Economic Warfare Can Win Terror War: Ronald Reagan Personally Crafted a Security-Minded Economic Strategy That Toppled the Soviet Union-A Blueprint George W. Bush Could Use to Defeat Terrorists. (Special Report)

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Al-Qaeda recently announced economic warfare against the United States and other Western countries. U.S. intelligence expects years of attacks on the economic infrastructure of the civilized world. For its part, the United States has an arsenal of economic weapons for this war, but critics fear it may have forgotten how to use them strategically--an important point, because proponents believe that strategic economic warfare thoughtfully applied by the United States could save innocent lives and avoid military conflict while achieving the same objectives as an all-out bombing or invasion.

Lessons of successful economic-warfare operations that hastened the collapse of the Soviet Union, veteran practitioners tell INSIGHT, are valuable guideposts to help the Bush administration develop an integrated economic-warfare strategy.

Many weapons in the economic arsenal already are in play in the war on terrorism. The United States and other governments are going after bank accounts and electronic money transfers of terrorists and their sponsors, seizing assets and running a spectrum of policy options from covert "black operations" against terrorist financiers to fun-scale embargoes against terrorist regimes. U.S. dominance of information technology and space for orbital satellite communications gives Washington immense superiority over any other world power.

The Department of Defense (DOD) defines economic warfare as the "aggressive use of economic means to achieve national objectives." Economic warfare can range from blockades and sanctions to physical attacks on an enemy's agricultural or industrial production, workforce and distribution systems to disruption of financial transactions and information networks. The concept dates to antiquity, from the plagues that destroyed the Egyptian pharaoh's crops, as reported in the Book of Exodus, to the enemy who sowed weeds on top of his neighbor's wheat in the New Testament.

For the United States, economic warfare is a tool of statecraft almost as old as the republic itself. Legislated actions include bans on certain international transactions, begun as early as 1807 with the Embargo Act and the 1809 Non-intercourse Act. Though neither law was successful as a foreign-policy tool, successive U.S. governments resorted to sanctions and embargoes to attempt to impose their will abroad.

Economic sanctions are a brand of economic warfare favored for their precise, though usually fleeting, political benefits to the politicians imposing them. They tend to have high and protracted human costs in the targeted countries and little if any appreciable impact in removing the targeted regime from power.

The 20th-century's mechanized warfare saw extensive targeting of enemy economies. British Prime Minister Winston Churchill saw this as such a vital part of the effort against Adolf Hitler that he created a wartime Ministry of Economic Warfare, telling its first minister, Hugh Dalton, to run it as "a new instrument of war" whose purpose "was to coordinate all action by way of subversion against the enemy overseas." The goal was to weaken "the enemy's will to make war and the strengthening of the will and power of his opponents," Dalton said. This also meant overt and clandestine radio broadcasts and other forms of propaganda to support allies and demoralize the enemy, running agents of influence in friendly countries to support the war effort and conducting other black operations to disrupt the enemy's economic capabilities and supply lines.

Throughout the Cold War, however, the Western democracies did not develop a coherent, strategic, economic-warfare policy toward the Soviet Union until the early 1980s. Early in his first term, President Ronald Reagan approved a coordinated, strategic plan that integrated economic warfare into a well-defined U.S. national-security strategy with the goal of rolling back Soviet communism and forcing the Soviet system to reform within or collapse into itself. …