Ending Conflict Through Financial War

The man who helped President Reagan plot the downfall of the Soviet Union is at it again, this time targeting countries that support terrorism.

Roger Robinson, president and CEO of Conflict Securities Advisory Group, has helped develop a financial terrorist watch list, which compiles information about companies who currently engage in business with countries suspected of terrorist involvement, such as Iran. At its highwater mark, Conflict Securities advised investment holdings totaling approximately one trillion dollars, lending advice to groups ranging from the New York Police Union to multiple state pension funds.

Robinson takes a two-track approach to his financial strategy. First, he stresses the asymmetric risk, or risk which is not accounted for in a stock’s price. Usually, with everything else equal, a high risk stock will have a lower price than a low risk stock. Robinson does not believe that companies who do business in terrorist sponsoring states have an additional risk factor subtracted from their stock price. Second, Robinson believes that there is a moral obligation for investment companies to disclose when they buy stocks of companies that do business in terrorist sponsoring states.

Conflict Securities Advisory Group (CSAG) researches businesses with publicly traded stocks and looks for potential links to terrorist-sponsoring states.

The greater the stake a business has in a terrorist sponsoring state, the more ardently CSAG warns against investment. “There are already divestment campaigns in a dozen states,” says Robinson, “but we refrain from advocating for divestment. We simply present the information and let businesses decide what to do.”

There are certainly a few challenges to be overcome with CSAG. With a relatively small staff, thorough research on all companies doing business with terrorist-sponsoring states is difficult. “Firms don’t usually advertise when they’re doing business in Iran or North Korea,” admitted Robinson. To compensate, CSAG subscribes to foreign business journals and newspapers, which generally report on American companies opening new operations.

Robinson has experience working with financial foreign policy, leaving Chase Manhattan to join the Reagan Administration in early 1982, at age 32, as the Director of International Economic Affairs. Robinson’s article in the Washington Quarterly, entitled Soviet Gas: Risk or Reward?, caught President Reagan’s eye in July of 1981, and Reagan convinced him to join government service soon afterwards. Robinson met with the president four to five times a week as the two worked on a strategy to bring down the Soviet Union. Robinson wrote several National Security Decision Directives, or NSDDs, including several which mapped the specific strategies to be used to stop the influx of available credit to the Soviet Union.

While ambitious, Robinson’s plan was particularly difficult because of the secretive nature of NSDD-75, which created the fi nancial master plan for the Soviet takedown. “There were only twelve people in the loop in the United States,” Robinson remembers, “it created the framework for the Soviet takedown.”

The crux of Robinson’s plan was to squeeze off Soviet credit by pressuring allied banks to stop lending money to the Kremlin. President Reagan bought the plan, claiming that he always knew the Soviet Union was not financially independent. “I don’t care how you do it. Just do it,” Robinson says Reagan told him. Even now, Robinson seems awed by Reagan’s instructions, remembering that his plan “wasn’t a rollback of the USSR; it was the literal takedown of the Soviet Union.”

The United States ended up excluding six major European countries from the U.S. market, which Robinson admits created a “major dispute” between the allies. “It was war with the allies because they were underwriting the Soviets, and furthermore Western governments were giving the Soviets loans at a full percentage point and a half less than the market value. This closed a 15 or 16 billion dollar deficit, about half of their operating budget.”

Robinson’s plan saw fruition two days before the formal collapse of the Soviet Union, when the USSR defaulted on over 90 billion dollars of Western debt. “Our plan was almost intuitively obvious,” Robinson claims, “but as far as I know we never had an international banker in national security before me, and that’s why I think international fi nance is still a very neglected part of national security.”

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