Part 11

by Robin McMeeking

Part 11

Islamist Attacks on U.S. and Americans Abroad

The hostage taking at the U.S. Embassy in Iran marks the beginning of a long list of attacks against America by a fringe group of militant Islamists. We will return to our Presidential chronology after reviewing the following. Terrorism, particularly that associated with various militant Islamist groups, has become a significant political issue. Until the 9/11 attack on the World Trade Center in 2001, these incidents were treated individually. Following is a list of the various attacks against the U.S. that were planned or actively encouraged by militant Islamists based outside the U.S.. I have listed them together primarily for the benefit of the younger reader who may be unaware of many of these events. Source 1, Source 2

1979 Nov 4:

Radical Iranian students seized the United States Embassy complex in the Iranian capital of Tehran. The immediate cause of this takeover was the anger many Iranians felt over the U.S. President Jimmy Carter allowing the deposed former ruler of Iran, Shah Reza Pahlavi, to enter the U.S. for medical treatment. In Iran, this was believed to be an opening move leading up an American-backed return to power by the Shah. [63 hostages were taken, mostly Americans. A few were released after three weeks leaving 52. There were negotiations, a trade embargo, and an abortive rescue mission . The hostages were held for 444 days.] The crisis which followed this seizure created a near state of war, ruined Jimmy Carter’s presidency, and began an environment of hostility between America and Iran which continues to this day.

1983 April 18:

A suicide car bombing against the U.S. embassy in Beirut kills 63, including 17 Americans.

1983 Oct 23:

A suicide car bomb attack against the U.S. Marine barracks in Beirut kills 241 servicemen. A simultaneous attack on a French base kills 58 paratroopers.

1983 Dec 12:

A truck laden with 45 large cylinders of gas connected to plastic explosives broke through the front gates of the American Embassy in Kuwait City and rammed into the embassy’s three-story administrative annex, demolishing half the structure. The shock blew out windows and doors in distant homes and shops and did an estimated $400,000 worth of damage to the high-rise Hilton Hotel across the street. Only five people were killed (Two Palestinians, two Kuwaitis, and a Syrian).

1984 Sept 20:

In Aukar, northeast of Beirut, a truck bomb exploded outside the U.S. Embassy annex killing 24 people, two of whom were U.S. military personnel.

1984 Dec 3:

Kuwait Airlines Flight 221 hijacked to Tehran – American passengers murdered.

1985 June 14:

A TWA airliner is hijacked over the Mediterranean, the start of a two-week hostage ordeal. The last 39 passengers are eventually released in Damascus after being held in various locations in Beirut.

1985 Oct 7:

Palestinian terrorists hijack the cruise liner Achille Lauro (in response to the Israeli attack on PLO headquarters in Tunisia) Leon Klinghoffer, an elderly, wheelchair-bound American, is killed and thrown overboard.

1985, November:

Hijackers aboard an Egypt Air flight kill one American. Egyptian commandos later storm the aircraft on the isle of Malta, and 60 people are killed.

1985 December:

Simultaneous suicide attacks are carried out against U.S. and Israeli check-in desks at Rome and Vienna international airports. 20 people are killed in the two attacks, including four terrorists.

1986 April 5:

A bomb destroys the LaBelle discotheque in West Berlin. The disco was known to be frequented by U.S. servicemen. The attack kills one American and one German woman and wounds 150, including 44 Americans

1986 April:

An explosion damages a TWA flight as it prepares to land in Athens, Greece. Four people are killed when they are sucked out of the aircraft.

1988 Dec 21:

A bomb destroys Pan Am 103 over Lockerbie, Scotland. All 259 people aboard the Boeing 747 are killed including 189 Americans, as are 11 people on the ground.

1993 Feb 26:

A bomb in a van explodes in the underground parking garage in New York’s World Trade Center, killing six people and wounding 1,042.

1993 June:

Foiled NY Landmarks plot by Omar Abdel Rahman to blow up the Holland and Lincoln tunnels and other New York City landmarks.

 

1993 April 14:

Attempted Assassination of Pres. Bush Sr. during visit to Kuwait.

1993 Oct 3-4:

Black Hawk Down: shot down U.S. helicopters in Mogadishu, Somalia, during Operation Restore Hope.

1995

Failed Project Bojinka by Ramzi Yousef to blow up a dozen U.S. airliners over the Pacific.

1995 Nov 13:

A car-bomb in Riyadh, Saudi Arabia kills seven people, five of them American military and civilian advisers for National Guard training. The “Tigers of the Gulf,” “Islamist Movement for Change,” and “Fighting Advocates of God” claim responsibility.

1996 Jun 25:

Bomb aboard a fuel truck explodes outside a U.S. air force installation in Dhahran, Saudi Arabia. 19 U.S. military personnel are killed in the Khobar Towers housing facility, and 515 are wounded, including 240 Americans.

1998 Aug 7:

Terrorist bombs destroy the U.S. embassies in Nairobi, Kenya and Dar es Salaam, Tanzania. In Nairobi, 12 Americans are among the 291 killed, and over 5,000 are wounded, including 6 Americans. In Dar es Salaam, one U.S. citizen is wounded among the 10 killed and 77 injured.

1999

Foiled LAX Millennium plot by Ahmed Ressam to bomb Los Angeles International Airport. Ressam was arrested at U.S. Canadian border.

2000 Jan 3:

Failed U.S.S The Sullivans bombing that was refueling in the port of Aden, Yemen.

2000 Oct 12:

A terrorist bomb damages the destroyer U.S.S Cole in the port of Aden, Yemen, killing 17 sailors and injuring 39. The U.S.S Cole was not engaged in any combat during this period.

2001 9/11 attacks:

Terrorists hijack four U.S. commercial airliners taking off from various locations in the United States in a coordinated suicide attack. In separate attacks, two of the airliners crash into the twin towers of the World Trade Center in New York City, which catch fire and eventually collapse. A third airliner crashes into the Pentagon in Washington, DC, causing extensive damage. The fourth airliner, also believed to be heading towards Washington, DC, crashes outside Shanksville, PA., killing all 45 people on board. Casualty estimates from New York put the possible death toll close to 5,000, while as many as 200 people may have been lost at the Pentagon crash site.

2009 Nov 5:

The accused perpetrator is Nidal Malik Hasan, a U.S. Army major serving as a psychiatrist. He was shot by Department of the Army Civilian Police officers, and is now paralyzed from the waist down. Hasan has been charged with 13 counts of premeditated murder and 32 counts of attempted murder under the Uniform Code of Military Justice; he may face additional charges at court-martial.

2010 May 1:

A car bomb in Times Square failed to explode. Faisal Shahzad, a naturalized U.S. citizen from Pakistan, has admitted to the plot and to receiving bomb-making training in a Taliban and al Qaeda stronghold in Pakistan, prosecutors said, but he claims to have acted alone.

The Great Inflation

The summaries above of Nixon and Carter fail to convey a proper perspective of the economic situation facing President Reagan. It was also high on the list of dissatisfactions with Carter. Inflation had been increasing for several years, and by the end of Carter’s term it was above 13% annually.

This is the gruesome story of the great inflation of the 1970s, which began in late 1972 and didn’t end until the early 1980s. In his book, “Stocks for the Long Run: A Guide for Long Term Growth” (1994), Professor Jeremy Sigel, called it “the greatest failure of American macroeconomic policy in the postwar period.”

The great inflation was blamed on oil prices, currency speculators, greedy businessmen and avaricious union leaders. However, it is clear that monetary policies, which financed huge budget deficits and were supported by political leaders, were the cause. This mess was proof of what Milton Friedman said in “Money Mischief. Episodes in Monetary History” (1994): inflation is always “a monetary phenomenon.” The great inflation, and the recession that followed, wrecked many businesses and hurt countless individuals. Interestingly, John Connolly, the Nixon-installed treasury secretary without formal economics training, later declared personal bankruptcy. (Read more about Friedman’s contributions in “Free Market Maven: Milton Friedman”.)

Yet these unusually bad economic times were preceded by a period in which the economy boomed, or appeared to boom. Many Americans were awed by the temporarily low unemployment and strong growth numbers of 1972. Therefore, they overwhelmingly re-elected their Republican President Richard Nixon, and their Democratic Congress in 1972; Nixon, the Congress and the Federal Reserve failed them.

How and Why

It began in 1969 with a president facing re-election. Nixon inherited a recession from Lyndon Johnson, who had simultaneously spent generously on the Great Society and the Vietnam War. Congress, despite some protests, went along with Nixon and continued to fund the war, and increased social welfare spending. In 1972, for example, both Congress and Nixon agreed to a big expansion of Social Security just in time for the elections.

Nixon came to office as a supposed fiscal conservative. Still, one of his advisors would later classify Nixonomics as “conservative men with liberal ideas,” (Stein, 1984). Nixon ran budget deficits, supported an incomes policy and eventually announced that he was a Keynesian. (Learn more about Keynes in Giants Of Finance: John Maynard Keynes.)

John Maynard Keynes was an influential British economist of the 1930s and 1940s. He had advocated revolutionary measures: governments should use countercyclical policies in hard times, running deficits in recessions and depressions. Before Keynes, governments in bad times had generally balanced budgets and waited for malinvestments to liquidate, allowing market forces to bring a recovery.

Nixon’s other economic volte-face was imposing wage and price controls in 1971. Again, they seemed to work during the following election year. Later on, however, they would fuel the fires of double-digit inflation. Once they were removed, individuals and business tried to make up for lost ground.

Nixon’s deficits were also making dollar-holders abroad nervous. There was a run on the dollar, which many foreigners and Americans thought was overvalued. Soon they were proved right. In 1971, Nixon broke the last link to gold, turning the American dollar into a fiat currency. The dollar was devalued, and millions of foreigners holding dollars, including Arab oil barons with tens of millions of petrodollars, saw the value of dollars slashed. (Learn more in The Gold Standard Revisited.)

Winning Elections

Still, President Nixon’s primary concern was not dollar holders or deficits or even inflation. He feared another recession. He and others that were running for re-election wanted the economy to boom. The way to do that, Nixon reasoned, was to pressure the Fed for low interest rates.

Nixon fired Fed Chairman William McChesney Martin, and installed presidential counselor Arthur Burns as Martin’s successor in early 1971. Although the Fed is supposed to be solely dedicated to money creation policies that promote growth without excessive inflation, Burns was quickly taught the political facts of life. Nixon wanted cheap money: low interest rates that would promote growth in the short term and make the economy seem strong as voters were casting ballots.

Because I Say So!

In public and private Nixon turned the pressure on Burns. William Greider, in his book “Secrets of the Temple: How the Federal Reserve Runs The Country” reports Nixon as saying: “We’ll take inflation if necessary, but we can’t take unemployment.” The nation eventually had an abundance of both. Burns, and the Fed’s Open Market Committee which decided on money creation policies, soon provided cheap money.

The key money creation number, M1, which is total checking deposits, demand deposits and travelers checks, went from $228 billion to 249 billion between December 1971 and December 1972, according to Federal Reserve Board numbers. As a matter of comparison, in Martin’s last year, the numbers went from $198 billion to $203 billion. The amount of M2 numbers, measuring retail savings and small deposit, rose even more by the end of ’72, from $710 billion to $802 billion. (Read more in Formulating Monetary Policy.)

It worked in the short term. Nixon carried 49 out of 50 states in the election. Democrats easily held Congress. Inflation was in the low single digits, but there was a price to pay in higher inflation after all the election year champagne was guzzled.

In the winter of ’72/ ’73, Burns was soon worried about inflation. In 1973, it more than doubled to 8.8%. Later in the decade, it would go to 12%. By 1980, inflation was 14%. Was the United States about to become a Weimar Republic? Some actually thought that the great inflation was a good thing. (For more information, read our Tutorial on Inflation.)

Conclusion

It would take another Fed chairman and a brutal policy of tight money, including the acceptance of a recession, before inflation would return to low single digits. But, in the meantime, the U.S. would endure jobless numbers that exceeded 10%. Millions of Americans were angry by the late 1970s and early 1980s.