Nuclear Close Calls: the War that Almost Happened

Finance and economics people are good at many different things, and we have never had a pleasure of listing modesty among our virtues. Sadly, predicting future has never been in the list either. As Paul Samuelson, a Nobel laureate (and the author of the best-selling economics textbook ever) famously joked in 1966, ‘Wall Street indexes predicted nine out of the last five recessions’, and our record has hardly improved since then.

One of the possible reasons for this apparent shortfall is the human tendency to treat the world as if it was more stable and predictable than it really is. This implies that people (finance people in particular) are normally not comfortable with ‘bad’ uncertainty (i.e. the one that is difficult to quantify and model) and often try to find ways around it, often at a cost of some kind. Benjamin Graham, a notable investor (and the author of probably the most acclaimed book on investing) has famously said, “No statement is more true and better applicable to Wall Street than the famous warning of Santayana: “Those who do not remember the past are condemned to repeat it.”

The recent financial crisis offers a plethora of good examples to corroborate Graham’s adage. When the financial crisis started in 2007, the Chief Financial Officer of Goldman Sachs, a major investment bank, famously noted that ‘25-standard deviation events’ happened on several consecutive days. However, that was a long time ago. A different event took place recently. When the Swiss National Bank abandoned its currency peg exactly a month ago, in mid-January 2015, and allowed its currency to soar in value (which was yet another extraordinary event causing some pain in financial circles), the CFO of Goldman Sachs (this time a different one), commented that the event was ‘something like a 20-plus-standard-deviation move.’ If Graham were alive, he would have been amused for sure.

And by the way, how common are ’20-standard deviation’ events? As it turns out, they don’t happen particularly often. For data following a normal distribution (which is not true for most financial data sets), events beyond three standard deviations are extremely unlikely. And what about 20 standard deviations? Well, that was a gross exaggeration. According WolframAlpha, the probability of such an event is very low: 5.507×10^-89. How small is this number? Well, it’s easier to compare it to something really big. According to the estimates provided in the Wikipedia article, the volume of observable universe is 4×10^83 liters. A 20-standard deviation event is hence really, really impossible.

If we have any consolation at all for our less-than-perfect forecasting skills, it might be the fact that people from other disciplines are generally no better. However, on an auspicious day of Friday, 13^th of February, the Financial Times published a piece of forecasting (prepared mostly by the University of Oxford and the Global Challenges Foundation) which we all may rather want to believe: a brief summary of things that could bring the world to its end.

Overall, this is a pretty interesting piece of writing. It covers all the major threats we (not only policymakers) need to discuss today (including a global pandemic, a rise of a global dictatorship, and even unknown unknowns), and the authors seem to agree that humanity is not necessarily doomed to go extinct in the next 100 years. However, there is one thing I am quite uncomfortable with: the probabilities assigned to some extreme outcomes are very low. In particular, the authors believe that a chance of a nuclear war is a mere 0.005%. In comparison, the probability of a ‘grey goo’ taking over the planet is considered to be higher, at 0.01%.

One may think of these low probability estimates, which are indeed quite difficult to estimate with reasonable precision, as of a good example of the so-called normalcy bias: a tendency to underestimate the chances of events that have never happened before (e.g. the Great Depression or the WWI). Indeed, one may argue that to this day the only known case of wartime use of nuclear weapons is the 1945 bombing of Hiroshima and Nagasaki. However, this approach to history may be a bit misleading. The common problem here is known as historian’s fallacy. In order to understand history in a better way, it is important to try to see the past from the same viewpoint as the actual decision maker at the time, without the benefit of additional information and hindsight (those who like turn-based or real-time strategy video games will probably recognize this as the concept of the fog of war). If a closer look is granted to the complex history of nuclear weapons, especially to the decisions which were not taken, many interesting details will arise which can put the apparent stability of the present world order into doubt.

Nuclear Weapons in Brief

In a specific sense, ‘nuclear weapons’ is a general term for the whole class of different weapons of mass destruction. A particular feature of this weapons class, which is of special importance to policymakers and the general public, is their potential explosive force in comparison with conventional weapons. Different methods of nuclear weapon yield comparison may exist, but arguably the most common one is the TNT equivalent. This method implies the mass of trinitrotoluene, a conventional explosive, which needs to be detonated to produce the same amount of energy as a single nuclear bomb. The blast yield of Fat Man, the bomb dropped on Nagasaki in 1945, was thus 21 kt (kiloton) of TNT equivalent. The Tsar Bomba (1961), the most powerful bomb ever detonated, had a yield of 50+ megatons, a tremendous improvement. The explosion was so powerful that it produced a fireball of some 8 km in diameter and a mushroom cloud of 50+ km high. What can 50 Mt be compared to? The mass of the Great Pyramid of Giza is, according to some estimates, ‘only’ 5.9 million tonnes. Obviously, producing and transporting such a mass of conventional explosives is not feasible. In comparison, the actual mass of the Tsar Bomba was only 27 tonnes – just enough for a single bomber aircraft to carry.

Bomb case of the size similar to the one of the Tsar Bomba

Nuclear Non-Proliferation

It didn’t take long to realize that the capacity of the existing nuclear arsenal of the time was sufficient to destroy the planet several times and that a special regulation was needed. The Treaty on the Non-Proliferation of Nuclear Weapons (aka the Non-Proliferation Treaty) was established in 1968, with the initial intention to limit the nuclear states only to five permanent members of the UN Security Council and to prevent further proliferation of the nuclear weapons. It was neither the first nor the only agreement on nuclear weapons, but it was a major step forward in its scope and intention. However, the success of the NPT was mixed at best. Although most UN member states have signed it, there are several notable exceptions. In particular, four other countries (India, Pakistan, Israel, and, most recently, North Korea), while not signatories, are understood to possess nuclear weapons. Moreover, some NPT signatories (most notably, Iran) are considered not to be in full compliance with NPT requirements, with different implications.

The MAD Doctrine

The fierce arms race (which is a classic example of the prisoner’s dilemma) of the Cold War between the USA and the USSR led to what is now known as the Mutually Assured Destruction (MAD) doctrine: each side is deterred from using nuclear weapons by the fully credible threat of complete annihilation of both the attacker and the defender. The MAD doctrine had two important implications: further development of nuclear weapons (with an emphasis on smaller size and higher speed of delivery) and increasing stockpiling of nuclear warheads. For a threat to be fully credible, both adversaries had to possess sufficient nuclear arsenals to annihilate each other within hours (or even minutes) located in such a way as to prevent any effective defense (i.e. land-based and submarine-based ballistic missiles located in various parts of the world). Efficiency of nuclear weapons, in terms of speed, range, and accuracy, increased dramatically in the following years. This inevitably led to understanding, by both the USA and the USSR, that in an event of a real nuclear attack the defender will have minutes, if not seconds, to react and launch a second strike. This in turn led to even more sophisticated means of defense. In the Soviet Union, for example, this resulted in development of the system called Dead Hand (or Perimeter). Little is known about it, but it is understood that its main purpose was to guarantee a retaliatory nuclear strike even if the top Soviet (or Russian) political and military leadership were killed in a single attack. The nuclear war became literally a few clicks away.

US and USSR nuclear stockpiles

The Many Near-Misses

Contrary to the public opinion, the Cuban Missile Crisis of 1962, which definitely deserves a separate blog entry, was not the only known example of a confrontation between the USA and the USSR that could have resulted in a nuclear war. Like pretty much all other major incidents of the Cold War, it had a deeper story behind it, which provides a fascinating read and is full of ‘what would you do?’ moments of challenging decisions, for all parties involved.

The meeting of  Kennedy's Executive Committee (EXCOMM) during the days of the Cuban Missile Crisis

Yet the Cuban Missile Crisis lasted for 13 days and involved extensive communication between the senior military commanders and the Kennedy Administration, as well as complicated negotiations between the USA, USSR, and Cuba. The turbulent history of the Cold War knows many other potentially dangerous events where decision was in fact made in a matter of seconds. The list of these events is extensive. In many cases, they resulted from the complexity of defense systems developed and challenges of handling them in a proper way. And yet a common feature of many near-misses, which has almost caused – and in some cases prevented – the nuclear war was the proverbial human factor.

As reported by Robert Gates, a former CIA Director and US Defense Secretary, a particular event happened in late 1979 when NORAD (combined aerospace defense command of the US and Canada) received a missile alarm on the Soviet nuclear launch. This was an issue of utmost gravity. The alarm was escalated to senior military and government officials in a matter of seconds. Zbigniew Brzezinski, the US National Security Advisor, was awakened at 3:00 in the morning to be told that some 250 Soviet missiles were on the way to the US. Less than 10 minutes were available to order a retaliatory nuclear attack. It’s hard to imagine Brzezinski’s initial reaction, but he decided to wait for a final confirmation. As he was still waking up and trying to comprehend the news, he received a second call, only to be informed that 2,200, not 250, missiles were launched against the US. That was a full-scale nuclear war. Understanding that he would be dead in some 20-30 minutes, Brzezinski was about to call Jimmy Carter, the President, who then had to order a US nuclear launch, when he received the final, third call, confirming that everything he was told before was just a false alarm.

This was one of at least five different false alarms which happened in 1970-1989 and indeed an event of ‘tremendous danger’…

The Soviet missile defense system was prone to errors too. In 1983, the Soviet Air Defense Forces received a system indication of a US missile strike. Stanislav Petrov, an officer on duty, had to report the alarm to his superiors, who would then have to make a decision on a retaliatory strike. However, Petrov had his doubts. He knew he only had few seconds to react and understood that the top commanders will probably not hesitate in ordering a launch, and yet he took a potentially dangerous decision to wait. Some 20 minutes later, as no actual attack on the USSR happened, it was clear that a system malfunction took place. Years later, when the incident was disclosed to the press, Petrov, then a retired officer, received his praise and a minor international award as the man who had averted a catastrophe. As he later admitted, “That was my job. But they were lucky it was me on shift that night.”

Stanislav Petrov receiving the Dresden Prize, 2013

It is generally considered that the dissolution of the Soviet Union and the end of the Cold War in 1991 eliminated many of the threats of the past. Yet the persisting threat of a nuclear war did not disappear. Yet another false alarm happened in 1995, when American scientists launched a rocket carrying scientific equipment from Norway (which is, by the way, a NATO member state). Air Defense were put on highest alert, which was escalated up to the top political and military leadership. Boris Yeltsin, Russia’s first president, had to make a decision on a retaliation with all the limited information he had. Fortunately, he decided against the launch, and a nuclear war was averted, yet again. However, Yeltsin, for all his incompetence and populism, was considered one of the most US-friendly Russian leaders credited by the West for his efforts to establish more amiable relationships. It’s hard to imagine though what Putin would have decided in a similar situation.

A Glimmer of Hope?

A lot has changed since the Non-Proliferation Treaty came into force in 1970. A major step forward was followed by two steps back. Despite best efforts to contain them, nuclear weapons are now more prolific than any time before in history, and are now available to countries with a significant risk of political instability and/or propensity for supporting terrorists. International organizations created with the sole purpose of maintaining peace, the UN Security Council in particular, seem to have been proved largely impotent during the course of some recent events. The 2015 NPT Review Conference, a get-together taking place every five years, which I am looking forward to, is unlikely to produce any meaningful result.

After security and territorial integrity assurances given to Ukraine in 1994, in exchange for its vast Soviet-era nuclear arsenal, were torn apart, current (and probably future) nuclear states are likely to conclude that own ballistic missiles are more reliable allies than the US or Russia. It seems quite naïve to expect any of them to abandon their nuclear weapons anytime in the nearest future in exchange for any kind of ‘guarantee’ or ‘assurance’. Even though it is likely to ensure their own territorial integrity in the short run, this also magnifies the risks if something goes wrong, which, unfortunately, still can happen.

Even though I am rather optimistic about the prospects of the world in the next 100 years, it is my firm belief that nuclear weapons, rather than a ‘grey goo’ or alien invasion, constitute the single biggest threat to humanity. For all the best efforts of the past, the world is still a dangerous place, and more is needed to ensure a safer path to the future for us all.

 BONUS 1

Ever wondered what it would look like if London suffered a nuclear attack? Or Washington DC? Or Moscow? Now it is possible to simulate with NUKEMAP: http://nuclearsecrecy.com/nukemap/classic/

Interested to see how big a resulting mushroom cloud will be? Try NUKEMAP3D: http://nuclearsecrecy.com/nukemap3d/

BONUS 2

The UK government has taken a possibility of a nuclear attack seriously, very seriously. They have even prepared a speech for the Queen in case of a WWIII, which was declassified only recently. Fortunately, this has never become history. The speech can be found here: http://www.telegraph.co.uk/news/uknews/queen-elizabeth-II/10213335/Full-text-of-Queens-speech-for-outbreak-of-World-War-Three.html