LETTER TO WILLIAM J. CASEY FROM ERNEST CUNEO

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83M00914R002800070041-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 12
• Document Creation Date: December 20, 2016
• Sequence Number: 41
• Content Type: LETTER

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EMBASSY OF THE-
UNIT D STATES OF' ArA::R1CA
Sorry I was not able to return this to you in person
on Monday, 3 May. I had looked forward to seeing you
again then.
Thank you for giving me the opportunity of reading
Ernest Cuneo's paper. It is interesting and, although
perhaps a little overdrawn, unfortunately, probably not
too far off the mark.
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ERNEST CUNEO
U20 INVESTMENT BUILDING
WASHINGTON, D. C.
May 10, 1982
Honorable William J. Casey
Director of Central Intelligence
Washington, D. C. 20505
As a rule of thumb, if the objective is not
carried, the rate of retreat is twice the rate of
advance. In my view, unless the Falkland Islands'
crisis is resolved firmly, we shall be facing the
Kremlin in Argentina, as we are now facing it in
Cuba and Nicaragua. The danger is not there will
be a confrontation, but there won't be one.
Since3ely,
ERNEST CUNEO
EC/cd
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THE FALKLAND ISLANDS - BLOODY NEW ARENA
ERNEST CUNEO
Mighty oceans, oil, Antarctica and the death of .the British
Empire have permanently projected the Falklands into the arena of
.world power. Future historians may well record that the British-
Argentine clash was the beginning of a "great power" struggle for
the control of Antarctica, only 500 miles away. The Falkland
Islands will remain of tremendous importance because they control
-the only sea passage between the Atlantic and Pacific Oceans
(100 million square miles) other than the Panama Canal.
For a century and a half,. so completely did Britannia rule
the waves that the presence of the Union Jack flying over Fort
Stanley (a town of less than 2,000, acting as a center for lonely
sheep ranches) was enough to warn off other nations from occupying,
them.
Great Britain, since the loss of the British Empire, can no
longer sustain its sea power. Since 1962, the Kremlin has built a
four-ocean navy, to fill, the vacuum left by the Royal Navy. Since
then, the expanding Red Navy has achieved tremendous success in
acquiring former British bases in Africa and the Middle East.
Brilliantly, the Kremlin has moved by land to control the
seas. Repeatedly, Russian intelligence heavily backs nationalist
movements, as in Angola, Yemen, Ethiopia, and other states,_and
brings them to power as Communist satellites. Thereafter, it uses
them as bases. Castro's Cuba is a prime example of how the
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Kremlin acquired a base in the Caribbean. In the same pattern,
the Kremlin is playing a veiled and mighty hand behind the scenes
in. a daring effort to use Argentina's nationalism to oust
Great Britain from the Falkland Islands, then "lease" it to
the Russians as a naval base in the South Atlantic.
Under these circumstances, the U. S. has no option but to
support continued possession of the Falklands by Great Britain.
However, a solution with Argentina alone is "negotiable" and'
desirable. What is not negotiable under any guise, including
Argentine sovereignty as a mask, is the introduction of Soviet
bases into the South Atlantic.
The Kremlin is waging a fierce economic war to capture
the government of Argentina. It leaped into the gap?:caused by
the American grain embargo. It already is purchaser of 60% of
Argentina's agricultural export, and promises a permanent market.
Very significantly, the Kremlin is paying for part of the grain
purchases with uranium from Czechoslovakia. It offers a half-
billion dollars in oil machinery and technology to develop
the oil of the Falklands. In the opening clashes it acted as
chief director of Argentina's military intelligence. The Soviet
Ambassador actually sat in the Argentine war councils as the
crisis developed. Cuban and East German military technicians
were flown into Buenos Aires.
The chances of reducing Argentina to a Soviet satellite
are not immediate but the Soviet, risking nothing, is famous
for its persistence. The key target at the moment is the
Falklands.
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Great coal deposits have been discovered in Antarctica, 500 miles
away. There is speculation that the Falklands and Antarctica
a
may be astride/vast new energy field. which could prove to be the
answer to. the current oil monopoly of the Middle East fields.
The spectacular success of the North Sea. and Alaska oil fields,
also.in frigid climates, add weight to the theory. The treaty
governing Antarctica expires in 1989. This adds another dimen
sion to the importance of the Falklands,. because in addition
to controlling the juncture of the Pacific and Atlantic oceans,
the Falklands may well. be the staging area for the opening of a
vast new continent: Antarctica with its untapped reserves is
nearly twice the size of the United States.
THE STRATEGIC
HISTORY- OF THE -FALKLAND ISLANDS
The Falklands are a desolate and dismal'group of islands,
practically uninhabited. The two main islands - East Falkland
and West Falkland - each about the size of Delaware, are
divided by the 20-mile wide Falkland Sound. Gale winds scatter
salt spray over the barren terrain; trees and vegetation cannot
grow. Rain falls 250 days of the year.
Scientific survey indicates that underneath the Falklands
are oil reserves estimated at least to be two billion barrels.
For 350 years, Great Britain knew, and the nations of the
world knew, that unless Britannia ruled the waves, she wasn't
going to rule anything. Her 88,000 square miles, less than
the size of Colorado, ruled an Empire upon which the sun never set.
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Great Britain ruled the oceans because she controlled the
Narrow Seas: the Strait of Gibraltar, the Suez Canal, the
Strait of Bab-el Mandeb, the Molucca Strait--and the Falklands,
.controlling the juncture of the Atlantic and Pacific.
For the century following Napoleon's defeat, Britannia
ruled the waves without firing a shot. In 1910 Kaiser
Wilhelm announced that Germany was building a High Seas Fleet
to challenge Great Britain's naval supremacy. Britain's First
Lor, young Winston Churchill, instituted a vast new shipbuilding
program. A fierce armament race developed.
However, at the outbreak of the war in 1914, the universal
belief that British sea power was supreme received a severe jolt
- with tragic diplomatic results. Two new German warships, the
battle cruiser GOEBEN, and the light cruiser BRESLAU sailed
through the British Mediterranean Squadron to reach Constantinople.
Convinced that.the British sea power was broken, Turkey joined
the war as an ally of the Kaiser.
Thus, the whole diplomatic power of Britain, and the
prestige of the Royal Navy, was in balance when the Kaiser's
crack Asiatic Squadron sailed from China across the Pacific to
attack shipping at the Atlantic-Pacific juncture at the
Falkland Islands. Here the British Lion and the Prussian Eagle met
in mortal combat. The German Squadron under the command of Graf
Von Spee consisted of the brand new heavy cruisers SCHARNHORST
and GNEISENAU, and the light cruisers LEIPZIG, NURNBERG and
DRESDEN. Accepting the challenge, the British Admiralty ordered
the Falkland Squadron under Admiral Sir Christopher Cradock to
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enter the Pacific and intercept the five warships. The British
cruisers discovered the German fleet off Cape Coronel, Chile.
The British flotilla consisted of the cruisers GOOD HOPE and
MONMOUTH, a fast cruiser the GLASGOW, an armed liner OTRANTO,
and an old battlewagon the CANOPUS.
Brilliantly, Graf Von Spee manuevered the British fleet
until it was sharply silhouetted against a sinking sun and the
German fleet was obscured in the. evening dusk.
The German squadron had superior range. The third salvo
of the SCHARNHORST, the flagship of Von Spee, knocked out the
batteries of the GOOD HOPE, Admiral Cradock's flagship. The
fourth German salvo crashed on her battered gun turrets. The
battle of the flagships was over. The GOOD HOPE capsized.
Admiral Cradock and all hands went down with her. In the
meantime the GNEISENAU badly crippled the MONMOUTH. Von Spee's
son, Heinrich, was her gunnery officer. The MONMOUTH fled
north, where she ran into the withering fire of the NURNBERG.
Von Spee's second son, Otto, was one of her officers. The
NURNBERG silenced all*of her batteries, but the MONMOUTH refused
to surrender. As darkness closed in, the MONMOUTH listed to.
port, then plunged with all hands, battle flag still flying.
Von Spee took his fleet into Santiago, Chile to coal. There
the German community gave him a huge bouquet. "Thank you," he
said. "They will do for my funeral." He knew the main engagement.
the Battle of the Falkland Islands was still ahead.
The catastrophic defeat in the Battle of Cape .Coronel
galvanized the British Admiralty. In deepest secrecy and at high
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speed, the British battleships INVINCIBLE and INFLEXIBLE, each
with long-range batteries of 12-inch guns, with a supporting
force of the heavy cruisers KENT, CORNWALL and CARNARVON
raced southward to the Falklands.
The remainder of Cradock's fleet had limped back to Fort
Stanley, ordered to refuse battle until the reinforcements-
had arrived.
The rescuing British battle fleet arrived at the Falklands
on December 7, 1914 in the nick of time. At 7:40 a.m. December 8,
Von Spee arrived off Fort Stanley. Spotting the dread tripod
masts of the INVINCIBLE and the INFLEXIBLE, and knowing he was
outgunned, Von Spee sped south toward the heavy Antarctic seas.
Fully coaled, the avenging British Fleet cleared harbor.at full
speed with "bones in their teeth,`-white waves at the bow and
decks cleared for action. At 12:30 they overtook the cruiser
LEIPZIG. Knowing his light cruisers didn't have a prayer, Von Spee
ordered them to scatter and speed for Argentina's neutral waters.-
Anticipating this, the British heavy cruisers broke from the
battle line and pursued them.
Then Von Spee ordered the SCHARNHORST and the GNEISENAU
to accept action. The great warships circled each other with.
the murderous intent of a knife fight in a Klondike saloon.
This time, however, the British had the long-range INVINCIBLE
and the INFLEXIBLE concentrated on the SCHARNHORST. By 4:00 PM
the SCHARNHORST was blazing from stem to stern, but still firing.
So were the British; at 4:15 the SCHARNHORST suddenly capsized.
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All hands, including Graf Von Spee, were lost.'`The big British
guns then concentrated on the GNEISENAU. At 5:40. though tower-
ing flames engulfed her, her lone gun was still firing. At 6:00 PM
battle flag still flying, she keeled over and sank. Despite
heavy seas, the British were able to pluck 187 German sailors
from the icy waters. Among those lost was Von Spee's son.
Meanwhile the British heavy cruisers overtook their prey.
The.GLASGOW and the CORNWALL ripped apart the LEIPZIG.- At 7:00 PM
she was a raging furnace. At 8:10 with all batteries silenced,
her Captain refused to strike his flag. but flew the international
distress flag asking that his crew be taken off. The British
did succeed in rescuing 18 German sailors, but at 9:23 the LEIPZIG
disappeared in a tremendous explosion. No survivors were found.
The KENT overtook the NURNBERG, raking her decks from afar.
a
Though aflame and/rudderless derelict, she refused to strike her
colors. At 7:30 the NURNBERG exploded and sank, leaving no
survivors and taking with her Von Spee's second son.
The DRESDEN escaped, but was overtaken on March 15, 1915
and sunk with all hands.
Once again the Falklands were safe. The British cork between,
the Pacific and Atlantic was back in the bottle. The prestige
of Great Britain and the invincibility of the Royal Navy were.
vindicated. So was the basic axiom of Winston Churchill,
"There's no such thing as a second best Navy." (A point President
Reagan is trying to make today.)
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The frightful total casualties of the Battle of the
Falklands had its repercussions in World War II. Hitler had
built a powerful "pocket battleship."The name GRAF VON SPEE.
The GRAF VON SPEE was off Brazil proceeding south toward the'-
Falklands when she encountered the British South Atlantic
Cruiser Squadron under Commandeer H. H. Harwood. Her six 11-inch
the EXETER,'
guns far outranged those of the eight 6-inch guns of/the AJAX
and the ACHILLES. The British Navy was drawn so thin that
strategic reasons compelled Commander Harwood to attack.
The GRAF VON SPEE's superior guns dealt out terrible
punishment to the EXETER, which though flooding and burning,
continued action to draw fire away from the AJAX and ACHILLES.
They stood in close and scored some hits, but perceiving no damage
retired
to the GRAF VON SPEE,out of range. However, the Gods of War
smiled on their gallantry. Their shells had struck the
bridge, knocking out VON SPEE's electronic equipment, killing
36 and wounding 59 German sailors. Captain Hans Langdorffunwilling
to try a run through the British Fleet under such conditions.,
put into Montevideo for repairs.
Here British diplomacy and intelligence took over. At
British diplomatic insistence, Uruguay allowed Captain Langdorff
only 72 hours to repair or face internment. Meanwhile British
Intelligence artfully spread false reports that the British
aircraft carrier ARK ROYAL and the battle cruiser.REKNOWN were
waiting outside the three-mile limit. Captain Langsdorff, a most
sensitive man,`was deeply affected by the loss of the young German
sailors. .
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British intercepts, still classified, indicate that he was
prepared to fight but not willing to sacrifice his crew uselessly.
In any event, he sailed as Uruguay demanded, but stopped his
engines?before leaving neutral waters. There he ordered the
GRAF VON SPEE scuttled. He personally directed the loading of
his men into the.lifeboats. Then he returned to Montevideo and
calmly put a bullet through his brain. He knew that Great Britain would
make any sacrifice to hold the Falklands.
Today,'lurking behind the scenes, where once the British
Lion fought the Prussian Eagle, the American Eagle and the Russian
Bear are in deepening confrontation. As President Truman, in 1946,
was forced to send the U.S.S. MISSOURI to Istanbul when Stalin
.attempted to step into Iran and Turkey over the body of the failing--
British Lion, in 1982 theAmerican Eagle is moving to prevent the
Russian. Bear from entering the South Atlantic.
A Soviet occupation of the Falkland?-in any guise, as lessee,
or as joint venturer with the Argentine Government, would provide
its fleets a base controlling two oceans, and gain for it a strong-
hold which is also the footstool of a continent of vast but
undeveloped resources.
Said the ancient Delphic Oracle, "Necessity is above the
Gods themselves." Necessity compels the. United States to keep
the Russian Bear out of the South Atlantic.
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ERNEST CUNEO
1120 INVESTMENT BUILDING
WASHINGTON, D. C.
April 23, 1982
Honorable William J. Casey
Director of Central Intelligence
Washington, D. C. 20505
Herewith is an article I wrote for the
American Legion, to appear this summer. I
think this is the odds of The Morning Line
of what's likely to happen next in Iran. I
believe Iran is the payoff turf.
There is a considerable amount of British
intelligence stuff on the area. General Gubbins
and Colonel Ellis, who served there,. gave some
blood-curdling accounts of the ferocity of the
action. Ellis wrote a small book on the subject
-- "Trans-Caspian Episode," which certainly
tends to prove the area is the "soft under-
belly" of Russia. He is at great pains to
prove that the British did not hang 24
Commissars; doth he protest too much?
For your information, when it got very late,
the Shah consulted the AFL-CIO. They suggested
free trade unions for workers of the oil fields
to hold them against the Commies - but it was
too late.
EC/cd
Sin rely,
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Pa -/2-