‘So what’s the point you’re making?’ said Jordan.
‘People can see military control on every street corner. It gives a focus for the resentment, for kids to tear up cobble-stones and be shown on television throwing them at tanks. You can’t see financial control: it’s an invisible oppression. I put forward the argument that what Moscow is doing is locking their satellites into greater and far more effective financial dependence than any that could be achieved with a tank or a gun.’
Volger turned enquiringly towards Pike. Quickly, on the yellow prompt pad laid out in readiness, Pike scribbled, ‘Good point. I concede the contrary argument as valid. Why Moscow repay western loans?’
Volger advanced only the question when the President came to him for an opinion: Pike was surprised by the uncertainly in his chairman’s voice. It was a fleeting reflection, because the CIA Director’s reply was instantaneous and Pike realized Adam was a very competent conference bureaucrat.
‘Because they’ve got to!’ seized Adam, at once. ‘They can’t hope to sustain the sort of financial support to which they’ve committed themselves without massive borrowing from the West.’
Pike was writing quickly now, ripping the sheets away sentence at a time. ‘Repayment foreign currency,’ he wrote first. Then, ‘Possible complete Soviet dependence upon West.’
Volger talked as the notes came to him but it was not the CIA chief who reacted but the Secretary of State. ‘Precisely!’ Bowen said. ‘Which is why I remarked at the beginning of this discussion how fundamental could be the change we’re discussing.’ The Secretary of State extended his cupped hand again and Pike realized the symbolism of the gesture now. ‘We’d have them!’ said the man who collected Western guns. ‘Here in the palm of our hands.’
‘What’s the Treasury feeling?’ invited the President, turning to the man on the other side of him. The Treasury Secretary, William Bell, was personally a retiring, shy man with a contradictory attitude towards monetary control. He had an unshakeable belief in monetarism. Under Bell, US interest rates had peaked at twenty per cent.
‘I’m thinking a little towards both views that have been put forward,’ said the man. ‘I agree it indicates a move towards stronger financial links between Moscow and its satellites, although I’m not sure I’d go as far as assessing it as oppression. But I can’t avoid the conclusion either that there’s some new, hard attitude being shown as well.’ He hesitated, looking towards the President. ‘An attitude I agree that we should respond to. The Argentinian deal hasn’t solved that country’s problems but it’s provided an indication of confidence and with the trade arrangements now confirmed it’s given some Western banks, our own included, the confidence to increase their loan commitment and make the whole scheme work….’ Bell replaced his glasses and went to some notes in front of him. ‘Certainly it enabled Buenos Aires to meet $75,000,000 of repayments on interest and short-term loans in the last week.’ He turned a page. ‘Poland, too. Three American consortia got payments on their due dates of $100,000,000.’
Pike scribbled another note on his yellow pad, passing it forward to Volger. Jordan saw the gesture and looked towards the Federal Reserve group. ‘A point to be made there?’ he said.
‘You’re aware that we had a representative at the Basel meeting,’ said the Federal chairman, nodding towards Pike. ‘English, French and German banks all reported in committee discussions that Poland was meeting its debts now. The country’s still a long way from the lifeboat but it’s swimming in the right direction at least.’
Jordan went back to his side of the table and said, ‘Commerce any views?’
William Johnson, the Secretary of Commerce, moved as if to stand for the meeting, then settled back into his seat again because everyone else had talked sitting down. He started uncertainly: ‘Picking up the earlier point about ultimate Soviet financial dependence I would point out that they are this year – as they have been in the past – purchasing grain supplies from us. Here again they’ve shown responsibility: when we agreed the increased shipment three weeks ago, an eight-day payment time was stipulated. And met on the nail, every cent.’
‘There’s an illogicality over that deal,’ broke in the CIA chief. He indicated a dossier on the table before him. ‘I’ve the actual photographs here for anyone who’s interested in seeing them, but our satellite reconnaissance of the Soviet grain-growing areas doesn’t show the failure that Moscow announced. According to the calculations made by our agronomists from these aerial surveys, Russia had one of the best harvests it’s had for years, not the worst.’
‘There’s surely an explanation for that?’ said the Commerce chairman.
‘I agree the man responsible within their ministry for assessing yield has been replaced,’ said Adam. ‘I’m surprised the crime was under-assessment; our experience of the Soviet system is almost consistently to over-estimate.’
‘They’ve held to the deal,’ said Johnson.
‘Which is an even greater illogicality,’ said Adam. ‘Why, having concluded the Argentinian deal and done well by their own farmers, are they taking from us wheat they.don’t need?’
‘We look to your Agency for answers to questions like that,’ said the President.
‘I can’t provide one,’ admitted the CIA Director at once. ‘It’s something we kept stubbing our toe against, on every analysis.’
‘What about stockpiling?’ said Johnson. ‘That would make sense, wouldn’t it, with an agricultural system as uncertain as theirs?’
‘Yes,’ agreed Adam.
Jordan indicated the dossier in front of the man. ‘How accurate is your aerial reconnaissance?’
‘Very detailed,’ assured Adam.
‘Any indication of storage facilities … the sort of facilities that would be necessary for this sort of quantity?’
Adam shook his head. ‘None,’ he said.
The President turned in the direction of the assembled bankers, nodding to Hector Belcher, who had replaced Pike’s father at the Chase Manhattan. ‘What’s the banking feeling?’ he said.
Belcher was a quiet spoken, cautious man who weighed his words before uttering them. He said, ‘There have been strains imposed – almost intolerable strains – over the last few years on the free world banking system. Strains that have led – falsely, I believe, but nevertheless to serious consideration among a large number of men whom I still respect – to the conjecture that the whole structure might collapse. The bank I represent, a bank with considerable commitment in the Eastern bloc, welcomes anything that reverses both the strain and the negative thinking. On the evidence available to us, the recent developments in Moscow seem to be doing just that….’ He stopped, looking towards the Secretary of State. ‘I don’t go along with the thought of using money as some kind of weapon: I think that’s unreal and irresponsible. I go along, however, with intermeshing the links between us….’
‘Gentlemen?’ said the President, continuing the invitation.
There was a momentary uncertainty between the bankers and then Alan Mewsom of the Bank of America said, ‘Six months ago we were involved in rescheduling discussions and were giving serious thought to setting off some of our debts, as non-recoverable. We are short just $20,000,000 on current repayments and we’ve an undertaking – one we believe will be met – from Argentina that it’ll be resolved in days rather than weeks. I couldn’t be more encouraged.’
‘Anyone else?’ asked Jordan.
‘I’d like to know more,’ said William Jeynes of Citibank. ‘But it’s looking good to our analysts.’
‘I think our biggest fear in the past is that some small bank would over-stretch itself to get into a loan consortium and ultimately declare a default,’ said Richard Railton, the chairman of Manufacturers’ Hanover. ‘In the last three or four months, that fear has receded because of the repayments from the Soviets and those they control. Moscow might not realize it, but they’re pulling us back from the brink.’
‘I agree,�
�� said Belcher. ‘For the first time for a long time my board feels things are working properly.’
The President nodded, gazing momentarily down at the desk in front of him. Then he looked up and said, ‘OK, what’s the consensus?’
‘Control, to our advantage,’ said Belcher. From alongside him came nods of agreement and mutterings of ‘agreed’ from the bankers.
‘Control,’ echoed Volger.
‘Control,’ said Johnson.
‘Control,’ said Bowen.
‘I’d like more information,’ prevaricated Bell.
‘Manipulation,’ said the CIA Director.
‘Majority for control,’ said the President, unnecessarily. ‘So how do we respond?’
‘Not directly,’ advised Bowen at once. ‘We’re still guessing.’
‘What can we comment upon positively?’ asked Jordan.
‘Trades unionism in Poland,’ said Adam. ‘There’s the additional advantage that we won’t be making any direct reference to the Soviet Union.’
Looking across the room at the President, Pike got the impression of a man staring down at a hand of cards, wondering which one to pick up in the hope of it being the trump.
‘I agree trades unionism and Poland,’ said Jordan. ‘But not immediately.’ He turned to Bowen again. ‘Call the Soviet ambassador in,’ he said. ‘Make it an unpublicized meeting; don’t want to antagonize them because it could be interpreted that we’re crowing over our sanctions. Let it be known that we welcome the relaxation. I’ll go public with a remark sometime next week.’ Jordan came back to the others in the room: it was a general point but he directed it towards the Federal Reserve contingent whose analysis had just been adopted. ‘There’s still a lot of grey areas … too many, for my peace of mind. If anyone comes upon anything that appears to clarify the matter, I’d like immediate advice.’
There were nods and movements of agreement from around the room.
The President stood and said, ‘Thank you, gentlemen, for your attendance and your help. Useful; very useful indeed. Enjoy the rest of your weekend.’
Everyone rose with the man and stood as he strode from the room.
‘You staying down?’ asked Volger, turning to Pike.
The thought hadn’t occurred to him until now but it made better sense than returning to New York, tired as he was. He wondered if his father would be at the house. He was, when Pike called to say he was coming.
As a child, the Virginia house had never seemed big to Pike. But it did now. The rooms seemed to echo with their voices and the corridors to their footsteps and although they’d eaten around one of the smaller circular tables it still seemed too large for the three of them. Perhaps the impression came from almost forty-eight hours without sleep.
The older man’s curiosity was understandable and initially Pike wondered about the integrity of talking about Basel and the White House meeting. And then he decided his father would learn everything from Volger anyway and that he might as well tell him. He gave a complete summary of the Swiss meeting and then of what had happened that afternoon during the conference with the President. He was aware of his mother smiling proudly as he talked.
‘I think the CIA reservations have got a lot of validity,’ he said.
His father shook his head. ‘The Agency never likes to commit itself,’ he said. ‘They’ re up to their ears in analysts who only seem able to make assessments based on the past. Anything new frightens the hell out of them.’
‘I still think the danger is momentum getting ahead of the facts.’
‘Don’t go fainthearted because of the level at which it’s being considered,’ said his father. ‘No one’s forcing the opinion. And there’s been enough independent analysis from the time you first spotted it.’
‘What’s the feeling in the Fund?’ said Pike.
‘Not unanimous, of course,’ said the older man. ‘The majority seem to be going for responsibility. England aren’t so sure.’
‘And they’re the most experienced,’ pointed out Pike.
The other man pulled down the corners of his mouth. ‘Maybe they’ve been bitten too hard in the past,’ he said. ‘I think they’re being too cautious, just like the CIA.’ He leaned across the table to emphasize his next question. ‘What did Treasury do at the meeting?’
Pike considered the query. ‘Sat on the fence,’ he said.
The IMF director nodded. ‘Bell’s frightened of his own shadow,’ he said, as if the assessment were confirmation. ‘Jordan knows he needs a stronger man there.’
‘The President was very determined to get the widest response, to get the consensus right.’
‘Pity I couldn’t have been officially involved,’ said his father. ‘Damned pity.’
‘What about unofficial?’ asked Pike.
There was one of the wolfish grins. ‘Like you said, Jordan is going as far as he can to get a wide consensus.’
‘Which means he’ll be in contact with Ambersom, as well.’
The smile faded, just slightly. ‘But Ambersom doesn’t have the advantage of knowing what’s already been said,’ he reminded.
‘Isn’t it time we stopped talking business?’ protested his wife.
Pike turned to his mother and said, ‘Sorry.’
‘How’s Janet?’ she said at once.
‘I’ve been away,’ Pike reminded her.
‘Haven’t you called her since you got back?’
‘It’s only been a few hours, mother!’
‘I thought you could have made time.’
It hadn’t taken long, thought Pike, for the feeling of size to disappear and be replaced by an impression that the walls were closing in around him.
Chapter 17
Lydia was no longer as overawed by the formality of the Politburo as she had been when she first appeared before them: the reserve still existed and she deferred to their authority, but gone was the suspicion she had come to recognize from people when they first began considering her proposals. Yakov Lenev controlled the meeting, a square-bodied, square-headed man with a Georgian rasp in his voice. The two other members were Viktor Korobov, a scholarly-looking man who had once been deputy Director of the KGB and had been seconded to the committee because of the experience, and Ivan Pushkov, a bespectacled, clerk-like man who had replaced Anatoli Karelin as economics expert upon the governing Soviet body. Protocol decreed that Malik should be the spokesman, as Finance Minister, but the biggest indication of the diminishing formality was the way questions were frequently addressed directly to Lydia; she wondered if Malik would have been irritated but for their personal relationship.
‘Are you absolutely sure that nothing has been overlooked?’ demanded Pushkov, with an accountant’s dislike of any risk involving money. He was worried at incurring the same fate as Karelin if anything went wrong.
‘Yes,’ said Malik. ‘You’ve considered all our reports.’
‘If something had been overlooked it wouldn’t be in the reports, would it?’ said Pushkov testily.
‘We are sure every preparation has been made,’ assured Malik. He glanced at Lydia and she decided he was irritated at being pressured in her presence.
‘How advanced are the loan applications?’ said Lenev.
Malik looked to Lydia. She saw it as an opportunity to convince Pushkov. And divert the pressure from Malik.
‘In the process of being established,’ she said. ‘We’ve moved into Europe, so London was the natural starting-point, through their merchant banks. In England the consortium involves Lloyds, Barclays, National Westminster, Midland and Williams and Glyn’s and, because of the close European interlinking that exists …’
‘What is this interlinking?’ demanded Korobov.
‘Let me give you an example of one bank we want to involve – Algemene, in the Netherlands. Algemene is one of a number who refer to themselves collectively as Abecor, the associated banks of Europe. Which means a bank from every country. Abecor, for instance, is composed of Alge
mene, the Banca Nazionale Del Lavoro, the Banque Bruxelles Lambert, the Banque Nationale de Paris, Britain’s Barclays, Bayerische Hypotheken und Wechsel Bank and the Dresdner Bank.’
‘So one becomes many?’ said Korobov.
‘For the maximum impact,’ agreed Lydia. ‘Continuing with Algemene, for instance. Whatever happens to that one bank, apart from its Abecor association, directly affects the twenty-eight financial subsidiaries it controls in the Netherlands and its thirty-five additional international subsidiaries.’
‘How widely are the loans being spread?’ asked Pushkov.
This time it was Malik who answered. ‘World-wide,’ he said. ‘Would you like some detailed indication?’
‘Of course,’ said Pushkov.
‘In addition to Algemene, other banks involved in the Netherlands are the Amsterdam and Rotterdam Bank and Nederlandsche Middenstandsbank. There’s a heavy concentration in Germany. They include Baden-Wurtembergische Bank Aktiengesellschaft, Badische Kommunale Landesbank, Bank für Gemeinwirtschaft, Bayerische Landesbank Girozentrale, Bayerische Vereinsbank, Berliner Bank, Berliner Handels-und Frankfurter Bank, Bremen Landesbank Girozentrale und Staatlische Kreditanstalt, Commerzbank, Deutsche Bank, the Deutsche Girozentrale and Deutsche Kommunalbank, Deutsche Genossenschaftsbank, the Dresdner Bank, the Hamburgische Landesbank Girozentrale and Hessische Landesbank Girozentrale….’
Pushkov nodded at Malik’s listing and said, ‘That seems comprehensive enough.’
‘The feeling was that the Germans retain a paranoid fear of hyper-inflation, with their memory of the Weimar Republic, and that any financial difficulty will have a major and immediate effect: they’ll panic,’ said Lydia.
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