MEMO TO NIO/LA FROM CHAIRMAN NIC RE RADICAL DESTABILIZATION SUCCESSES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83B00140R000100050010-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 20, 2016
• Document Release Date: March 21, 2007
• Sequence Number: 10
• Publication Date: September 15, 1981
• Content Type: MEMO

Approved For Release 2007/03/21 : CIA-RDP83BOO14OR000100050010-9 G~
15 September 1981
NOTE FOR: NIO/LA
FROM: Chairman, NIC
Here are some comments on your note to the DCI on "radical destabilization
successes:"
1. There is no doubt that some arguably preventable, political
developments can inflict enormous costs on us. Your 1978 prediction of
the consequences of the fall of the Shah is a case in point.
2. I agree that there are several contingencies that might occur
in the near future which could have a similar effect. Those that should
be of particular concern center on the Persian Gulf, which remains the
most important, concentrated source of energy for the West (although
noticeably diminished in importance now by comparison with 1973).
There are, of course, other important sources of oil including Mexico
and Nigeria, and events which disrupt supplies from these regions would
also drive up the price of oil at great cost to us.
3. You should distinguish between the effect of short-term panic
reac*,;ions and the effect of market forces over time. The price of oil went
up in 1973/1974 and 1979/1980 because the supply of oil reaching consumers
was reduced. In contrast, political events which represent a political
loss for the West but do not disrupt the flow of oil are unlikely to have
more than transient effects on that market and consequently are not likely
to be very costly to us -- at least in the short run. Some of your cases
seem to fall into the latter category, eg., Somali Lib. Front making
Berbera unusable and Radical success in Guatemala.
4. To the extent that prices in markets are driven by supply and
demand (again, neglecting possible short-term stockpiling),the oil price-
impacts in several of. your cases may be zero or close to it. However, your
final point is well taken: it is a good idea to be more systematic about
such matters. STAT
Henry Owen
Approved For Release 2007/03/21.: CIA-RDP83BOO 140R000100050010-9