The Profiteers

by Sally Denton

  DOE’s primary budget goes to designing, building, and managing the country’s nuclear weapons and the infrastructure necessary to support them. Herbert S. Marks, general counsel of the AEC under President Truman, observed after a visit to the Los Alamos National Laboratory that the nation’s atomic program “was a separate state, with its own airplanes and its own factories and its thousands of secrets. It had a peculiar sovereignty, one that could bring about the end, peacefully or violently, of all other sovereignties.” In the thirty years subsequent to Marks’s observation, the nation’s nuclear weapons complex, with Davis effectively at the helm, was on the verge of metamorphosing into a huge agency with hundreds of thousands of government employees and private contractors overseeing dozens of weapons labs, radioactive-waste sites, and a massive stockpile of bombs and nuclear warheads.

  The underpinnings of one of the largest industrial projects in the world, the DOE’s nuclear weapons program includes the nuclear fuel cycle for both bombs and commercial nuclear energy. The first step in the cycle is the mining and milling of uranium ore that is then shipped to the DOE facilities for enrichment to either reactor- or weapons-grade level. The weapons-grade uranium is then fashioned into an arsenal for numerous delivery systems. Enriched uranium is the key component for both civil and military nuclear power—power plants require 5 percent, bombs require 20 percent—and Bechtel is the leading company in mining uranium.

  One of the most “closed” and secretive of government organizations, the DOE administers more classified operations than any other agency, including the CIA, and is second only to Defense for maintaining the largest body of secret documents. The DOE’s national laboratory system, a collection of seventeen government-owned facilities spread around the country, was born to build the atomic bomb. The weapons complex includes the three laboratories: Los Alamos and Sandia in New Mexico, and Lawrence Livermore in California, as well as numerous production plants and other top secret facilities.

  The organization of the labs’ model—government owned and contractor operated (GOCO)—was originally selected by the AEC to avoid either an entirely government-controlled lab system or an entirely private-sector-based structure. While the government funded the labs and dictated the missions, private contractor-managed teams carried out the operations. The GOCO model had been lucrative throughout the postwar decades for Bechtel, which received the first AEC contract at the ultrasecret Los Alamos site—the flagship of the country’s nuclear enterprise. “Bechtel was the poster child for the GOCO mechanism dating back to the Manhattan Project,” said a former DOE general counsel. Following the massive expansion of DOE during the era of the Bechtel Cabinet, the company would be awash in government money.

  Shortly after coming on board at DOE, Davis led a delegation to Mexico that resulted in a contract for Bechtel to build one of the first of twenty nuclear plants that country planned. Within a few months, the Ex-Im Bank chairman, John L. Moore, offered Taiwan generous financing for the construction of two nuclear plants to be built by Bechtel. (The next year, Moore joined Bechtel as vice president for financial development in its Far East operations.) Following Davis’s recommendation, Reagan directed the NRC to “take steps to facilitate the licensing of [thirty-five nuclear] plants under construction,” fifteen of which were Bechtel projects. Bechtel received another windfall when the administration lifted restrictions against the sale of nuclear fuel to South Africa and Brazil, even though neither country had signed the Nuclear Nonproliferation Treaty that went into effect in 1970. South Africa and Brazil were two of seven non-nuclear states that were close to being capable of the technology necessary to build a nuclear weapon.

  There were even more advantages that came Bechtel’s way through the accommodating administration. While Shultz assured Congress that he would recuse himself from matters related to Bechtel, he visited China—“a market Bechtel had unsuccessfully been trying to crack for years,” according to Laton McCartney—to make a deal for nuclear power plant construction. The secretary of state offered to provide US technology in exchange for China’s allowing American firms to participate in the construction of $20 billion of planned projects. A Shultz-promoted nuclear cooperation agreement enabling US firms to sell nuclear technology to China passed Congress two years later, and Bechtel would boast of becoming the first US company granted a construction license in China.

  A powerbroker behind the rise of Ronald Reagan, Steve Jr. had meticulously overseen the expansion of the revolving door between his company and government that would be so integral to Bechtel’s continued ascent, though he would downplay those connections. He often pointed to the decline of the engineering and construction market during the Reagan years to deflect from the boon that Bechtel received in the expanding markets, from nuclear cleanup to coal, chemicals, and, especially, liquefied natural gas (LNG). “Employing former government officials added an outside perspective to the leadership and management expertise of our senior management team,” he wrote. “They were not hired to represent Bechtel with the U.S. government; in fact, by virtue of their previous work for the government, they brought added attention and scrutiny. However, on the whole, the positive benefits outweighed the negatives. Their judgments and capabilities were valuable additions to our business.” The great good fortune for Bechtel that the early Reagan years brought seemed to embody Steve Jr.’s personal maxim: “It’s more effective to do a man a favor than to ask him for one.”

  CHAPTER TWENTY

  It Would Be a Terrible Mess

  Cap Weinberger, meanwhile, would also do his part as secretary of defense to insure Bechtel’s inside position in Washington’s halls of power. While busy presiding over the largest department in the federal government—in the world’s largest office building, the Pentagon—Weinberger oversaw a million civilian employees and a $218 billion budget. As the president’s chief advisor on military matters, Weinberger had reached the pinnacle of power he had long sought, at the head of the army, navy, marine corps, and air force.

  A supporter of a strong defense budget and obsessed with what he perceived as America’s weakened standing in the world, Cap proceeded to usher in the largest military buildup in peacetime history. He had traveled throughout the Middle East as a Bechtel executive, and had come to believe that America was losing the support and respect of its allies because of Carter’s erratic policies. He thought that the Soviet Union had made larger strides in defense capability than it actually had, and believed, wrongly as it turned out, that the USSR had a gigantic military advantage over the United States. He publicly expressed his shock at having learned through daily Pentagon briefings of the “size of the Soviet buildup and the rapidity with which it had taken place—in all areas, land, sea, and air.”

  Among his first moves in the Reagan administration was to recommend increasing the defense budget by $32 billion, including a push for new and expensive weapons systems such as the B-1 bomber, the Pershing II nuclear missile, and the Trident submarine. “To paraphrase Will Rogers, I think this administration has never seen a weapons system it didn’t like,” Les Aspin, the chairman of the House Armed Services Committee, told a reporter. The crux of Weinberger’s agenda was a strong military buildup, the protection of American allies, and a rejection of Nixon-era détente. Weinberger was also the embodiment of privatization: replacing government departments and programs with for-profit, private companies. He had long advocated a Defense Department procurement policy that would generate higher profits for defense contractors—Bechtel included—and insure long-term and no-bid contracts to encourage private companies to engage in the military marketplace.

  “The government has a long history of overpaying for weapons, offering interest-free loans, waiving federal taxes, bailing out floundering defense contractors, and even paying generous termination fees to unsuccessful vendors,” according to one account of the military-industrial symbiosis. But in the name of national security and anti-Communism, Weinberger elevated the practice to historic
heights. It all amounted to a “government-subsidized industry, doing business over a safety net,” wrote journalist Dan Briody. The onetime budget-cutting zealot nicknamed Cap the Knife was now a budget-escalating zealot newly nicknamed Cap the Shovel.

  Weinberger’s $1.6 trillion five-year “rearmament plan” was in preparation for a winnable nuclear war—a complete reversal from all foreign policy objectives since the Manhattan Project. He also called for the production of a stockpile of chemical weapons, again reversing American policy against chemical warfare that had been in effect since 1969. “Our long-term goal is to be able to meet the demands of a worldwide war, including concurrent reinforcement of Europe, deployment to Southwest Asia, and support in other potential areas of conflict,” Weinberger said. The secretary of defense sought to redirect government funds “from virtually every domestic program to the military,” according to one account.

  While criticism of Weinberger’s plans came from political fronts, that the four top national security officials were Californians—Reagan, Shultz, Weinberger, and William P. Clark—lent an air of solidarity to the administration’s military goals. One of Reagan’s closest and most trusted personal friends and confidants, the Stetson-wearing Clark was a rancher and devout Catholic with hard-line positions on military spending. Credited with convincing Reagan that the Soviets could be crushed by an aggressive arms race, Clark would recruit another reactionary Californian as Reagan’s chief policy advisor. Edwin Meese III would hold Cabinet rank within the administration, and at times would so overshadow his boss that he once felt obliged to reassure the press that Reagan “is really running things.”

  Even though Reagan’s economic advisors sniped at Cap’s gargantuan rearmament and its effect on the deficit—one calling the department a “swamp” of waste and inefficiency and the General Accounting Office estimating that DOD’s mismanagement was costing taxpayers $10 billion a year—the defense secretary dug in deeper. Both he and Bechtel were most fanatical about the five-part $222 billion strategic program to improve the nation’s nuclear war–fighting capability and, especially, the deployment of the controversial MX missile system. Based upon a proposal drawn up by a presidential commission composed of Bechtel consultants, including the two former CIA directors, McCone and Helms, the US Air Force plan involved shuffling a hundred intercontinental ballistic MX missiles (ICBMs) between shelters in Nevada and Utah. Bechtel’s Washington representatives had been lobbying for the MX—a missile that could travel 15,000 miles per hour, carrying 300-kiloton nuclear warheads up to 6,800 miles away and capable of a first strike against the Soviet Union. Bechtel expected to receive the DOD contract to build the system’s massive infrastructure as well as provide the necessary enriched uranium for the warheads.

  Many members of Congress and most of the nation’s leading physicists were alarmed at Weinberger’s messianic allusions to the possibility of fighting and winning a nuclear war—a complete and utter shift in American foreign policy from the avoidance of nuclear war to preparation for it. For the first time ever, the United States would be committed to the idea that a global nuclear war could be won—a concept that reversed the long-standing precept that nuclear war meant mutual suicide. “Reagan and Weinberger are only advancing the mystique about nuclear weapons and depriving the U.S. of money and resources for conventional weapons. And that, of course, reduces our options,” said Stan Norris, a senior analyst for the Center for Defense Information, an independent nonprofit, nonpartisan think tank founded by retired military officers to analyze and influence defense policy. “If you have five weapons, four of which are nuclear, what kind of options does that leave?”

  Gerard C. Smith, director of the US Arms Control and Disarmament Agency under Nixon, also saw Weinberger’s rearming of America as distressingly dangerous. “The only purposes which these new weapons can serve are apparently to bolster our self-confidence and to make it more feasible to fight a protracted nuclear war,” Smith told Congress. “It is difficult to see what contribution this expansion of nuclear bombs and warheads will make to our security.” Reagan had been in office less than a year when he approved Weinberger’s secret plan for preparing the United States to prevail in a protracted nuclear war with the Soviet Union. Guided by the elite Committee on the Present Danger—the potent Washington-based lobby cofounded by Shultz and McCone—the conservative agenda was a geopolitical, pro-defense spending view that had been mounting since World War II.

  Throughout the 1970s, Bechtel supported the foreign policy think tanks, such as the Hoover Institution and the Heritage Foundation, that were attacking détente and the idea of a peaceful coexistence with the Soviet Union by mutually assured destruction. The “Cold War cabal of unreconstructed hawks and neohawks who had never been at ease with the arms control efforts of the Nixon, Ford, and Carter administrations suddenly came into its own,” with Weinberger its instrument, wrote Robert Scheer in With Enough Shovels. He embodied the group’s ideology and rejection of the possibility of peaceful coexistence with the Soviet Union. These “threat inflators,” as one account described them, “dourly predict every success for the forces of evil” to drag the world back into the dangerous Cold War era—and a multibillion-dollar arms race. “My idea of American policy . . . is simple,” President Reagan once told his aides when asked his view on the Soviet Union. “We win, and they lose.” Still, while Reagan championed abolishing nuclear weapons his cabinet and business advisors who crafted policy worked at cross purposes.

  For his part, the Episcopalian Weinberger saw the US-Soviet dynamic in biblical terms. “I have read the book of Revelation, and, yes, I believe the world is going to end—by an act of God, I hope—but every day, I think time is running out,” he replied in the summer of 1982 to a question posed by a Harvard student about his apocalyptic vision. “I worry that we will not have enough time to get strong enough to prevent nuclear war. I think of World War II and how long it took to prepare for it, to convince people that rearmament for war was needed. I fear we will not be ready. I think time is running out . . . but I have faith.”

  With the committee’s philosophy dominant in the Reagan administration—and with a president who had long shared its “rightist suspicions of détente”—the nuclear brinksmanship was acute. “It would be a terrible mess, but it wouldn’t be unmanageable,” Reagan’s head of the Federal Emergency Management Agency (FEMA), Louis Onorato Giuffrida, told ABC News about how America could survive a nuclear war with the Soviet Union. “I think they would eventually, yeah. As I say, the ants eventually build another anthill.” The brilliant Cornell University astronomer Carl Sagan entered what he saw as a grotesquely anti-intellectual debate on a subject that was undebatable. He penned a three-page hypothesis of the Doomsday Machine—as a 1967 Star Trek episode called it—that would result. Sagan’s 1983 article, “The Nuclear Winter,” a stark and terrifying warning, was published in Parade magazine, the Sunday newspaper supplement that reached an estimated 20 million readers. Using a model of a five-thousand-megaton nuclear exchange, Sagan wrote that land temperatures would drop to minus 25 degrees Celsius and stay below freezing for months, creating a climate catastrophe. “This would kill food crops and livestock, and lead to mass starvation among survivors who hadn’t already perished in the blast,” a later account described Sagan’s predictions.

  This extreme shift in American foreign policy shocked the Israelis, who were seething from Bechtel’s pro-Arab influence in the Reagan administration. The “pro–Saudi Arabian group is in full control,” the top Middle East intelligence expert for the US Air Force warned Israel in a public statement following Haig’s resignation. Calling Shultz, Weinberger, and Habib “the boys from Bechtel,” Dr. Joseph Churba said, “As long as policy making is in their hands, U.S. power and diplomacy will be irrelevant in the region.” The renowned arms control specialist claimed that American foreign policy was now driven by “commercialism” and “economic greed” rather than by the best security interest of the United States.


  At the same time, Weinberger became embroiled in a scandal revolving around an arms request from Saudi Arabia for a squadron of twenty F-15 jet fighter bombers, further upsetting the Israelis. When a Lebanese magazine published a transcript in the summer of 1983 showing that Weinberger was attempting to keep the arms sale secret from the president, Congress, and the media, the brazenness of his scheming stunned Israeli officials. In a Paris meeting with two Saudi defense ministers, Weinberger told them that the arms request should be concealed from the president because “the administration is suffering from leakage of information.” According to the transcript, Weinberger’s relationship with the Saudi officials dated back to his days at Bechtel, which led to a uniquely candid conversation. “I would like to confirm . . . that President Reagan does not know of your request,” Weinberger told them. “If we were to inform President Reagan of your request, it would be leaked to Congress and the press, and a problem would be created, hampering delivery of new weapons to Saudi Arabia.” In addition to the bombers, Weinberger also offered to deliver a new M-1 tank for a “tryout,” boasting that this “model is not even in the hands of the American Army.”

  Weinberger’s clandestine arms dealing sparked outrage in the United States and Israel, prompting New York City mayor Ed Koch to demand an explanation from the defense secretary. Koch said he was “appalled” that Weinberger was denying the president “access to information relating to our nuclear secrets and other vital information because of a lack of trust in his integrity in keeping government secrets.” In an angry exchange of letters published in the New York Times, Koch accused Weinberger of “hostility to the State of Israel” and asked him if there is “a secret supergovernment in which the President is not a participant?” In response, Weinberger claimed the transcript was a “fabrication” and refused to answer Koch’s questions, citing administration policy “not to reveal details of classified diplomatic exchanges.” Still, Weinberger’s stonewalling did little to calm Israel’s nerves. Just a few months later, Israel’s interests were once again undermined when George Shultz’s State Deparrtment dispatched a presidential envoy to Iraq, one of Israel’s foremost regional enemies, to lobby on behalf of a massive Bechtel project.