The Reagan Revolution, Ii: Rebuilding the Western Alliance

By Richard C. Thornton

How President Reagan successfully rebuilt the Western Alliance, particularly in relations with the United Kingdom, West Germany, and Japan.

• Language: English
• Publisher: Trafford Publishing
• Release date: Feb 23, 2004
• ISBN: 9781412217729

Richard C. Thornton

Dr. Richard C. Thornton is the professor of history and International Affairs at George Washington University in Washington, D.C. He is the author of nine books on the subjects of U.S. foreign policy, Sino-Soviet affairs, and Chinese history. His most recent works are: The Falklands Sting: Reagan, Thatcher and the Argentine Bomb. The Carter Years: Toward a new Global Order The Nixon-Kissinger Years: Reshaping American Foreign Policy Odd Man Out: Truman, Stalin, Mao, and the Origins of the Korean War Purchase The Reagan Revolution, II: Rebuilding the Western Alliance

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The Reagan Revolution

II

Rebuilding the Western Alliance

Richard C. Thornton

Second Edition

Revised and Expanded

© Copyright 2005 Richard C. Thornton. All rights reserved.

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Contents

Dedication

Aphorism

Introduction

Chapter 1      Margaret Thatcher’s Crises of Power, Strategy, and Proliferation

Chapter 2      Reagan’s Solution: The Falklands Sting

Chapter 3      Helmut Schmidt’s Bold Gamble for European Hegemony

Chapter 4      Reagan’s Response: Reintegration of the European Alliance

Chapter 5      Deng Xiaoping and China’s Strategy of Equidistance

Chapter 6      Reagan’s Response: A Modus Vivendi On Taiwan

Chapter 7      Zenko Suzuki’s Pursuit of Unarmed Neutrality

Chapter 8      Reagan’s Riposte: Reconstitution of the United States-Japan Alliance

Conclusion

About the Author

Endnotes

Endnotes

Endnotes

Endnotes

Endnotes

Endnotes

Endnotes

Endnotes

Dedication

This book is dedicated to my wife Joanne, and my sons, Douglas and James, whose inspiration has encouraged me to pursue this large and complex task.

Aphorism

History is hindsight, but hindsight without insight is history without relevance.

Introduction

When he entered office, Ronald Reagan was not surprised to find that the American global position had been severely compromised, weakened to the point of collapse. That much was apparent to anyone who was even vaguely familiar with the course of U.S. foreign policy during the seventies. The United States seemed to be in retreat, the Western Alliance in total disarray, and the Soviet Union on the march. Buttressed by a massive strategic weapons and conventional weapons buildup, the Soviet Union was bent upon redesigning the global order to advantage.

Many would claim that the decline of the United States was the result of military defeat, the Vietnam syndrome. Others would blame the American people themselves for a pervasive malaise, or some other explanation which removed accountability from responsible American leaders. The truth was that the decline of the previous seven years was almost entirely attributable to the strategy of détente and the New World Order inaugurated in 1973 by Henry Kissinger and carried forward by Jimmy Carter. The seven years of détente had seen the worst setbacks and defeats to United States foreign policy in its history. But these setbacks and defeats had all exhibited a consistent pattern.

The New World Order strategy was predicated on détente with the Soviet Union and involved the redeployment of American power to offshore positions, and a recalibration of alliance relationships, to accommodate the rising power of Moscow. Thus, dismantling the Containment structure was the overriding foreign policy purpose of the American leadership during the years of detente. The first steps in deconstructing Containment occurred under Henry Kissinger’s stewardship, as the United States withdrew in defeat from Vietnam, leaving a permanent scar on the national psyche.

Kissinger then turned President Nixon’s successful opening to China into a stillborn relationship because strong Sino-American relations were anathema to Moscow. Nixon had sought rapprochement with China specifically as a means of strengthening Containment against the Soviet Union and a satisfactory exit from Vietnam. Kissinger declined to develop relations with China in deference to his hopes for détente with Moscow. In his quixotic search for détente, Kissinger promoted war in the Middle East, badly mishandled relations with Israel, turned Angola into a permanent battleground, and encouraged America’s main allies, West Germany and Japan, onto more autonomous courses.

Under President Jimmy Carter, the pattern continued, as U.S. relations with key allies, such as West Germany, Japan, Great Britain, Saudi Arabia, Iran and Israel moved to the breaking point, and in some cases, rupture. The key relationships with which I will be concerned in this volume—the United Kingdom, West Germany, China, and Japan, underwent great strain. Carter’s attempt to reach an accommodation with the Soviet Union encouraged America’s chief allies to do the same. The seven years of détente saw Britain debate an Atlantic versus a European future, West Germany mount a drive for European hegemony, and China and Japan shift to balancing positions between the United States and the Soviet Union in the Far East.

But the United States shift to détente was in no way reciprocated by Moscow. On the contrary, the seven year period from 1973-1980 saw the Russians embark upon the largest military buildup any state had ever attempted in history, in both strategic and conventional arms. The Soviet military buildup was accompanied by a multi-continental effort to alter the geopolitical balance of power to advantage. Wherever one looked, in Europe, in Asia, the Middle East, Africa, the Caribbean, and in Central and South America, the Soviets were strengthening positions at American expense, by means of proxy wars, military intimidation, subversion, terrorism, and outright subjugation.

The Soviet drive to global hegemony was apparent before the Carter Administration took office and it is a legitimate question as to just why the new president was persuaded to continue with detente. It was quite late in his administration before Carter recognized that a substantial shift in the global balance of power was occurring to the detriment of the United States and attempted to arrest it. Part of the answer of why the United States delayed in responding to the obvious Soviet drive to global hegemony was because key individuals in his administration were quite willing to accommodate Soviet activities in the name of détente and feared antagonizing Moscow. When the president belatedly recognized the sad reality, he succeeded neither in blocking Moscow’s drive nor tempering it.

In the Middle East, the much heralded Camp David peace process had stagnated as Israel flatly refused to address the issue of West Bank sovereignty. The American attempt to construct a strategic consensus based upon an Israeli-Egyptian peace treaty foundered on the failure to move even slightly toward a resolution of the Palestinian issue. The inability to deliver on the Camp David formula resulted in the serious deterioration of relations with Saudi Arabia, as oil prices skyrocketed.

If relations with Saudi Arabia teetered, relations with Iran, the second of the former twin pillars of Southwest Asia, collapsed. President Carter watched as Iran suffered through revolution and the Shah fell from power. Worse, the Carter leadership expected to maintain a normal relationship with the virulently anti-American regime which emerged under Ayatollah Khomeini. The hostage crisis put an end to such starry-eyed expectations. Only the Soviet invasion of Afghanistan permitted the beginning of recovery and was aided immeasurably by the outbreak of the Iran-Iraq war in September 1980 which produced a general polarization of the region as Washington and Moscow lined up behind respective proxies.

Problems with allies became more intractable. West Germany, now an economic superpower, sought for the first time in the postwar era to play a leading role in world affairs, striving for hegemony in Europe and striking an independent position between the United States and the Soviet Union. Bonn emphasized détente and arms control at a time when the United States was shifting toward a more militant posture. The resultant rift with West Germany negatively affected U.S. relations with all of its European allies, as clashes repeatedly erupted in NATO conclaves.

Regarding Japan, President Carter entered office initially seeking to promote Japanese détente with Moscow, but when the Soviet Union began a massive buildup of military power in the Far East, pressed for increased defense spending. The Japanese, however, outmaneuvered the United States by limiting defense spending and greatly increasing the accumulation of trade surpluses. Japan, like West Germany a growing economic superpower, sought to play the role of unarmed neutral between Washington and Moscow.

As part of his effort to counterbalance Soviet power, President Carter sought to improve relations with China, but got no farther than normalizing relations as Beijing declined to be drawn in to an anti-Soviet position. Indeed, the Chinese, like the Germans and the Japanese, were intent upon pursuit of a balanced, equidistant policy toward the two superpowers.

Carter failed to develop the promise implicit in fully normalized relations with Beijing, as the issue of Taiwan continued to fester.

President Carter left office with American strategy in disarray and the American people confused and angry about his inability to lead the nation back to preeminence and prosperity. In 1980, when voters went to the polls, the nation was worse off than when he entered office four years earlier. Carter’s attempt to move toward a New World Order based upon détente with the Soviet Union had been an unmitigated failure. It would be left to his successor to choose a new way forward.

President Reagan entered office determined to rebuild American power and global position preparatory to accepting the challenge presented by growing Soviet military power and geopolitical expansion. The task was complicated by disagreement within his administration over the decision to reject the New World Order strategy of détente and move to a new strategy whose objective was to reestablish the United States as the preeminent global power. Throughout his administration, but especially during the first year and a half, the battle raged over the proper strategy to pursue.

The president’s short-term objective was to rebuild American power and reestablish the alliance relationships which had been the bulwark of the former Containment strategy, but his longer-term goal was to move beyond Containment to victory in the Cold War. The New World Order faction agreed on the short term objective of rebuilding American power and, to an extent, on restoring the western alliance, which permitted a semblance of cooperation, but disagreed on the long-term objective of seeking victory. They continued to urge that the president hold out the prospect of détente and cooperation with Moscow. After months of struggle, the president would succeed in establishing his authority over the foreign policy decision-making apparatus, but tension would continue.

Volume I of this four-volume study focused on the U.S. decision-making process through the first two years of the Reagan Administration, which emphasized the struggles with the advocates of the New World Order strategy over the structure of the foreign policy process and over the economic requirements of the president’s strategy. In essence, policy formulation revolved around struggles with Secretary of State Alexander Haig and Federal Reserve Chairman Paul Volcker. The president would be successful in the former but be forced to compromise over the latter. Nevertheless, the president would succeed in determining the long-term direction and content of the rearming of America.

In the current volume, volume II, the focus shifts to the president’s relations with key interlocutors, in the United Kingdom, West Germany, China, and Japan, as he sought to reestablish and strengthen the western alliance. In Prime Minister Margaret Thatcher of the United Kingdom, the president found a firm ally and kindred spirit, who, however, was on the verge of being thrown out of office after repeated policy failures. In Great Britain a battle was occurring similar to that which was under way in the United States between those who advocated the New World Order strategy, which, in the British case, meant integrating the U.K. further with the continent, and those who, like Thatcher, were determined to preserve Britain’s Atlantic relationship. Just as in the United States, it was a battle that went beyond party labels.

The president supported the prime minister, not simply because she was a kindred philosophical spirit. Strengthening the Atlantic partnership with Britain was essential to the strategy of rebuilding the European alliance. There could be no effective defense of the continent without the access provided by the special relationship with Great Britain. From the United States’ perspective, however, refurbishing the bridge to Western Europe was not the only Atlantic problem facing the president. There was looming, largely outside public view, a very ominous development in the South Atlantic. This was the growing nuclear missile race between Brazil and Argentina, as both countries were within a year of producing nuclear weapons.

Aside from the United States’ general opposition to nuclear proliferation, the emergence of two nuclear powers in the Western Hemisphere would be a very unwelcome development. Even worse, both countries, but especially Argentina, saw acquisition of a nuclear weapons capability as integral to their pursuit of immediate foreign policy goals. For Buenos Aires, then ruled by a military junta, the acquisition of nuclear weapons promised to enable the recovery of Las Malvinas, islands 400 miles off the southeastern coast. The Falkland Islands, as they were also known, had been under British control since 1833, settled by people of British stock, but claimed by Argentina as a legacy of Spanish rule.

The Reagan Administration’s answer to Thatcher’s problems in Great Britain and nuclear proliferation in the South Atlantic lay in what I have termed the Falklands Sting, a war whose outcome would have the most beneficial effects for all concerned parties. British victory in the conflict would insure Thatcher’s preeminence in British politics through the decade of the eighties. Argentine defeat would lead to the collapse of the junta and the reemergence of civilian rule. Most importantly, Argentina (and Brazil) would renounce plans to acquire nuclear weapons. In what would be a great, but unheralded victory, President Reagan would secure the Atlantic bridge to the continent and forestall the emergence of nuclear weapons’ states in the Western Hemisphere.

In West Germany, Chancellor Helmut Schmidt was riding the crest of a political surge to European hegemony as he strove to place West Germany as the leading power between the United States and the Soviet Union. Already the main trading partner with the countries of east and west Europe, and a growing economic superpower, West Germany sought to forge an independent position in Europe. Of course, Schmidt’s success would increasingly marginalize the U.S. role in Europe as it was executed through the NATO alliance.

The president would seek to reintegrate West Germany into the NATO alliance, in part, by carrying forward the solution devised by the previous administration of deploying weapons capable of striking Soviet territory directly on West German soil and by curtailing German trade with the Soviet Union. Schmidt pursued the opposite course, seeking to prevent the deployment of weapons on German soil and expanding trade with the Soviet Union, particularly by extending credit and technology to construct a massive gas pipeline to service Western Europe.

The two-year struggle between Reagan and Schmidt would turn on questions of arms control and trade with the Soviet bloc. Schmidt sought disarmament and expanded trade with Moscow, while Reagan sought the reverse. A key turning point in the struggle was the crisis in Poland, where the Soviets threatened intervention, but ultimately orchestrated an indigenous crackdown with the imposition of martial law by the Polish communist regime. President Reagan would effectively use martial law in Poland to demonstrate the inadvisability of Schmidt’s strategy toward the Soviet Union.

Ultimately, when Schmidt’s strategy of disarmament and Ostpolitik proved unsuccessful in bringing about détente with Moscow, the German people rejected both him and his strategy in favor of a new leader committed to reestablishing close relations with the United States and NATO. The ascendancy of Helmut Kohl to the chancellorship of West Germany in October of 1982 signaled a great victory for President Reagan as a revitalized U.S.-German relationship would form a strong axis of the Western Alliance.

In China, relations with the United States had vacillated along a predictable trajectory since Nixon’s opening. In the United States, those who supported an anti-Soviet strategy, like Nixon and President Carter’s national security adviser, Zbigniew Brzezinski, sought to strengthen relations with China, while those who advocated détente with Moscow, like

Henry Kissinger and Carter’s secretary of State, Cyrus Vance, sought to cool the relationship with China.

A similar strategic dichotomy existed in Beijing. Mao Zedong had sought to shift China out of the Soviet orbit into that of the United States, while Deng Xiaoping sought to position China between the United States and the Soviet Union. The issue of Taiwan was part of this struggle, with Mao and his immediate successor, Hua Guofeng downplaying it, while Deng highlighted Taiwan both as leverage in negotiations and as a means of keeping the United States at arms length.

When Reagan entered office, Deng had risen to the top of the Chinese leadership and highlighted the issue of Taiwan. In Washington, however, the dispute over strategy had not yet been resolved and it would take Reagan a year and a half to establish his primacy in the foreign policy arena and settle the issue of strategy. Once settled, he would negotiate a modus vivendi with Deng that removed Taiwan as an obstacle to an improvement in relations and, at a minimum, opened the door to improved relations.

In Japan, Prime Minister Zenko Suzuki had taken Tokyo as far to the middle between Soviet and American power in the Far East as Helmut Schmidt had done in Europe. Japan, too, under successive leaders, had since 1973 sought to develop a better relationship with the Soviet Union in following the U.S. lead. The Japanese approach was to remove any threat to the Soviet Union in the Far East by limiting its military capability to the minimum. At the same time, Japan pursued a neomercantilistic strategy toward the west with a vengeance in search of accumulating the wealth which would some day enable the nation to regain control of its destiny.

President Reagan would pursue the objective of rebuilding a strong U.S.-Japan relationship and fully reintegrating Japan into the Western Alliance. In what would also be a two-year quest, the president would carry forward the previous administration’s unsuccessful tactic of pressing Japan to spend more on defense, while threatening to limit Japanese exports to the United States. Reagan wanted Japan to expand its economy to be able to sustain a larger defense establishment, which the Suzuki leadership was determined to avoid, even though in the meantime the Soviet Union had mounted a major military threat in the Far East.

Most of all, President Reagan wanted Japan to become a major partner with the United States in creating a financial-economic axis which would enable the United States to shift the global balance of power back to the west. The American military buildup would be costly and Japan would assist by reinvesting profits from trade in the United States. In the security realm, Japan would also help by taking up the slack as American power was concentrated on Southwest Asia and the oil fields. Japan’s recommitment to the U.S.-Japan alliance under Yasuhiro Nakasone, who replaced

Zenko Suzuki in late 1982, marked a major success in the president’s strategy.

By the end of 1982, after intense and protracted struggle characterized by imaginative and daring policy choices, President Reagan would succeed in restoring the main anchors of the Western Alliance. Elsewhere, during these first two years, the Reagan record would be mixed with successes and failures, as, for example, in Lebanon, in the Iran-Iraq war, and in Nicaragua. Nevertheless, by and large, throughout the president’s two terms of office, the Western Alliance would be a solid bulwark on which the United States could rely in the global struggle against the Soviet Union and its minions.

Chapter 1

Margaret Thatcher’s Crises of Power, Strategy, and Proliferation

Upon entering office, President Reagan was confronted with two major problems in the Atlantic area. The first, public and integral to his plan to restore the western alliance, was to reestablish the special relationship with Great Britain, a relationship that had frayed badly during the détente of the seventies as Britain attempted to negotiate improved relations with the continent.

The second, completely outside the public’s purview, was to head off a most dangerous and unwelcome development, the imminent emergence of two new nuclear weapons states in South America. Both Argentina and Brazil were moving rapidly and secretly toward the acquisition of a nuclear ballistic missile capability. It was imperative that the president attempt to defuse the secret nuclear missile race under way in the Western Hemi-sphere.¹

In both areas the problems seemed intractable. Prime Minister Margaret Thatcher, elected in 1979 and a kindred spirit, was on the verge of being tossed out of office due to her refusal to bow to those demanding that Britain join the continent. The problem for President Reagan was how to strengthen Thatcher’s leadership, which would reestablish the bridge to Western Europe necessary for any defense against Soviet aggression. The second problem was how to prevent nuclear proliferation in the Western Hemisphere. Argentina and Brazil, both led by military dictatorships, were bent upon establishing regional hegemony through military buildups, centered around the clandestine acquisition of nuclear missile capability under the cover of public nuclear power programs. West Germany was the leading provider of nuclear technology to Brazil, along with several other nations.

Unable to exert any influence with either Brasilia or Bonn, attention came to focus on Argentina where the United States possessed greater leverage, and then more precisely on the dispute between Buenos Aires and London over Great Britain’s possession of and Argentina’s long-standing claim to the Falkland Islands, or Las Malvinas. In response to the Argentine junta’s plan to seize the Malvinas in a military fait accompli the president and the prime minister devised a scheme, which I have called the Falklands Sting, to defeat the junta and parley victory into larger, Atlantic success.

Victory in the Falkland Islands War would solidify Thatcher’s hold on British politics for two more terms of office, enabling the prime minister to carry out an economic transformation of the United Kingdom. Her victory would also strengthen the United States-Great Britain special Atlantic partnership which would provide access for defense of the continent. Argentine defeat, on the other hand, would result in the fall of the military dictatorship and the return of civilian political rule. Most importantly, in the aftermath of the conflict, both Argentina and Brazil would agree to abrogate their nuclear weapons programs, returning the hemisphere to non-nuclear status. It would unquestionably be one of the greatest, yet unheralded, victories of President Ronald Reagan.

The Falkland Islands Dispute

Although the sovereignty dispute over the Falkland Islands can be traced to 1833 when Great Britain took control of the islands, the origins of the 1982 war derive from a more recent history. Britain’s claim to the Falkland Islands lay in its continuous possession and settlement since 1833 by people of British stock. Argentina’s claim was based on Spain’s prior possession of the islands and subsequent transfer to a group of independent Republics, including the United Provinces of the Rio de la Plata, which later became Argentina, upon their declaration of independence from Spain in 1816. Although the quest for Las Malvinas became an integral part of the national psyche, complicating Buenos Aires’ claim was the fact that Argentina did not become a duly constituted national entity until 1853.

Regardless of the validity of the competing claims, there was little movement on the issue for over a century—until after World War II when

UN resolution 1514 of 1960 called for the end of colonialism in all its forms. Five years later, UN resolution 2065 urged Argentina and Great Britain to proceed without delay to negotiate a peaceful solution to the problem, bearing in mind…the interests of the populations of the Falkland Islands (Malvinas). Although objecting to the UN designation of the Falklands dispute as a colonial problem, London agreed to enter into negotiations and to allay islanders fears of a sellout, specifically referred to their wishes, rather than their interests, in order to include them as a party to the dispute.

Six years of negotiations produced the 1971 Communications Agreement, which, without prejudice to either side’s sovereignty claims, sought to bring about a change in islander attitude through increased interaction with the Argentine mainland and dilution of the British connection. The Argentine government invested in some infrastructural development and sought to purchase the islands outright, but, London refused. When purchase was denied, Buenos Aires offered a leaseback arrangement, which would transfer sovereignty but permit Britain to retain possession of the island for a fixed period of time, along the lines of its Hong Kong possession.

Buenos Aires also proposed that Great Britain accept without condemnation an Argentine presence in the Dependencies, the island of South Georgia, where Britain maintained the small British Antarctic Survey (BAS) station, and the South Sandwich islands, which were uninhabited. While these proposals led nowhere when initially put forth, within a year, after a military coup unseated Isabella Peron in March of 1976, the Argentine junta adopted this very outside in approach to the Falkland Islands, establishing a presence first in South Thule in the South Sandwich Islands, and then attempting to do so on South Georgia, the event that led to the Falkland Islands War.

The Argentine junta also decided that the solution to its problems lay in the acquisition of greater military power and thus commenced a multibillion dollar conventional military buildup, acquiring modern aircraft from France and Israel, submarines from West Germany, ships from Great Britain, and more. Combined with continued defense cuts in Britain, the clear prospect was for a shift in the military and thus political balance in the South Atlantic. In other words, the rise of Argentine and the decline of British military power offered, in the not too distant future, the chance to complete the century and a half long quest for Las Malvinas.

In November 1976, the junta implemented the first step in its long-term strategy toward Las Malvinas. Designated Operation Sol, the junta secretly dispatched a 50-man military team to construct a scientific research station on South Thule, the farthest point in the South Atlantic Ocean from the Falkland Islands. The station, in reality a small hut, was identical to the dozen or so small facilities that Argentina had placed throughout its Antarctic claim area. In Antarctica, Argentinean, Chilean and British claims overlapped, but were held in abeyance by the Antarctic Treaty, in effect since 1961.

British intelligence was fully informed of Argentina’s plans and contingencies, having some years earlier broken Buenos Aires’ code system.² Nevertheless, hoping to avoid a crisis, the Callahan government took no action beyond making a quiet request in January 1977 for an explanation of Argentina’s presence on the island. Moreover, the government kept the existence of the research station secret for a year-and-a-half. Buenos Aires was happy to follow suit because its effort appeared to have produced the desired result.

On February 2, 1977, Foreign Office Secretary Anthony Crosland announced that the time had come to consider whether a climate exists for discussing the broad issues which bear on the future of the Falkland Islands. Following discussion between the two parties, the British Government announced the beginning of negotiations in July, whose agenda would be to consider: future political relations, including sovereignty, with regard to the Falkland Islands, South Georgia and South Sandwich Islands….Negotiations will be directed to the working out of a peaceful solution to the existing dispute on sovereignty.³

The first round of talks, held in Rome, revealed that Great Britain and Argentina were proceeding on a parallel course, but in opposite directions. Argentinean strategy was to nibble at the dependencies working from the outside in toward the Falklands, while Great Britain was willing to make concessions in the Dependencies to delay Argentina’s advance to the Falklands for as long as possible. Thus, while the Argentine junta believed they were building a geopolitical noose around the Falkland Islands, creating conditions which would inevitably lead to the transfer of sovereignty, Great Britain hoped to procrastinate indefinitely to discourage a transfer.

During the talks, British intelligence learned that the Argentineans were going to land another naval party on South Thule in October at winter’s end. (The seasons are reversed in the southern hemisphere, with fall-winter spanning the months of June through September.) The junta evidently believed that as the first landing had produced results, a second landing would do more of the same.

The Joint Intelligence Committee (JIC) believed that the junta would take more forceful action if no progress were made, although discounting an invasion as unlikely. The JIC predicted that Argentina was prepared to establish a presence on one of the other Dependencies, such as South Georgia, come to the support of a private adventurist operation in the Falklands, or attack British shipping.⁴ British intelligence was thus fully apprised of and sensitive to possible Argentinean options for applying pressure on London to be more forthcoming.

The Callahan government’s (still secret) response to the planned landing was to deploy a nuclear-powered submarine to the immediate vicinity of the Falkland Islands. The presence of the submarine would make any landing extremely risky. Then, the government leaked news of the submarine to the Argentine government, which promptly canceled its plan. Officially, London denied the existence of this plan, but it was later confirmed. In his memoirs, Dennis Healey, Chancellor of the Exchequer in 1977, revealed that Callahan had allowed the Argentine Government to discover [the submarine] through secret channels. This deterrent was sufficient. There was no invasion.⁵

Callahan coupled his forceful but unpublicized response with a renewed willingness to discuss sovereignty, but as soon as Argentina agreed to resume the talks, he switched the game once again. Having consented to set up two working groups—on sovereignty and on economic cooperation—once the talks began, London focused on economic cooperation, not sovereignty, proposing an arrangement to provide for British and Argentinean scientific activities in the Dependencies. In other words, Britain now sought to legitimize retroactively the Argentinean presence on South Thule and divert discussion away from the issue of sovereignty over the Falkland Islands.⁶

When London’s stall on sovereignty became apparent, Buenos Aires broke off the talks. The failure to make progress on Las Malvinas was coupled with foreign policy stalemate elsewhere, prompting a major review. In February 1978 Buenos Aires had lost its arbitration case with Chile over three islands in the Beagle Channel (Picton, Lennox, and Nueva). The award gave Santiago a significant expansion of its Atlantic waters, as well as controlling access to Argentina’s southernmost port of Ushuaia, and strengthened its claim against Argentina in the Antarctic. At the same time Argentina was falling steadily behind in its competition with Brazil. Brasilia had embarked upon a very expansive nuclear power program, whose clear implication was that Brazil was about to become Latin America’s first self-sufficient nuclear state with a nuclear weapons capability, although its nuclear weapons program was still secret.⁷

Taking stock of their progress over the previous two years, the junta concluded that while they had been successful in bringing civil strife to an end, in what was called the dirty war, a vicious conflict against the political left that had been the rationale for the coup against Isabela Peron, they had reached a dead-end in foreign policy. Despite the extensive conventional military buildup upon which they had embarked, Argentina was still unable to resolve its foreign policy impasse. In what was a fateful choice, the junta decided that while the conventional buildup would continue they would also invest in the acquisition by stealth of a nuclear weapons capability.

The acquisition of a nuclear weapons capability seemed to be the only way out for the junta. Nuclear weapons would not necessarily give Argentina an advantage over Brazil, but it would place the nation on a par with its larger neighbor. On the other hand, the failure to match the Brazilian effort would relegate Argentina permanently to secondary status. However, a nuclear weapons capability would place Argentina in a position to deal with both Chile and Great Britain from a position of greatly increased strength and leverage.

In the spring of 1978, therefore, the Argentine government announced the decision to construct five nuclear power reactors, the first of which, a reprocessing plant at Ezeiza outside of Buenos Aires, was scheduled to begin operating in the summer of 1982. The Ezeiza project alone sparked fears that Buenos Aires would have direct access to weapons-usable plutonium by the early 1980s. Kept secret, however, was the decision to construct a uranium enrichment plant at Pilcaniyeu, deep inland a thousand miles from Buenos Aires in Patagonia, which would greatly accelerate the public timetable.⁸

By the spring of 1978, both Buenos Aires and Brasilia were actively developing secret nuclear weapons under the cover of public nuclear power projects. They may each have been ignorant of the other’s programs, but their projects would not remain secret for long from the United States and Great Britain. When discovered by American and British intelligence these nuclear weapons programs would be the deep origin behind the chain of events which set off the Falkland Islands War.

Outside-In, Step Two

In conjunction with the decision to augment Argentine military power, the junta determined to proceed with its outside-in strategy toward the Falkland Islands. The next target was the island of South Georgia roughly mid-way between the South Sandwich and the Falkland Islands. The approach to South Georgia, however, would be different, based upon what they had learned from the experience at South Thule the previous fall. In short, the move against South Georgia would not be a slowly evolving challenge which would give London time to respond with superior force, as at South Thule. The next step would be a fait accompli and take place under the cover of plausible deniability.

In keeping with these principles, and closely along lines British intelligence had actually predicted, the junta authorized a purely commercial operation for South Georgia, which would provide cover for the subsequent establishment of an Argentine presence there. Such was the genesis of the proposal by one Constantine Davidoff, an Argentinean citizen of Greek extraction, to dismantle defunct whaling stations on the island for their scrap metal value. Whether he himself knew it or not, Davidoff’s commercial venture would be the cover for the junta’s accompanying plan to establish a military presence on the island, called Operation Alpha.⁹

In mid-1978, Davidoff approached Christian Salvesens Company of Edinburgh, Scotland, to salvage its two whaling stations, located at Leith and Stromness Bay, which had been shut down since 1965. The only active presence on the island was the British Antarctic Survey (BAS), a scientific research station located at Grytviken twenty miles away at Cumberland Bay. Aside from the fact that Davidoff had no personal knowledge of the potential scrap metal value of the whaling stations, never having been to South Georgia, there was actually a better opportunity for salvage work on the island.

An Argentine company, Albion Star, also had two old whaling stations on the island, one at Grytviken and another at Husvik on Stromness Bay. Albion Star, in fact, had gone under and the liquidator of the company was seeking a buyer for these leases.¹⁰ The question was: why did Davidoff ask Salvesens, which had not offered its properties for sale, and not Albion Star, which had? The evident answer was that leasing from Salvesens would at one stroke substitute a legitimate Argentinean for a British presence. And once the BAS were withdrawn, which was widely anticipated as part of London’s highly publicized budget and defense cuts, the only presence remaining on South Georgia would be Argentine.

The British government did not respond to Davidoff’s proposal for several months—until after Margaret Thatcher had been elected Prime Minister in May of 1979. Despite objections from the governor of the Falkland Islands to a deal with Davidoff and despite the suspicions by some that Davidoff might be used by the Argentine government to spark an incident, Thatcher’s Foreign Office not only cleared the way for Salvesens to enter into a salvaging contract, but it also sweetened the deal.¹¹

First, the Foreign Office authorized Salvesens to acquire the Albion Star leases at Husvik and Grytviken, giving the company control over all four of the whaling stations on the island. Then, Salvesens offered Davidoff an option contract to dismantle the stations at Leith, Stromness, and Husvik, all located at Stromness Bay and one more than Davidoff originally sought. The fourth station, at Grytviken, twenty miles away from the other three, where the BAS was located, was excluded from the deal. In other words, the British Foreign Office structured a contract designed to encourage Davidoff to undertake his commercial venture in South Georgia. Moreover, if the Argentines were planning to establish a presence there, they were being given a secluded place at Stromness Bay to do it.¹²

Although Davidoff signed a three-year contract with Salvesens in September 1979, and despite the fact that scrap metal prices reached their historic peak in 1981, Davidoff’s enterprise lay dormant until activated in late 1981. At that point scrap metal prices began to plummet from $93 to $63 per ton, suggesting that profit was not necessarily the reason for the venture. By that time, however, all of the circumstances surrounding the Falkland Islands both in Argentina and internationally had changed. And, when Davidoff activated his scheme it would be to serve a vastly different purpose than originally envisaged. In fact, Davidoff’s scrap metal enterprise on South Georgia would be the spark that set off the Falkland Islands War.

Britain and the United States: A Coincidence of Interests

In retrospect, the junta’s decision to acquire secretly a nuclear weapons capability produced a coincidence of interests between Washington and London, which eventually focused on the Falkland Islands. It was not long after the junta’s decision, probably not later than the spring of 1979 that both American and British intelligence discovered Argentina’s secret program. Both countries had long since broken Argentine codes and were able to monitor Buenos Aires communications.¹³ Satellite intelligence would confirm construction of nuclear facilities. That discovery would produce immediate changes in the policies of both countries toward Argentina, in opposite but complimentary directions.

Contemporary estimates regarding the public Ezeiza project alone cautioned that such a facility would provide Buenos Aires with direct access to weapons-usable plutonium by the early 1980s.¹⁴ The Argentine navy managed the nuclear weapons program under the cover of a nuclear power program and the air force was developing a ballistic missile delivery system, which was also disguised as a program to develop a single-staged meteorological rocket.

But word soon leaked out about Argentina’s plans. In late 1981, the British journal New Scientist declared that Argentina will have manufactured its first atom bomb by the end of 1982 and reported that American intelligence believed that the Argentine Air Force had already tested a missile capable of carrying a nuclear bomb.¹⁵ The report indicated that the Argentine nuclear program had been under surveillance for some time.

The United States, of course, had an overriding general interest in nuclear non-proliferation, and particularly in the Western Hemisphere, but had little leverage. Neither Brazil nor Argentina was a signatory to the nuclear nonproliferation treaty, which placed them outside International Atomic Energy Agency supervision and controls. Although both had signed the Treaty of Tlatelolco, specifically intended to prevent the emergence of nuclear weapons states in Latin America, neither had ratified it.

The fact was that Brazil and Argentina were engaged in a secret race to acquire nuclear weapons and the United States had no obvious means of countering it. Deeply concerned, President Jimmy Carter had unsuccessfully attempted to stop it at its source by gaining the cancellation of West Germany’s contract with Brazil. (Bonn was the main supplier of nuclear technology to Brazil.) He had also severely criticized Buenos Aires human rights practices, placed an embargo on arms sales, ended sales of all nuclear and nuclear-related equipment to Argentina, all of which had simply deprived the United States of any leverage.

It was obvious that better relations were necessary if the United States expected to exert any leverage on the junta’s decision-making process. Therefore, in late 1979, Carter decided to change tack. Subtly, without fanfare or satisfactory public explanation, he dropped his human rights criticism and attempted to improve relations with the junta. The turnabout was attributed to evidence, never adduced, that the military authorities were restraining the worst of the violence by the security forces. Based on the junta’s presumed restraint, the United States increased financial assistance to Buenos Aires. Export-Import Bank credits were increased from $32.7 million to $79.2 million, and Argentina’s duty-free exports under the General System of Preferences more than doubled, from $102 million to $231 million.¹⁶ It would be a policy his successor would also embrace, initially.

Meanwhile, upon entering office, Thatcher moved in the opposite direction toward Argentina, reversing the Callahan government’s policy of dangling the prospect of a negotiated transfer of sovereignty. To insure greater control over intelligence, Thatcher transferred the JIC from the Foreign Office to the prime minister’s office. It was in all probability discovery of the junta’s nuclear weapons program that persuaded Prime Minister Thatcher that strengthening relations with the United States was now imperative, for Britain was rapidly losing the capability to defend the Falklands. In part this was the continuing effect of the gradual constriction of Britain’s imperial role, and in part the function of the movement toward détente in the seventies, as Britain divested itself of previous responsibilities assumed under the Containment strategy.

That was now changing, however. Thatcher was determined to dismantle Britain’s welfare state and recreate a market economy while reversing Britain’s drift toward a continental strategy and away from the special relationship with the United States. At the same time, Jimmy Carter was beginning to turn away from détente, as U.S.-Soviet relations began to deteriorate. Thatcher quickly concluded negotiations with the United States for the acquisition of the Trident submarine to replace the aging Polaris and agreed to deploy cruise missiles in Britain as part of the NATO weapons upgrade agreement. Unfortunately, these choices consumed a considerable portion of the defense budget, resulting in a further degrading of Britain’s naval capability.

In her efforts to reverse British strategy, Thatcher was immediately locked in a struggle with her own leadership, with mixed results. Her initial attempts at domestic reform had been a fiasco. An early supply-sider, Thatcher had attempted to spur economic growth by reducing tax and inflation rates, but internal resistance made her policies largely ineffective. By 1980, the promised turnaround in the British economy had not occurred and Thatcher was under growing pressure to increase government spending and reflate the economy. As Cosgrave observed, it seemed that the Thatcher experiment was crumbling to disaster.¹⁷ By December of 1980, as Thatcher herself notes, she was being described as the most unpopular prime minister since polls began, with a job approval rating of a mere twenty-three percent.¹⁸

Her situation on the foreign policy front was not much better. The central strategic issue was Britain’s relationship to the European community. Thatcher was determined to turn away from a continental relationship and strengthen relations with the United States, but was opposed within her cabinet by the so-called moderates, whom she called wets, led by foreign secretary Peter Carrington and Francis Pym, among others. Her strategy was to place immovable obstacles buttressed by interminable arguments to prevent closer cooperation. She chose to focus on the issue of the British contribution to the EEC budget, insisting that Britain’s contribution was too great and demanding a rebate. Her dilatory tactics succeeded.

The split between Thatcher and Carrington carried over to the issue of the Falklands. Carrington sought to resolve the sovereignty dispute along the lines of the leaseback proposal advanced earlier, but Thatcher decided to delay. Against Carrington’s persistent advice to begin negotiations to resolve the dispute, Thatcher directed her foreign secretary to obtain written agreement from the Falkland Islands Council. Although the FIC agreed to talks, which began in New York in April 1980, they went nowhere and although Carrington managed to obtain cabinet concurrence to proceed on leaseback, Thatcher stalled, insisting that the islanders be consulted again.

By the time they were consulted once again, in December 1980, circumstances had changed all around. Ronald Reagan had been elected as president of the United States and Roberto Viola had succeeded Jorge Videla as president of Argentina. Initially, President Reagan attempted to improve relations with Argentina, following in the steps of his predecessor, in hopes of thereby opening up an opportunity to dissuade Buenos Aires from continuing with its nuclear weapons program. But Viola declined the president’s invitation to improve relations, deciding, instead, to maintain a non-aligned status between the superpowers.

When Viola declined Reagan’s offer to improve relations, the stage was set for what I have termed the Falklands Sting. The evidence is not direct, but the pattern of events fully consistent with the thesis that the United States and Great Britain maneuvered the Argentine junta into an unwinnable conflict over the Falkland Islands, a conflict which would lead to the overthrow of the junta and the return to civilian rule in Argentina. That outcome would establish the precondition for the abrogation of Buenos Aires nuclear weapons program. Victory would also serve to consolidate Margaret Thatcher’s position in the British leadership. Most of all, the outcome would serve American interests: the strengthening of the Atlantic partnership and the abolition of nuclear weapons in South America.

The first step in the Sting was President Reagan’s decision, in the spring of 1981, to court Viola’s competitor, the army member of Argentina’s three-man junta, Leopoldo Fortunato Galtieri, with the evident objective of fostering a change to more congenial leadership. Galtieri immediately responded positively and before long was known in Buenos Aires as Washington’s man. Galtieri openly disputed Viola’s neutrality and advocated an alliance with the United States as well as cooperation with Washington on a number of international projects, including participation in the Sinai peacekeeping force and dispatch of advisers to El Salvador. The army commander also increasingly argued for a tough stand regarding Las Malvinas, suggesting that the United States would support Argentina in its quest.

Viola, meanwhile, had adopted a go-slow approach toward negotiations with Great Britain over the Falklands, which surprised Carrington, but was consistent with the junta’s decision to build a prior unchallengeable military advantage. The Argentine government appeared to be content with a protracted dialogue, declaring that meaningful negotiations would have to be long and difficult.¹⁹ The Argentine government, in short, was far less eager to acquire the islands than Carrington was to divest them.

Indeed, by late 1981, both in the House of Commons and in the islands themselves a hardening of attitude had occurred. In the House leaseback was dead. During debate, one house member declared that whatever the Government and whatever the majority, there will never be a majority in this House to give this historically separate people and separate islands to the Argentine. Elections to the Falkland Islands Council in mid-October produced a parallel hardening of attitude, as well, as all of those elected were opposed to a transfer of sovereignty in any form. ²⁰

Clearly, several fundamental shifts had occurred. Thatcher had reversed the previous Callahan government’s decision to negotiate on sovereignty, adopting a stall on the Falklands. Surprisingly, Viola had accepted the British shift, agreeing to lengthy negotiations. Reagan, after failing to win Viola over, had successfully begun to court junta member General Galtieri, who openly supported improved relations with the United States, but took a tougher stand on the Falklands issue. Reagan seemed to be supporting both Thatcher and Galtieri in their respective positions.

The United States and the Rise of Leopoldo Fortunato Galtieri

By mid-1981, and in office all of four months, Viola was confronted with an economy in free fall and a challenge within his own leadership. The world recession of 1980 triggered by the second oil crisis catapulted Argentina into crisis which the new president could not overcome. The economic crisis, in turn, provided the growing rationale for increased opposition to him. Moreover, at that time, a series of seemingly unrelated events occurred that severely undermined Viola’s strategy of non-alignment and strengthened arguments for alliance with the United States.

First, on June 7, came the Israeli bombing of the Iraqi nuclear reactor at Osirak. Then, a few days later, the London newspaper, The Guardian, revealed that Brazil