The fall of a wall panics some circles

from the moral conscience of the civilized world. It was considered an ‘American affair.’

By September 1989, CIA Director William Webster publicly unveiled a bold new intelligence mandate for U.S. intelligence. Pointing to the increasing signs that Gorbachev’s Soviet Union was eager to reach a mutual disarmament agreement with NATO, and especially with the United States, Webster told an elite gathering of the Los Angeles World Affairs Council on September 19 that year that his CIA was retooling itself for new tasks in the post-cold war era. Webster told his audience, ‘economic issues I mentioned—trade imbalances and technological development—illustrate a point that is becoming increasingly clear: our political and military allies are also our economic competitors.’ The new mission of U.S. intelligence worldwide was to be economic espionage and other acts against key industrial ‘allied’ nations, rather than hunting communist operations and subversion.

THE FALL OF A WALL PANICS SOME CIRCLES

Then, in November 1989, events in eastern Europe took a most dramatic, and to many in Washington and London, a wholly unexpected turn. Mikhail Gorbachev had privately met with the old-guard Honecker communist leadership in East Germany, and had more or less ordered them to give way to the enormous popular movement for freedom sweeping East Germany since that spring. Within weeks, the old order in the DDR was swept aside in a genuine popular revolution. Moscow had apparently realized that continuing its old efforts to maintain a costly and ineffi cient empire through force was likely to cause the destruction of the Soviet Union itself.

The collapse of the world oil price in 1986 had perhaps been the fi nal fatal blow to Moscow’s illusions that reform within the rotten communist bureaucracy could work. Soviet export earnings from its oil sales to the West, the major source of its hard currency earnings since the early 1970s, collapsed after 1986, just when popular demand for change prompted Gorbachev to promise far more than he was able to deliver. The economic chaos which ensued was the major factor motivating the Moscow leadership to cut its ties with its east European satellites of the Warsaw Pact. Moscow hoped that a united Germany, under the strong economic direction of West Germany, could provide a suitable partner to help rebuild the collapsing Soviet system.

But while offi cial Washington put on a face of public approval for the dramatic end to 40 years of communist domination in

eastern Europe, privately, Bush, himself a former CIA director whose view of world politics was shaped by the clandestine world of U.S. intelligence, was dead set against success of the revolution in eastern Europe. In Britain, Margaret Thatcher’s wing of the Tory party was equally alarmed at the prospect of what some there even called a ‘German Fourth Reich.’

A well-placed British establishment voice, Peregrine Worsthorne, editor of the infl uential London Sunday Telegraph, articulated the thoughts of the Thatcher faction of the Tories towards the emerging new Germany. Worsthorne was the the stepson of the former Bank of England governor, Montagu Norman. Norman had maintained personal ties with Hitler’s finance minister Hjalmar Schacht, during the war, and had worked intimately with J.P. Morgan Bank in New York after 1919 to impose the Dawes reparations atrocities on defeated Germany.

In his lead editorial on July 22, 1990, titled ‘The Good German Problem,’ Worsthorne cynically recalled Montagu Norman. ‘My stepfather, Montagu Norman, who as Governor of the Bank of England had done so much to help the German economy after the First World War, lived just long enough to see the earliest beginnings of the German economic miracle.’ Worsthorne recalled Norman’s comment shortly before his death: ‘I always knew we would beat the bad Germans; but I wish we could be so sure that we will do as well against the good Germans.’

Then Worsthorne came to his point.

Let us assume that a united Germany is going to be a good giant, what then? Let us assume a united Germany teaches Russia to become a good giant, what then? … In truth, the threat could be more dangerous, rather than less. For how on earth can any effective defense be put up against a united Germany that intends to win by obeying the rules? Germany is going to be very powerful and, as Lord Acton taught us, power corrupts … Germany is marvellously well placed, at long last, to be the principal agent to bring Slavdom back into the comity of nations.

Worsthorne’s Sunday Telegraph was owned by an Anglo-American holding, the Hollinger Corporation, on whose board sat Dr. Henry Kissinger and former British Foreign Secretary Lord Carrington, who was also a business partner in Kissinger’s New York Kissinger Associates consultancy fi rm.

Referring to controversial comparisons made by Thatcher government Trade Minister Nicholas Ridley, who had just been forced to resign for publicly comparing the Kohl government to Hitler’s Reich, Worsthorne concluded his telling diatribe against the implications of a reunifi ed Germany:

Mr. Ridley was talking nonsense, but perhaps there was more method in his nonsense than is dreamt of … Perhaps Britain’s role should be to preserve enough independence to be free, at the right moment, to make use of these grievances. In the course of doing good, Germany will make just as many enemies as ever it did in doing harm, and America may well be one of the enemies … Sooner or later it is going to be balance of power politics all over again. This could be an opportunity for Britain which knows about the balance of power …

That summer, according to London reports, the Thatcher government formed a new unit of British intelligence, to signifi cantly upgrade its activities in Germany. Moreover, the Bush administration moved to improve its ability to control the German developments. In a select Washington meeting in the spring of 1990 of the Association of Former Intelligence Offi cers, a former senior CIA offi cial, Theodore Shackley, the man who had previously been involved in the destabilization of the Shah of Iran and the illegal Iran–Contra gunsfor-drugs operations, told fellow American intelligence professionals they should begin to recruit from disaffected former East German Stasi and related ranks and to build up U.S. intelligence assets in Berlin, for the conditions of the new Germany.

The long-term implications of the fall of the Berlin Wall and the opening up of the potential to modernize the underdeveloped economic potentials of eastern Europe and the Soviet Union around the emerging unifi ed Germany were alarmingly clear for policy strategists in London and New York. Writing a weekly report to investor clients, as well as the general fi nancial community, David Hale, a U.S. economist with reported ties to the Bush Treasury Department, warned in January 1990 of the strategic ‘dangers’ for the U.S. fi nancial markets if German unity were to succeed:

One of the most extraordinary features of Wall Street economic research during recent weeks is its complacency about the potential consequences of eastern European economic developments for the

global fi nancial equilibrium which permitted America to borrow over a trillion dollars externally during the 1980’s.

Hale then noted:

Indeed, when the fi nancial history of the 1990’s is written, analysts may look upon the fall of the Berlin Wall as a fi nancial shock comparable to the long-feared Tokyo earthquake. The destruction of the Wall symbolized an upheaval which could ultimately divert hundreds of billions of dollars capital towards a region which had not only been a minor factor in the world credit markets for six decades.

Hale concluded, in a message he reportedly was asked to circulate by infl uential Washington circles:

Nor should Americans take comfort from the fact that Germany itself has been only a modest investor in the U.S. during recent years. The biggest investor in the U.S. since 1987 has been Britain (over $100 billion of takeover bids) and the British could not have undertaken such large investments without access to surplus German savings.11

On November 29, 1989, days after the collapse of the Berlin Wall, highly professional assassins blew up the protected car of Deutsche Bank head Alfred Herrhausen, a key adviser of the Kohl government who only days before had told the Wall Street Journal of his plans for reconstruction of East Germany into Europe’s most modern economic region within a decade.

Herrhausen’s assassination was seen by knowledgeable Germans as a direct echo of the assassination more than 60 years earlier of Walther Rathenau, architect of the Rapallo plan to industrialize Russia with German industrial technology. But the Bonn government proceeded with plans to unify Germany, and with discussions to assist the economic rebuilding of the collapsing Soviet economy as part of the terms for Moscow’s agreeing to German unifi cation.

The German chancellor spoke to the nation that late November about his dream of constructing a modern rail link connecting Paris, Hanover and Berlin, on to Warsaw and fi nally to Moscow, as the foundation for the infrastructure of the emerging new Europe. The old de Gaulle concept of a Europe economically cooperating from