“It’s America’s inaction, or possibly America’s impotence, that has landed us all in this mess.”
—The Shah, 1973
“Can’t we overthrow one of the sheikhs just to show that we can do it?”
—Henry Kissinger, 1973
In any normal August, Southern California’s Mojave Desert would be a quiet refuge of triple-digit temperatures baking a barren landscape of sagebrush and sand. But August 1973 fit no one’s definition of “normal.” Against a sobering backdrop of scandal and political paralysis in Washington, the tightest oil market in history, and rumors of war in the Middle East, the largest desert warfare training exercises in the history of the U.S. Marine Corps began. For two weeks clouds of dust rose high above the Mojave as thousands of men and machines engaged in pitched battle. Surrounding hillsides echoed with the crackle of rifle shots and the dull thud of mortar rounds. Overhead, Phantom jets shrieked and HueyCobra gunships and Chinook helicopters kicked up curtains of dust and sand while offloading supplies and men.
There was little doubt what it was all for. “Officially, no parallels are drawn between Operation Alkali Canyon and the Middle East,” noted one of the handful of civilians invited to observe the maneuvers at Twentynine Palms, the Marines’ 932-square-mile desert warfare training facility in the Mojave. “Although most troops were lectured on Middle East desert politics and survival—and the ‘aggressors’ were clothed in khaki shirts and red collar insignia similar to those worn by the Libyan army, no one is supposed to talk about Arabs.” As one reservist earnestly explained, “They told us not to say anything political. We can’t even use Israel as a hypothetical example.” Added one of his colleagues, “The Pentagon has a computer plan for the invasion of every civilized country in the world. The Middle East is the obvious powder keg, and we’d be fools if we didn’t prepare.”
Seven months after ending combat operations in the jungles of Southeast Asia, and four weeks after agreeing to draw up contingency plans with Iran to invade Kuwait and Saudi Arabia in an emergency, the Nixon administration was gearing up for war in the desert sands of the Middle East. The Alkali Canyon 73 exercises called for five thousand Marine Corps regulars and four thousand Marine reservists to split into two opposing sides. Eight hundred Marines from the fictional communist state of Yermos were ordered to invade peace-loving Argos to the south. Although “the entire war, all its battles and the eventual outcome, had been programmed in advance by computer,” things went haywire from the get-go. Many of the reservists made it clear that with the war in Vietnam over, they just wanted to sign their discharge papers and go home. “I can give you my opinion of this entire operation in two words: F——it,” declared Private Willie Wilkins of Akron, Ohio.
The reservists seemed more interested in reaching for their bottles of Coppertone than their rifles. They retreated to their tents with crates of beer and got drunk. Confusion abounded. Men fainted in the heat. An exchange officer from the British Royal Marines, Captain Duncan Christie-Miller, sat out the “war” in his tent writing an article on skiing in Europe. “Our unit was supposed to be in a tank battle last night, but someone forgot to bring the tanks,” groused Sergeant Bob Musmann from Pittsburgh. “Can you picture Hogan’s Heroes, F Troop and MASH all together? We’ve got it.” Lieutenant Colonel Richard Dennis lost his cool when he learned that his telegrapher had gone to chow without telling him, forcing a delay in calling up air strikes. “Goddamn!” screamed Dennis. “This is war! What’s the matter? Doesn’t anyone take this seriously?” One who did was Staff Sergeant Greg Anderson. Clambering aboard his tank to rally his troops, Anderson called them to arms with the irresistible cry, “Come on men! We’re out here to get practice so we can grab the oil!”
The trigger man for mayhem that summer turned out to be not Iran’s Mohammad Reza Shah Pahlavi but a man from the next generation, Colonel Muammar al-Qaddafi, the thirty-one-year-old ruler of Libya. Libya was a relative newcomer to the world oil market. Armand Hammer’s Occidental Petroleum had struck it big in Libya in 1966 with gushers in the Sirte Basin, located a hundred miles inland from the Mediterranean. Libya’s proximity to Europe’s southern underbelly meant that within six years it was supplying the continent with 30 percent of its oil. Libyan petroleum was in high demand in the United States because it easily met the Nixon administration’s tough new clean air standards.
Libya, three times the size of France but with a population of less than 2 million people, reinvested the profits from its daily exports of 2.3 million barrels of oil into a welfare state that boasted free education, health care, and housing. Qaddafi had staked out a reputation as the most mercurial and radical leader of the Arab world, espousing a hodgepodge of “isms”: pan-Arabism, pan-Africanism, Islamic fundamentalism, anti-Zionism, socialism, anti-Americanism, and anti-Communism. He canceled military base agreements with the United States and expelled Libya’s Italian community, threatening to empty Italian graveyards of their dead and ship the 21,000 corpses to Rome. He used Libya’s fortune to acquire the biggest cash and gold reserves in the Arab world while lavishing aid on Egypt, Syria, and Yasser Arafat’s Palestinian guerrillas. Qaddafi’s most potent purchase to date was a $200 million order for a fleet of 114 French Mirage fighter-bombers. The aircraft threatened to tip the military balance of power in North Africa. Qaddafi’s military pretensions and radical tendencies engendered enormous concern in Tel Aviv and Tehran. “This Qaddafi is a real nut,” the Shah warned Kissinger. “He is making trouble.”
Western oil companies operating in Libya presented Qaddafi with a soft target. In 1970 he forced Occidental Petroleum to raise the price of its oil by the then unheard of sum of 30 cents a barrel. The negotiations were conducted over rolls and a revolver—after the Libyan representative offered American oil executives coffee and rolls, he set his revolver on the table in front of them as a reminder of just how much the market in petroleum had changed in recent years. It was the first time the oil majors had broken ranks and surrendered to the demands of a host government. Kissinger explained in his memoirs that the White House assumed it was witnessing “commercial bargaining and not a revolutionary upheaval” in the oil market, and that “the dimensions of the problem were not immediately apparent. And because the symptoms, the price increases of the early 1970s, were extremely modest, no issue of domestic economic policy—not to speak of national security—seemed to be involved.”
Kissinger’s logic was specious to say the least. Although individual increases in the price of oil appeared at the time to be modest, their overall cumulative effect was striking enough—the price of oil jumped 72 percent between 1970 and September 1973. No one could miss the fact that oil prices were trending upward. Kissinger wrote that the U.S. government “did not as a general practice involve itself in commercial disputes” although his involvement in the Aramco negotiations and his frequent contacts with the oil companies suggested otherwise. Kissinger unfairly laid the blame for what he termed the Nixon administration’s policy of “noninvolvement” in the oil market on William Rogers, Nixon’s first secretary of state. “Our hands-off policy ordained the result: the companies yielded,” Kissinger explained. He insisted that he on the other hand had been “increasingly alarmed by the escalating demands of the producers” in the spring of 1973. Yet Kissinger’s declassified telephone transcripts tell a different story. They reveal missed opportunities, ignored warnings, and precious months lost to prepare the American economy for the wave that was about to break over its bow.
On May 15, 1973, Deputy Secretary of Defense William Clements telephoned Kissinger to ask for “a quick word because I know you don’t like surprises, Henry.” Clements had it on “good authority that the Libyans will likely this week starting today, perhaps tomorrow for sure supposedly, start nationalizing the American interest in Libya.”
“So what?” was Kissinger’s response.
Clements, a former oilman who enjoyed close ties with Middle East governments, asked that Libyan oil nationalization be “put on the agenda today” because of the “enormous pressure that’s building up as an interface with that problem in Saudi Arabia. The two are related.” King Faisal had in the past promised not to turn his kingdom’s giant oil reserves into a weapon in the Arab-Israeli dispute. But the old king was losing ground to the siren call of Qaddafi and his radicals. In early May Faisal warned Aramco executives “with extreme urgency” that the Nixon administration should take notice of rising tensions in the Middle East. Clements said the White House needed to come up with a plan “because I don’t think anyone is now addressing that problem or thinking in terms of how we will respond.”
“To the nationalization,” said Kissinger.
“Right. And the people are there and some of the other things that may happen.” Defense was worried about the safety of American civilians working in Libya who were vulnerable to hostage taking or assassination.
“I agree,” said Kissinger, who had still not grasped the extent of the problem. “You’re not talking about the flights, you’re talking about . . . ”
“Oh hell, no, I’m talking about the takeover of 3 billion or more, 3 billion plus of our assets,” answered Clements.
Kissinger agreed that something should be done. But two weeks later Deputy Secretary of State Kenneth Rush phoned with a warning of his own. “I had in all the heads of the companies doing business in Libya,” he explained. “They are really—their backs are against the wall. What Libya is going to do is knock them off one by one and then leap-frog over to the Middle East, and the Shah has told me he does not want to raise the price of oil, but that if we [don’t act], then he’s got to do it at least back to Libya and back and forth. And all the heads of these companies say we’ve got to do something to show—to calm the emotional upsurge in the Middle East.” Rush had just returned from Tehran, where he had held talks with the Shah. The Iranian leader was letting Kissinger know that if Qaddafi charged more for Libyan oil, then Iran would follow suit penny for penny, dollar for dollar. That would be like striking a match in a paper factory—it would ignite a bonfire of price gouging and profiteering among Gulf oil producers. By now, alarm bells should have been ringing at the NSC. But Kissinger instead brushed aside Rush’s warning. Unlike his colleague, he knew that the Shah already had Nixon’s permission to raise the price of oil. “But they are always wrong, Ken,” he lectured his colleague and rival. “Every year they have another pet project to calm it, and they are never right.”
A sound knowledge of global finance, commodity prices, and exchange rates would be as crucial to navigating the shoals of the new decade as moving flags and armies around the chessboard of great power rivalries. Nixon’s decision in August to replace Rogers with Kissinger as secretary of state came with Nixon’s recognition that his new secretary of state lacked essential expertise in oil and economics. Kissinger held on to the pivotal post of national security adviser. “Henry wanted State, felt he deserved it, and let me know that he would resign if he didn’t get it,” Nixon recalled. “With the Watergate problem, I didn’t have any choices.” The painful scenes that followed were reminiscent of Nixon’s botched handling of Richard Helms’s dismissal as CIA chief the previous November. When White House chief of staff Alexander Haig asked Secretary of State Rogers to do the right thing by the president and resign, the usually affable secretary of state exploded in a fury: “Tell the president to go fuck himself.” Rogers expected a more honorable way out than to be presented with a pistol on a plate. Kissinger understood that “for Nixon my appointment was less an act of choice than a step taken against his will in the hope it would mitigate catastrophe.”
Arthur Burns wrote in his diary that Kissinger had been in office only a matter of days when he asked for help “in reducing Treasury’s role in international economic area, so that State’s role may be enhanced.” Burns wrote with horror of the way Kissinger used economics and international finance as tactical tools to settle scores and punish leaders who stood in his way. On one occasion he asked Burns to come up with ways in which the Fed could “cause economic trouble for the French? What can U.S. do, or the Fed alone, to cause economic trouble for the French?” Burns was shocked by Henry’s suggestion that the administration should destabilize the economy of one of its most important allies and trading partners: “H. at times strikes me as a madman; a genius, yes; but he has a lust for power—a good pupil of Nixon’s and Haldeman’s, or perhaps one of their teachers? What outrageous thinking on his part!”
Colonel Qaddafi struck on the evening of September 1, 1973. During festivities to mark the fourth anniversary of his coup the Libyan leader announced the expropriation of 51 percent of the assets of foreign oil companies operating in his country. As predicted, Qaddafi selected several companies, including Occidental, to test American resolve. When no resistance was forthcoming, he swept the board. Pressure now mounted on more moderate Persian Gulf oil producers to tear up their participation agreements, join Libya in hiking their oil prices by 30 percent, and refuse payment in dollars.
That same day news broke that during a recent unannounced visit to Saudi Arabia President Anwar Sadat of Egypt had won a pledge from King Faisal to “restrict oil production increases to the level of 10 per cent annually by the end of the year if American policy in the Middle East does not change.” The problem for the United States was that it had been counting on Saudi Arabia to more than double production from its current output of 8.5 million barrels to 20 million barrels per day by 1980 to meet the growing chasm between domestic oil production and America’s galloping rate of oil consumption. America could produce no more than 11 million barrels of oil per day even though it would shortly require 24 million for the economy to maintain current growth levels. Western economies including Japan were projected to see their oil consumption rise from 1.6 billion tons in 1970 to 2.8 billion tons by decade’s end. Where would it all come from? Middle East oil producers had so far managed to keep pace with Western consumer demand by boosting their production rates by an annual 6.9 percent. Saudi Arabia’s oil production had soared by 30 percent in the past year alone. But Faisal’s threat to reduce rather than increase production threatened to drive Western economies to the wall. In a stroke it would wipe out surplus capacity in the market, pit consumers against each other in a mad scramble for scarce energy resources, and potentially destabilize financial systems worldwide by provoking a severe recession. The Saudi king had in effect placed his thumb on the windpipe of the American economy. “Faisal is no bluffer and we’re playing for real marbles now,” a worried White House official admitted to Newsweek. “We’re talking about the flywheel of our economic system; if anything goes wrong with it, America stops.”
Despite explicit warnings provided to them by the leaders of Iran, Jordan, Saudi Arabia, and the Soviet Union that Egypt was rearming with the intention of attacking Israel, Nixon and Kissinger deferred to the confident assurances of Israeli government officials, who regarded such predictions as preposterous. One warm Saturday morning in mid-May, Henry Kissinger sat down with Israeli foreign minister Abba Eban in Washington. Eban rejected intelligence reports warning that Egypt and its ally Syria were preparing to hit Israel. They lacked the firepower and tactical expertise to pull off a surprise attack. President Sadat would not be so foolish as to gamble his house on a war he could not possibly win. “The result would be catastrophic for them, militarily, politically, domestically, and internationally,” Eban assured Kissinger. “The humiliation at home; the Soviet Union would say we told you so.” Nor was an Arab oil boycott of the West a realistic option. Besides, their friend the Shah would step in to break it by releasing additional crude into the system: “But a boycott wouldn’t work, because Iran wouldn’t go along.”
Eban and Kissinger gossiped about Anwar Sadat’s supposed lack of smarts. “Sadat is not bright, but he can think a few moves ahead,” observed Eban. “He is not so volatile.” “That is not my impression,” replied Kissinger. “He shows no capacity for thinking moves ahead.” Kissinger explained why the Nixon administration was sitting on its hands and refusing Faisal’s entreaties to involve itself more in the Middle East. “As I have told your Ambassador, American passivity is due to a fortuitous combination of circumstances and cannot be counted on indefinitely. If you look at the constellation of leading officials, you cannot count on the continuation of the present . . . . So far, the Egyptian policy is so stupid there is no particular challenge.” He told Eban that he was “reluctant to get us into a position where both sides can shoot at us without considering any scheme.” The Israeli delegation returned home confident that Kissinger understood their concerns and shared their strategic assessment of the situation.
In August sixty-seven-year-old King Faisal received Aramco executives in Geneva. He made it clear that Saudi Arabia was under enormous pressure from its Arab brethren to turn its oil resources and revenues against Israel and its friends. Time was running out for the Nixon administration to reengage in the Middle East and nudge Israel toward dialogue. It wasn’t until February 1974 that Americans learned the detailed nature of the king’s warning. At a luncheon hosted in Washington by the Propeller Club, a merchant marine organization, guest speaker and Aramco vice president Michael Ameen Jr. described how King Faisal “told us in August, 1973, there would be another war within six months, and that he would have no alternative but to use oil as a weapon.” The Saudi monarch even confided that Arab states were prepared to sustain fifty thousand casualties. “His warnings went unheeded,” recalled Ameen. The White House never returned his calls, Ameen said. “We talked to the CIA, the Navy, the Army, the Marine Corps. They told us, ‘Mike, you’re out of your head—they don’t want to get the hell kicked out of them.’ They said, ‘Don’t worry about King Faisal—we’re going to give them Phantoms.’ ”
King Faisal also took to the airwaves and granted rare interviews with American foreign correspondents to explain his concerns. He called for balance in U.S. foreign policy in the Middle East and explained that it was not necessarily in Saudi Arabia’s interest to boost its oil production just to meet consumer demand in the West. “Logic requires that our oil production does not exceed the limits that can be absorbed by our economy,” he said. Pumping billions of dollars in oil revenues back into an economy already registering the world’s highest growth rate of 16 percent could be disastrous. Modernization had to proceed gradually and in stages. The king announced that Saudi oil production would not be increased until two conditions were met. First, he wanted the West to help industrialize and diversify the Saudi economy. Second, “a more suitable political atmosphere, hitherto disturbed by the Middle East crisis and Zionist expansionist policies, must be present.”
The White House was thrown into confusion. On September 5 Henry Kissinger met with Secretary of Defense James Schlesinger for an eight o’clock breakfast meeting at the Pentagon. The two onetime academic rivals at Harvard would shortly have to deal with a cascade of crises in the Middle East against a backdrop of domestic political turmoil. Their immediate, if admittedly forlorn, objective was to “keep the Persian Gulf [oil production and pricing] issues away from the Arab-Israeli conflict.”
“Let’s talk contingency plans,” said Schlesinger. “The Iranians could take Kuwait but not cross the Gulf.”
“The Shah wants to know if the F-14 and F-15 mix,” Kissinger replied. “[Israel’s Yitzhak] Rabin said he wouldn’t have the F-14.”
Their brief but revealing exchange confirms that military contingencies, including plans involving Iran and Israel, were being reviewed by the White House in the first week of September. The timing of the discussion is significant because it came one month before war broke out in the Middle East and six weeks before Arab states embargoed oil sales to the United States. Historians have assumed that the use of force was seriously considered by the United States only after the oil embargo began to bite in November. We now know that the trigger events for intervention were not the outbreak of war or the imposition of the oil embargo—two events that Kissinger had already decided were implausible if not impossible—but Libyan oil nationalization and Saudi threats to reduce the flow. Traditionally, the use of force in international affairs is the policy option of last resort, to be activated only when diplomacy comes up short. But in the absence of diplomacy itself, military action becomes less a choice than a necessity. The end of summer brought with it the cruel realization that the United States had allowed itself to be marginalized in the Middle East. It had lost control of its oil lifeline even as it allowed billions of dollars’ worth of assets to be expropriated.
Later in the day of September 5, President Nixon hinted at what was going on behind closed doors when he spoke to reporters. He insisted that he was committed to seeking a peace settlement in the Middle East. But he warned Arab oil states not to push him too far. “Oil without a market, as Mr. Mossadegh learned many, many years ago, doesn’t do a country much good,” said Nixon. Nixon liked to keep his adversaries on edge in the belief that he might use massive force against them—he called it his “madman” theory. That month Nixon and Kissinger were closely following events in Chile, where the CIA was involved in efforts to overthrow the elected government of President Salvador Allende, a Marxist who, like Colonel Qaddafi, had nationalized American corporate assets. It is likely that Allende’s fate was weighing heavily on Nixon’s mind when he invoked the specter of the deposed Mossadegh. But the president’s decision to prise Mohammad Mossadegh from his crypt during a standoff with Middle Eastern governments—and at a time when Watergate investigators were probing his financial ties to the Shah—was a pointless provocation. For two decades American presidents had observed a discreet silence on the subject of the 1953 coup, not wishing to embarrass the Shah by resurrecting old accusations of puppetry.
Nixon had also unwittingly tipped the issue of U.S.-Iran relations and his deal making with the Shah into the shark tank of Watergate congressional investigations and media scrutiny. The result was predictable. “Because of our relationship with Nixon, they started hitting us,” remembered Ambassador Zahedi. He was particularly worried about the tone of The Washington Post. “It was hardly market forces that threw Mr. Mossadegh out of office as premier of Iran in 1953,” Post editors scolded Nixon in a particularly vociferous editorial that outed the Shah’s CIA connections. “After a bitter dispute over his nationalization of British oil concessions, he fell in a coup ably and successfully supported by this country’s Central Intelligence Agency.” Washington Post columnists Rowland Evans and Robert Novak piled on the opprobrium, ridiculing Nixon’s attempt to compare conditions in 1973 with those of twenty years before. His threat of retaliation against Arab governments was “dangerous poppycock . . . a hip-shooting challenge uttered without careful forethought.” The president had “surprised his own aides” and “stunned the oil states of the Mideast, most particularly Saudi Arabia.”
There was backlash in Arab capitals too. Nixon’s threat coincided with a rash of news reports of the Marine exercises in the Mojave and an article in the French weekly Nouvel Observateur that described a joint American and British plan “to drop paratroopers in strategic oil and communications centers with the help of Iran and Israel.” Invasion rumors swept the Middle East. A top-ranking Saudi official asked, “Do they think in Washington it is so easy to occupy oil fields with troops? Let them come and see.” In Libya, Colonel Qaddafi warned that the “Nixon gang” wanted to take over his country. “The backlash is definitely there,” a senior U.S. diplomat told The Washington Post. “More and more, Arab officials are convinced that justification for some kind of military operation against the oil countries is being built by the United States. This feedback is in itself becoming a factor in our relations with the Arabs—a negative factor.”
The president’s own advisers were appalled but for a different reason—it dawned on them that Nixon still believed Western consumers retained influence in the oil market. “My God, doesn’t he realize that every single incremental barrel of oil today has to come from the Middle East,” complained an adviser. Asked by a reporter why Nixon had decided to dredge up Mossadegh’s name to threaten Arab governments, a White House official snapped back, “Because he was advised by a fool.” The president, said the official, had since been “readvised.”
Oil producers made their feelings clear when they announced plans to meet in Vienna on October 8 to raise oil prices and scrap the terms of the 1971 Tehran Agreement. The contracts they had previously signed with the oil companies “are no longer compatible with prevailing market conditions.”
The combined armies of Egypt and Syria attacked Israel on October 6, 1973, the high holy day of Yom Kippur. They punched through Israeli lines, pouring across the Suez Canal in the south and storming the Golan Heights in the north. Troops from Saudi Arabia, Iraq, Jordan, Kuwait, Morocco, and Tunisia rushed to join the fray. The fourth Arab-Israeli war was underway.
In Tehran, the Shah summoned his chief of staff and army commander to discuss Iran’s options. The Shah was distressed that his warnings to Nixon and Kissinger about the prospects for war had been ignored. He wisely decided to keep Iran on the sidelines. He agreed to lend Iranian aircraft to the Arab states for strictly domestic use, refused Moscow’s request that Soviet military aircraft be allowed to fly over Iranian airspace, and quietly assured the Israelis that Iran would keep selling them oil. But he instructed his court minister to convey his frustration to Ambassador Richard Helms: “Tell him he’s under an obligation to find some sort of solution to this blasted war. It’s America’s inaction, or possibly America’s impotence, that has landed us all in this mess.”
Israeli leaders informed the Nixon administration that they could not hold two battlefronts for long. Faced with the prospect of Arab armies sweeping down from the Golan into Israeli towns and settlements, Prime Minister Golda Meir activated Israel’s nuclear deterrent and had a Mirage jet loaded with an atomic bomb readied for takeoff. The message was clear: Israel would not burn alone. Officials in Washington watched in shock as their strategic assumptions about Israeli military superiority crumbled. Early on the morning of October 10, Schlesinger phoned Kissinger to inform him that the Soviets were resupplying Arab forces and that King Faisal had committed Saudi troops. He made it clear that as far as the Pentagon was concerned all options concerning the Saudis were now on the table. Faisal had crossed the line and thrown in his lot with the radicals. “So I think that we are going to get into a position in which all of our interests in Saudi Arabia are at risk and it might be desirable to examine the fundamentals of our position—”
“Well, what are the fundamentals of our position as you see it?” asked Kissinger.
“Well, the fundamentals are that we may be faced with the choice that lies cruelly between support for Israel, loss of Saudi Arabia and if interests in the Middle East are at risk, the choice between occupation or watching them go down the drain.”
“Occupation of whom?”
“That would remain to be seen—it can be partial.”
“But which country are we occupying?”
“That’s one of the things we’d like to talk about,” said Schlesinger.
“Who’s we?”
“Me.”
“Okay, I have heard an urgent message which I’ve got to take up with the President and I’ll be back to you later this morning and we’ll get together this morning,” said Kissinger, ending the conversation.
Kissinger’s day of intense drama had just begun. His efforts to reach a cease-fire in the Middle East while discussing plans for U.S. military intervention came to a dramatic and historic pause at 2:05 P.M. when he received Vice President Spiro Agnew’s formal letter of resignation. It was a procedure required under the terms of the Presidential Succession Act of 1792. Agnew had been under investigation for graft during his term as governor of Maryland. Under a plea bargain reached with prosecutors, the unhappy vice president agreed to resign in order to avoid a prison sentence. Within an hour private citizen Spiro Agnew stood in a Baltimore courtroom and “with barely trembling hands” pleaded no contest to charges of tax evasion. Two days later President Nixon nominated Gerald Ford, the sixty-year-old Republican minority leader in the House of Representatives, to replace him.
There was drama too in Vienna, where Persian Gulf oil producers renegotiating the terms of their contracts with Western oil companies abruptly quit the talks and threatened unilateral price increases. Abu Dhabi, Iran, Iraq, Kuwait, and Saudi Arabia were in no mood to compromise against the backdrop of war in the Middle East and crisis in Washington. They threatened to hike prices by 50 percent, well above those set by Libya and Algeria. Industry negotiators refused and warned them that such a big increase “would have exceptionally serious and wide-ranging implications, not only for the companies but for the world economy at large.” Inflation would rise in the West and such a rapid transfer of wealth could destabilize the international financial system. Arab leaders decided to reconvene in Kuwait City in two weeks to discuss their options.
The Israelis meanwhile were bogged down, having lost a quarter of their air force and suffering hundreds of battlefield casualties. At 12:49 A.M. on Saturday, October 13, Kissinger and Schlesinger held a tense telephone conversation in which the secretary of state implored his colleague to get moving with an airlift of military equipment. Kissinger was panicked. Israeli commanders had told him they were running so low on ammunition and spare parts that a counteroffensive they had mounted against the Syrians in the Golan Heights was in danger of collapse. Kissinger knew that for a diplomatic deal to be brokered, the Israelis must be in a stronger military position. Schlesinger insisted that the Israelis had given him no indication they were in trouble. “Well they simply cannot be that short of ammo, Henry,” he countered. “It is impossible that they didn’t know what their supply was—and suddenly they run out of it.”
Kissinger needed to keep Israeli guns in action for at least another twenty-four hours until a cease-fire resolution went before the Security Council. He confided to Schlesinger that Israeli generals were afraid to speak candidly about their dire predicament because “they don’t trust the people in the room.” Israeli army headquarters was in a shambles. “Look, they have obviously screwed up every offensive they’ve conducted and they are not about to take the responsibility themselves,” he exclaimed. “I have no doubt whatever that they are blaming us for their failures.”
“Are they short of ammo or aren’t they?” demanded Schlesinger. The distinction was critical because, as the defense secretary knew, any decision by the United States to airlift military supplies to Israel would provoke retaliatory action from Arab oil producers and possibly lead to an oil embargo against the West.
“How the hell would I know,” snapped Kissinger. The White House was operating in an information vacuum. Schlesinger worried that the Israelis were trying to, as he put it, “suck us in.” Henry’s behavior was also a concern. “As Israel began to fall apart, Henry began to fall apart,” he remembered. Kissinger and Schlesinger both understood that the United States was in a dilemma, faced with a choice between losing Israel or losing Arab oil. The American position in the Middle East was untenable. Kissinger told Schlesinger that the Israeli officials he had spoken to were “so terrified now” of a renewed Egyptian drive into the Sinai. They could not hold both fronts for much longer.
“That’s incredible planning on their part,” answered an exasperated Schlesinger.
“Look, they fucked it up,” fumed Kissinger.
“Hm huh. Okay, let me try to find out what the hell their status of supplies situation is. We had the impression they had 15 days of supply.”
This was the fog of war. Kissinger was furious with the assurances the Israelis had given him over the past year. “Because you know what happened—as well as I do,” he told Schlesinger. “These guys got the whole thing screwed up—every time. They are living in 1967. All day long yesterday they were telling me they were headed for Damascus and they were going to stop on the outskirts . . . . Now they obviously can’t make it.”
Kissinger and Schlesinger agreed to move military supplies through the Portuguese Azores. The next morning The New York Times reported that the administration had agreed to ship F-4 Phantom jet fighters to Israel to make up for its losses: “The step is being taken with unusually tight secrecy by the Administration, which is deeply concerned about the repercussions it could have on American relations with oil-producing Arab states as well as on Soviet actions in resupplying Egypt and Syria.”
Nixon’s national security team reconvened just after nine o’clock on Sunday morning, October 14. They were joined by the White House energy adviser, former governor John Love of Colorado, and special energy consultant Charles DiBonna. Their inclusion was a belated acknowledgment by Kissinger that the issues of the oil supply and the Middle East conflict might now converge. Kissinger asked his colleagues to come up with policy options in the event—still unlikely as he saw it—of interruptions to America’s oil supply in response to the airlift. They should develop contingencies for a possible Arab oil embargo. He asked: “What do we do if the oil is cut off? What kinds of problems will we have?”
Israeli foreign minister Abba Eban had assured Kissinger back in May that in the event of an Arab oil embargo the Shah would step in and break it by ramping up Iran’s oil output. But Eban had been wildly overoptimistic—it turned out that Iran had virtually no spare capacity. There was no way the Iranians could flood the market with enough oil to counter any Arab boycott. “How much could the Iranians increase?” asked Schlesinger. “Five-and-a-half to eight million?”
Love had some bad news for the White House: “Iran could perhaps get 200,000 barrels a day more but they have already kicked it up.” Any hopes the administration had of breaking a future embargo with the Shah’s help were dashed.
“If it happens it will happen next week,” said Kissinger. “We are going to need a plan. It should consider a cutoff in the U.S. and a cutoff to Japan and Europe as well.”
“To do so, we also have to consider consultations on the Hill, putting the President on TV, and the timing of what we do now,” added Love. “We have to be ready.”
“We don’t want to push the button now and cause panic,” Kissinger advised. “We need to have the program ready for the day when they do it.”
Deputy Secretary of Defense William Clements described a cutoff of oil supplies from the Middle East as “a mega problem,” one that could not be fixed by conservation at home, cutting the speed limit, or increasing domestic oil production. Schlesinger added, “On timing we must weigh the advantage of getting something out on the problem. If it is indicated this will happen, we will want to consider the deterrent impact.” Defense was making it known that military contingency planning might have to come into play.
Kissinger was less sure: “So far no one has threatened us, but we have no program.”
“We could announce something quickly,” said Love.
“I wouldn’t provoke it or threaten them,” Kissinger replied. He explained that he had not heard any mention of a cut-off in his talks with Arab envoys: “All I have received are hysterical calls from oil companies. The Saudis have been better than any. We have good commercial relations. Some idiot says we shouldn’t have said that but I don’t want to challenge the Arabs to a test of their manhood.”
“When we resupply to Israel, at that point we will have a problem,” said Kenneth Rush of the State Department.
They looked at the impact of an embargo on the domestic economy. The crisis team was asking questions that should have been asked and could have been answered months earlier. “It will cause restrictions on the domestic economy,” observed Clements.
Love concurred: “We would have to make some shifts and close down some factories.”
The stunning fact was that even at this late hour in the crisis no one in the administration could offer specifics on how much spare fuel capacity was available to tap in the United States in the event of an emergency.
“In a short time there would be shortages in everything—perhaps a month,” warned Love. But when someone suggested that the group consider worst-case scenarios, Kissinger refused, saying, “Let’s not talk about consequences. We don’t want to make it happen. We should be low key.”
The following day, Saudi oil minister Zaki Yamani warned that if the administration undertook an aerial resupply operation of Israel, his government would retaliate by slashing its oil output by 10 percent immediately and then by 5 percent each succeeding month. Saudi production was running high at 8.5 million barrels per day, with 600,000 of those barrels bound for the United States. Reports were also circulating that Kuwait was considering a halt to petroleum exports to the United States.
At this critical juncture Richard Nixon roused himself and like his hero Teddy Roosevelt decided to charge up San Juan Hill one more time. On Tuesday, October 16, the president welcomed recipients of the National Medal of Honor to the White House. Nixon told his audience that he was prepared to use force in the Middle East and referred to “the policy we followed in 1958 when Lebanon was involved” and “the policy we followed in 1970 when Jordan was involved.” In 1958, the Eisenhower administration had landed Marines in Lebanon to put down an insurrection. Twelve years later, Nixon had come close to dispatching airborne troops to Jordan to help King Hussein crush an uprising by the Palestine Liberation Organization. Nixon’s threat to use force might have worked in another year, but Vietnam had damaged perceptions abroad of American resolve and Watergate had shattered the public trust in Nixon’s leadership at home. Worse, the U.S. economy was not capable of absorbing a major blow like an oil embargo.
The next day, Arab oil ministers meeting in Kuwait agreed to monthly 5 percent cuts in production until Israel evacuated the territories it had seized in 1967. Separately, the six Persian Gulf oil-producing nations, including Iran, announced a double-digit percentage increase in the price of a barrel of light Arabian crude from $3.01 per barrel to $3.65, an increase of about 21 percent. The game of leap-frogging that Kenneth Rush had warned Kissinger about back in May had started. The next day Saudi Arabia sharply responded to the airlift of American weapons and supplies to Israel by slashing its oil output by 10 percent. Abu Dhabi announced that it would ban shipments to the United States altogether.
The mood darkened considerably on October 19 when Colonel Qaddafi imposed an oil embargo against the United States and raised the price of a barrel of Libyan crude from $4.90 to $8.92, which accelerated the sequence of price escalations for the rest of the oil producers. Libya’s oil was a mainstay of the economy in New York City. The full impact of price increases and new taxes agreed to by Persian Gulf producers now became clear: the posted price of light Arabian crude had jumped by 70 percent to $5.11. “We are masters of our own commodity,” declared Sheikh Yamani. “Stunned and confused” oil industry analysts warned of impending fuel shortages along the eastern seaboard. A private industry group in Washington warned with considerable understatement that “what the producing countries appear to have done is to have raised the price of running a factory, heating a home, and powering a car around the world by an unprecedented degree.”
In Washington, meanwhile, a White House spokesman made the remarkably ill-advised statement that the United States would not take the Arab oil embargo seriously until “at least one million barrels of oil a day of supply had been cut off.” King Faisal was glad to oblige. The next day he ended all shipments of oil to the United States. Saturday, October 20, was a historic day that began with a declaration of economic warfare by Saudi Arabia against the United States and ended with demands for the president’s impeachment. American television viewers watched in disbelief as news anchormen broke into regular late night broadcasting to report that President Nixon had fired Watergate special prosecutor Archibald Cox, abolished the Watergate task force, and conducted a purge of his own Justice Department. Nixon accepted the resignation of Attorney General Elliot Richardson and sacked Richardson’s deputy, William Ruckelshaus, for disloyalty when both men refused Nixon’s order to fire Cox. (The number three Justice official Solicitor General Robert Bork fired Cox.) The calls for Nixon’s resignation came on a day when the country still lacked a vice president—nominee Gerald Ford had only begun the process to win congressional confirmation—and while the secretary of state was in Moscow conferring with Soviet leader Leonid Brezhnev on the war in the Middle East.
King Faisal’s decision to cut off fuel supplies was bravely played down by a White House in the midst of chaos. Officially at least, the administration was “not surprised” by the Saudi action. Unofficially, the White House was stunned. The next day, Kuwait, Qatar, Bahrain, and Dubai announced that they were joining Saudi Arabia, Libya, Algeria, and Abu Dhabi in halting oil shipments to the United States. The embargo was complete.
Secretary of State Henry Kissinger arrived in Tel Aviv from Moscow on October 22, the same day that a Middle East cease-fire approved by the United Nations Security Council took effect. Flush with American firepower from the airlift, and having trapped Egypt’s Third Army on the east bank of the Suez Canal, Israeli leaders weren’t ready to settle just yet. With Kissinger’s tacit assent they fought on past the deadline to consolidate their last-minute territorial gains. It was an extraordinary gamble and one that caught the attention of Soviet leaders in Moscow already considering an appeal for help from President Sadat.
Kissinger was back in Washington on the evening of Wednesday, October 24, when Leonid Brezhnev challenged Nixon to join him in sending peacekeepers to the Middle East to enforce the cease-fire accords and separate the combatants. Brezhnev made it clear that he was prepared to land Russian troops in Egypt regardless of Nixon’s decision. Moscow would not tolerate the destruction of Egypt’s Third Army. To complicate matters, Brezhnev’s ultimatum occurred on an evening when Nixon showed every sign of collapsing under the strain of Watergate. During a telephone call to Kissinger, the president was “as agitated and emotional as I had ever heard him.” Nixon railed against “those bastards” in Congress who were kicking him around: “They are doing it because of their desire to kill the President. And they may succeed. I may physically die.” The president intimated he was prepared to quit: “I would like them to run this country and see what they do.”
By the time Nixon’s rump national security team, the Washington Special Action Group (WSAG), gathered at the White House at 10:40 P.M., the president had passed out in his bed, emotionally spent and reportedly in a drunken stupor. Kissinger and White House chief of staff Alexander Haig concluded that Nixon was incapacitated and unable to participate in the crisis meeting to discuss the challenge from Moscow. Kissinger asked Haig if he should wake up the president, but Haig said no. A half hour later, Haig asked Kissinger if he had spoken to Nixon. “No, I haven’t,” replied Kissinger. “He would just start charging around . . . . I don’t think we should bother the President.” They agreed that the president was “too distraught to participate in the preliminary decision.”
The scene that unfolded over the next several hours hovered between great drama and high farce. Kissinger and Haig did not brief their colleagues—the director of Central Intelligence, the chairman of the Joint Chiefs of Staff, or the secretary of defense—on the president’s true condition. Instead, they engaged in an elaborate ruse. Kissinger ran the proceedings while Haig, “who was shuttling back and forth between the residence and the [Situation Room] where the meeting was taking place, reported that the president approved our recommendations,” recalled Schlesinger. “Haig reported that the President was about and following events.” The others were unaware that Nixon slept through one of the most dangerous nights of his presidency.
The crisis team was particularly concerned about intelligence reports suggesting that the Soviets were preparing to fly eight transport planes to Egypt and had “stood down their forces in East Germany, stood down their aircraft.” That “conveyed to us the possibility that they were seriously contemplating moving in,” said Schlesinger. There had been a substantial buildup of nuclear-armed Soviet naval vessels in the Mediterranean. Iran’s northern border was also a potential flashpoint. “We had some concern about the northern Iranian border, although the Iranians had a lot more concern than we did.” The Pentagon knew that it would not be easy for the Russians “to punch through [the Elburz Mountains] with ground forces.” Of more immediate concern was their awareness that the Soviets had recently developed a highly effective rapid mobility force. Schlesinger recalled that the group worried that Soviet “air transport troops would swoop down into the Arab states including the oil fields.” The wild card in their deliberations was Watergate. They wondered if Brezhnev, “hearing these calls about impeachment of the President in regard to the Watergate issue, might be concluding that the United States was paralyzed and could not act. And so our action that evening—which may have been more forceful and visible than necessity dictated—was driven in part by our concern that the Soviets might have concluded we were paralyzed and that we could not forcibly react.”
A few minutes before midnight the seven officials in the Situation Room agreed to recommend that the president raise the readiness level of the United States military. The military’s Defense Condition (DEFCON) alert system ascended numerically from DEFCON 5, the lowest level of readiness, to DEFCON 1, which was war. Nixon’s aides decided to raise the alert to DEFCON 3, which, as explained by Kissinger, “increases readiness without the determination that war is likely; it is in practice the highest stage of readiness for essentially peacetime conditions.” The secretary hoped that if the United States declared a worldwide nuclear alert and placed the military on standby, Brezhnev would withdraw his threat to send troops to the Middle East. They meant to call his bluff.
Haig left the Situation Room, ostensibly to present the president with their recommendation. When he returned, he told his colleagues that Nixon (who was still asleep) approved their decision. Kissinger turned to Admiral Thomas Moorer, the chairman of the Joint Chiefs, and asked him to implement the president’s “directive.” To reinforce the message to the Soviets, Nixon’s aides placed the 82nd Airborne Division on alert, directed three carriers, the Franklin Delano Roosevelt, Independence, and John F. Kennedy “to move at full speed” toward the Eastern Mediterranean, ordered nuclear bombers readied for takeoff, and had U.S. submarines “sped to secret positions off the Soviet coast, prepared to launch.” Kissinger later recalled that not everyone in the room agreed with the urgency of the threat. As he later recounted, he addressed the skeptics this way: “If we can’t do what is right because we might get killed, then we should do what is right. We will have to contend with the charge in the domestic media that we provoked this. The real charge is that we provoked this by being soft.”
The White House communicated its intent to Moscow. For a brief moment the world faced the prospect of a showdown between the nuclear superpowers. Brezhnev withdrew his threat. The next morning at eight when he received a personal briefing from Kissinger and Haig, Nixon was informed that he had declared a worldwide nuclear alert. He applauded their toughness. Basking in the presidential praise, Kissinger boasted to Haig, “You and I were the only ones for it. These other guys were wailing all over the place.” In Tehran, the Shah was “dreadfully anxious” to hear of the alert but went ahead with a scheduled trip to watch a performance of Carmen. He was certain the Soviets would not have backed down without the speedy response from Washington.
Once the crisis had passed Henry Kissinger telephoned Israeli ambassador Simcha Dinitz demanding to know why Israeli intelligence officials were challenging the alert decision. He said that “on every television I heard yesterday that Israeli intelligence was of the view that there had been no threat of Soviet intervention.”
“That I did not even hear,” said Dinitz.
“I heard it from—you know it was Israeli intelligence officials were not aware of any unusual activity.”
Dinitz described the reports as “ridiculous.”
“Well, what I would like to stress to you, Mr. Ambassador, is this: If you could use whatever influence you have with the press here—I don’t give a damn for ourselves because the historical record will support us. But we are not out of the woods yet and if the Russians look at this and see that when there is a crisis we then get flyspecked by the press, they may try again.” This last point—that press coverage critical of the decision might tempt the Soviets to risk a second confrontation—stretched the limits of credulity. Kissinger had just invited Israel’s embassy to help him manipulate domestic American public opinion to justify an action that had provoked a worldwide panic. “I mean, if you look at the Czechoslovak situation, they had a number of scares before they moved.” He urged Dinitz to lobby senators, congressmen, and journalists in support of the alert.
“Because we took enormous risks,” he continued, then implied the administration might have to apply pressure to Israel on a peace for land deal. “You may not like what we do in the U.N . . . . ”
“That’s a different story . . . ”
“But that is a question of tactics—on strategy we took a fantastic risk.”
“Right, right,” said Dinitz. “Absolutely. No, I am in complete agreement with you. And yesterday [redacted] was done and we will do more of it today.”
The “fantastic risk” had been a bluff. Meanwhile, the same officials who had declared a worldwide nuclear alert to prevent Soviet troops from landing in Egypt were moving ahead with their own plan for military intervention in the Persian Gulf. With the cease-fire holding they could finally turn their attention to the crippling consequences of King Faisal’s oil embargo.
Prior to the embargo the Saudis had supplied the U.S. Seventh Fleet in the Pacific with 120,000 barrels of oil per day. Those shipments had now ended. Also affected by the fuel cutoff was the U.S. Sixth Fleet in the Mediterranean. The Sixth Fleet relied on Arab oil supplied from Italian refineries. U.S. officials feared that once governments in Western Europe implemented fuel rationing, there would not be enough oil to keep the fleet at sea. The Mediterranean would then be exposed to a Soviet flotilla of ninety vessels that had just been outfitted with a battalion of marines trained and equipped for landing operations. A second blow for the U.S. strategic position came on October 20 when Bahrain announced that it was giving the U.S. Navy one year to close down its small naval station, America’s last base in the Persian Gulf. Iraq meanwhile had granted a Soviet naval squadron docking privileges at a new port being built with Russian expertise at Umm Qasr. Schlesinger for one had had enough, telling Kissinger, “Well, we only have one facility and I am not sure we shouldn’t move in and . . . ” Kissinger finished his train of thought: “We are going to move on that thing.”
Pressure was building within the ranks of the United States military to end what many officers regarded as a national disgrace. “The Naval War College was filled with Marine colonels walking around saying, we’re going to put those Goddamned rag heads back on their camels,” recalled a former senior official. There was outrage too because the Air Force and Navy, the two services most affected by the Saudi embargo, were heavily involved in building the kingdom’s defensive systems. The Air Force was about to deliver the first shipment of Northrop F-5E jet fighters. The Saudis were also seeking permission from the United States to buy thirty Phantom F-4 aircraft. The services had been contracted to install an early warning radar defense system. Now, worried about the potential for an American invasion, Saudi officials had asked the contractors to speed up their work. Yet even as Saudi Arabia relied on American goodwill and treasure to defend it from regional predators, the kingdom’s oil minister, Sheikh Yamani, wagged his finger at Americans and piously declared, “We are tracking down every last barrel of oil that reached the United States.”
Officials at the Defense Department believed that a show of force was needed to restore at least the perception of American power in the Persian Gulf. Events had spiraled well beyond their control. Even the smallest thumbnail-size sheikhdoms felt free to act out in the era of Vietnam and Watergate. This posed a problem for U.S. policy makers. It greatly heightened the risk that a smaller state, say a Libya or an Iraq, might go too far with its provocations and cross an imaginary trip wire that invited massive retaliation from the outside. Lines of authority had to be clearly demarcated to restore order and reduce the possibility of a fatal error or reckless gamble that might trigger another war. All the players in the October crisis—the United States, the Soviet Union, Israel, and Arab governments—had mistaken each other’s intentions and motives. They had committed a series of blunders that had ended in a nuclear showdown. Virtually unarmed oil states felt free to declare economic warfare against the United States. Then there was the Soviet Union. White House officials were convinced that Brezhnev would never have dared threaten to land Russian troops in the Middle East had he respected the U.S. military posture in the region. The United States had to find a way to reassert American power in the Middle East and at the same time smash the oil embargo. The White House could not accept a situation in which the United States was chased out of the Middle East, its armed forces ran out of gas, and allied economies throttled by the actions of a few lightly armed oil potentates.
The White House WSAG crisis group met over breakfast on Saturday, November 3, in the Map Room. The Saudis had sent troops to fight against Israel. They had imposed an oil embargo against the United States that had the potential to cripple the Air Force and Navy. Now they were threatening to tear up the terms of the 25 percent participation deal they had signed with Aramco a year earlier. “The Saudis are getting heady over the power of oil,” said Schlesinger. “I am not sure they have a future aside from the West. They can’t survive spitting fire and brimstone at the West.”
“The Shah would play that game,” replied Kissinger. “He is raring to go. The Saudis are having trouble surviving in this kind of world and they have to be more radical than the radicals.”
Schlesinger believed he had found an ideal testing ground to restore at least the illusion of American power in the Middle East and cower the Saudis. Fifteen years earlier, before the discovery of oil in Abu Dhabi, the capital of the United Arab Emirates had been a fishing village. In 1973 its native population of thirty thousand enjoyed an annual per capita income of $100,000. Abu Dhabi was close to the mouth of the Persian Gulf and made for a convenient springboard from which the United States could launch future military strikes across a broad swath of the region. Abu Dhabi’s twenty-seven-year-old oil minister had been the first to impose an oil embargo against the United States. “I was prepared to seize Abu Dhabi,” Schlesinger recalled. He envisioned a clean surgical strike to land American troops in the heart of Arab oil country. “Something small. But nothing big. Militarily we could have seized one of the Arab states. And the plan did indeed scare them and anger them. No, it wasn’t just bravado. It was clearly intended as a warning.”
If it was a bluff, it was one with sharp teeth. Schlesinger anticipated an amphibious invasion using the Marines. They had spent August training in the Mojave for just this type of eventuality. “Abu Dhabi would give us what we want,” he told Kissinger, CIA director William Colby, Moorer, and Scowcroft.
“The Shah is cynical enough to discuss this with us,” said Kissinger, who liked the idea. He had a stopover planned in Tehran on his way to China the next week.
A date for military intervention was set for the last ten days of November. At that time several American destroyers would be in place at the entrance to the Persian Gulf to take part in previously scheduled CENTO naval exercises. It would be convenient to have military forces from the United States, Great Britain, Iran, and Turkey hovering just off the coast practicing such war drills as amphibious landings. The aircraft carrier USS Hancock with more than eighty attack aircraft was steaming toward the area. “We need a public line on the Hancock when it arrives,” said Schlesinger.
“Routine. An exercise that we have been planning a long time,” replied Kissinger. “I will discuss it with the Shah. If he wants in, I will let you know.” He was about to leave in a few days for the Middle East and China and fretted that the Soviets still had not gotten the message from two weeks earlier. “The Russians may make a run at us while I am away,” he said. “What can we do?”
“Turn Israel loose on the Third Army and tell Sadat if he lets the Soviets loose, it will be very bad,” replied Schlesinger. They could also work with Turkey to close the Bosporus Straits, a key choke point through which the Soviets had been moving nuclear-armed warships.
A few hours later, on Sunday, November 4, the Shah received formal notification that a U.S. naval task force led by the carrier Hancock and accompanied by destroyers was moving toward a holding area off the coast of Oman. Helms asked the Shah if he would open Iranian airfields to American P2 spy planes and short-range flights to the Hancock for a period of twenty days. He also sought Iranian assurances of fuel deliveries to the task force. The Shah was willing to comply so long as the fuel was supplied indirectly through the Iranian navy.
Washington was now leaning heavily on the Shah, perhaps in ways Nixon and Kissinger had never intended. Iranian ports, airstrips, and fuel depots were opened to the U.S. military and supplies made available for American use during a major international crisis. At first glance the Nixon Doctrine appeared to have paid off with interest. Yet there were risks involved that neither Washington nor Tehran had properly thought through. For one thing, the deal was guaranteed to antagonize Iran’s northern neighbor. Under the terms of a 1962 agreement signed with Moscow the Shah had agreed to never “allow any foreign power to establish rocket-launching sites of any kind on Iranian territory.” The Soviets were naturally anxious to prevent Iran from being used as a base for U.S. intervention on its southern border. The Shah’s secret decision to supply the U.S. naval task force during the October crisis did not violate the terms of that treaty, but it did make him vulnerable to the accusation that the United States did not need to construct bases of any kind in Iran when it enjoyed free and unfettered access to Iranian facilities. There were also repercussions for the United States. Washington was in the humiliating position of having to ask an ally’s permission before taking the measures it deemed necessary to defend its national interest. There had been a subtle but profound power shift within the relationship.
The Shah knew better than anyone just how eroded American power was in late 1973 and the extent to which the Nixon administration relied on his continued cooperation and goodwill. The political paralysis induced by Watergate and the growing mood of isolationism in the U.S. Congress made him question America’s ability to defend the interests of its allies when it could barely defend its own. Over the summer King Hussein of Jordan let the CIA know that during a recent visit to Tehran the Shah had “opined that the Watergate affair was unfortunate for everyone since it appeared to have brought the U.S. Government to a standstill. There were many problems between the U.S. and its friends which need attention, the Shah continued, but these days they did not seem to be receiving it.” His confidence in U.S. intelligence gathering had eroded to the point where he stopped receiving fortnightly reports from the CIA station chief in Tehran.
Kissinger arrived in Riyadh, Saudi Arabia, on November 8 for a three-hour discussion with King Faisal. Since the imposition of the embargo Saudi oil production had fallen from its daily average of 8.3 million barrels to 6.2 million barrels. The discussion took place in a tense atmosphere. Both men knew that just off the coast lurked enough naval firepower to reduce Faisal’s kingdom to rubble. The Hancock was a reminder of who really wielded power in the relationship. Saudi Arabia was little more than a giant filling station whose primary goal was to service the needs of the industrialized democracies, as the United States saw it. Faisal intimated that he was ready to reach a deal to end the embargo. “You can make Israel withdraw immediately in the space of three weeks,” Faisal implored Kissinger. The king pleaded, “Can’t you help me? Can’t you give me Jerusalem?” An unbending Kissinger told him, “That’s the last. Our enemies would like to hang us up on a tough point like that one. Give us time and we will do it.” The challenge now was for the White House to walk Faisal back from the edge with his honor and American integrity intact. Kissinger had the opening he believed he needed to pursue diplomacy.
On November 19, the same day the CENTO exercises kicked off in the Persian Gulf, the White House sent reassuring signals that the United States had decided “for the time being not to retaliate against Arab states.” But lest anyone doubt American resolve, two days later Kissinger announced at a press conference that the administration would consider “countermeasures” if economic pressures continued “unreasonably and indefinitely.” Washington would not tolerate a situation in which it was subjected to economic pressure while trying to negotiate a Middle East peace deal. It was the first time a U.S. official had publicly floated the idea of using force to smash the embargo. Sheikh Yamani issued a blistering response, threatening to slash Saudi oil production by 80 percent if the Western powers took countermeasures to break the embargo, and warning that military action would be suicidal for the developed world “because your whole economy will definitely collapse all of a sudden. There are some sensitive areas in the oil fields in Saudi Arabia which will be blown up.”
The threat to blow up Saudi oil installations was no bluff. Throughout the region Arab governments were making contingency plans to defend their assets by rigging them with explosives. Anticipating a possible American invasion, Kuwait laid land mines around its oil wells and announced it could set them off “at a moment’s notice.” King Faisal also felt the need to publicly reiterate his hard-line demands for the withdrawal of Israeli forces to 1967 borders, recognition of Palestinian rights, and a restoration of “the Arab character of Jerusalem.” But behind the scenes the king tepidly reached out to the White House. He was no Qaddafi and he had no stomach for taking on the American superpower. The White House also knew that Faisal credited Nixon with overthrowing the Libyan monarchy in 1969, a fact they used to their psychological advantage. “They think we knocked off [King] Idris,” Schlesinger told Nixon’s war council. In this instance at least, Nixon’s “madman” theory worked as intended.
At 10:15 A.M. on November 28, 1973, Kissinger phoned Schlesinger to tell him that he had “a very interesting message from Saudi Arabia saying Faisal would like to ease the boycott and is looking for an early occasion which will provide him the way when the peace conference is agreed to—in the form of a presidential letter.”
“Very good,” said Schlesinger. This suited his purposes because he needed more time to assemble his amphibious task force. “That bears on the subject I was going to discuss which is that it will take six or seven weeks anyhow to accumulate the Marines in the Indian Ocean.” The administration’s carrot-and-stick approach meant that while Kissinger explored diplomatic options, his colleague over at Defense readied the Marines for action in case negotiations failed. The aircraft carrier Hancock would be their vehicle for the seizure of Abu Dhabi.
They believed they had the breakthrough they were looking for. On Thursday morning, November 29, WSAG, the president’s crisis group, convened for two sessions in the Map Room. Kissinger briefed them on his talks with King Faisal, who, he reiterated, was in a real bind. The king “is a friend of the United States, but he is pressured by radicals. So he is leapfrogging the radicals so he isn’t embarrassed by his U.S. relationship . . . . I get the impression that they are blinking.”
“Yes, they are looking for ways to get us oil,” observed CIA director Colby.
“They are turning up the screws on Aramco,” noted Schlesinger. The Saudis had quietly told Aramco to start releasing more oil into the system. They were prepared to make secret deliveries of fuel to the U.S. Navy as a gesture of goodwill to avoid precipitating a clash with America. Five weeks after publicly imposing an oil embargo against the United States the Saudis were already breaking it in private to the U.S. military. The embargo had cracked. Faisal was now convinced that the administration was firmly engaged in the Middle East and that Nixon was committed to finding a negotiated settlement to the Arab-Israeli conflict. But most of all he feared for his life and his throne. Schlesinger’s bluff had done the trick.
“They seem to be looking for a way out,” Kissinger noted.
The crisis group agreed to relax the U.S. military posture in the Mediterranean. They decided to pull back the naval task force but keep it within easy reach of the Gulf. The Hancock was sent on a goodwill mission to Kenya and the destroyers steamed to Ethiopia, where they could be recalled at a moment’s notice. But as they settled down to lunch Schlesinger made a shocking admission: “We have no fuel for the B-52s in Southeast Asia.” Eighty-nine percent of the fuel used by U.S. forces in Southeast Asia originated in the Persian Gulf. American power projection was being compromised in the Persian Gulf, the Pacific, the Mediterranean, and now Southeast Asia. It was hardly any wonder that the Soviet bear was probing and nudging at the periphery, on the lookout for weaknesses in Western defenses. “We need to build a presence in the Middle East,” he urged his colleagues.
The Pentagon needed a base from which it could secure the nation’s fuel supply. Preferred locations faced the Indian Ocean and were in white-minority-ruled African states such as the city of Durban in South Africa and Lourenzo Marques (now Maputo) in Portuguese Mozambique. Ethiopia was a possibility. In West Asia, Prime Minister Zulfikar Ali Bhutto of Pakistan was eager to host the U.S. Navy and had offered to provide base facilities. It would take months, if not years, to negotiate leasing arrangements and build base facilities. Schlesinger proposed “putting 5–6,000 Marines into Bahrain,” but Kissinger told him not to bother: “They will never agree.” Kissinger’s own feelings of frustration boiled over during a strategy meeting on November 29 with his colleagues when he exclaimed, “Can’t we overthrow one of the sheikhs just to show that we can do it?”
Kissinger’s helplessness was shared by millions of Americans as the first effects of the oil embargo were felt. “The energy crisis is like Watergate. We know something is wrong but we don’t know quite what it is,” said a Massachusetts school superintendent. Dramatic news reports spoke of the last fully laden oil tankers streaming toward the eastern seaboard, bucking their way “through the wind-blown Atlantic,” headed for oil refineries along the East Coast. President Nixon went on national television to announce strict limits on weekend sales of gasoline, a blackout on all unnecessary outdoor lighting, and voluntary compliance with a new reduced highway speed limit. The administration announced plans to seek emergency powers over the fuel supply and to reduce private automobile use by 30 percent. The White House was assessing the impact of a 9.6 percent jump in the cost of living for the month of October, the first direct result of recent increases in the price of oil. It now estimated that the oil embargo meant an 18 percent reduction in the minimum amount of fuel required to keep America moving. Economists warned that a lengthy embargo might increase the unemployment rate to levels last seen during the Great Depression.
Western lights went out in November 1973. Half of the lights on the Golden Gate Bridge were extinguished and monuments on the Washington Mall were blacked out. Americans rallied around their president, temporarily setting aside their differences over Watergate to show off their newfound conservation credentials. Stirring stories were told of the lengths to which ordinary citizens were prepared to go to display their patriotism. There was Joe Conforte, “proprietor of a licensed house of prostitution” outside Reno known as the Mustang Ranch, who “turned the reception-room thermostats down from 75 degrees to 68 degrees and ordered his girls to wear pantsuits and gowns instead of bikinis.” There was the plucky housewife in Belle Plaine, Minnesota, who “has found a way to retain heat in her concrete-block home; she wrapped it in transparent plastic, like a sandwich.” A nursing home resident in her nineties offered some timeless advice to her fellow Americans: “Tell the people to turn off their electric blankets and cuddle. It’s a lot more fun.”
The oil embargo had immediate and fearful repercussions for a global economy still dependent on ocean-borne traffic. Around the world, freighters remained tied up in their last port of call because companies and governments began hoarding scarce fuel supplies. Reports of shortages of essential items led to housewife riots in Japan where a woman was crushed to death during a stampede for toilet paper in Osaka, and where a nationwide run on sugar was supposedly traced back to gossip exchanged between two shoppers worried about power outages in the sugar-refining industry. Fishing boats were beached and farm machinery idled in Italy. West Germany announced a halt in the hiring of non-EEC guest workers. Sunday driving bans took effect in France, Holland, and Italy. Everywhere there were worries about rising inflation and unemployment as food costs soared and factories were shut down. The lights were dimmed in Piccadilly Circus and the wedding of Queen Elizabeth’s daughter, Princess Anne, to Lieutenant Mark Phillips took place amid scenes resembling wartime austerity. “It’s a mad final fling before the winter of our discontent,” shrieked a London tabloid.
The U.S. economy rumbled with dislocations both anticipated and real. Wall Street suffered its worst back-to-back losses since the crash of 1929, with the stock market shedding 133 points in three weeks to end the month at an anemic 854. After wholesale prices of Cadillacs collapsed 25 percent, shares in Detroit automobile manufacturers swooned and General Motors announced it was closing sixteen assembly plants across North America. Citrus growers in California reported they were running low on the diesel fuel needed to save their crops from frost. The steel industry estimated that a 10 percent reduction in oil consumption would result in a 4-million-ton decline in production and twenty thousand job losses.
Americans knew that if they had one friend they could count on in times of trouble it was the Shah of Iran. Amid the panic the Shah issued a statesmanlike plea to Arab oil producers to end their embargo. “Oil is like bread,” he said. “You cannot cut it off during time of peace. Why do you want to look as if you want the world to starve.” Arab governments weren’t listening. “In their hearts, the Arabs never forgave us for going it alone on the blockade,” said Ardeshir Zahedi. They viewed Iran’s refusal to participate in the oil embargo as a betrayal.