In late 1981, President Ronald Reagan announced far-reaching sanctions on a critical Soviet infrastructure project, a 3,000 mile pipeline connecting the Soviet Union to Western Europe. American allies had carefully negotiated “The Deal of the Century” with the Soviets to minimize its energy dependence on the Middle East, but the Reagan administration flouted the concerns of his allies to test the resolve of the United States’ ideological archenemy. American allies were shocked. A fracture in the democratic-capitalist alliance opened.

Reagan Victory School proponents claim these sanctions were a masterful stroke to exploit Soviet economic weakness and triumph in the Cold War. Recent archival openings of Foreign Relations of the United States and CIA Crest, however, provide more color. This paper uses two lines of argument to refute the traditional Victory School narrative. First, drawing on newly released documents and recent articles by historians David Painter and Tyler Esno, this paper finds that Reagan slowly abandoned his initial hard-line tactics for pragmatic diplomatic engagement once he realized the ineffectiveness of unilateral economic pressure. Second, this paper draws from memoirs and biographies of Soviet leaders to demonstrate that Gorbachev understood the issues facing the Soviet oil industry as only one issue in the broader context of Soviet economic decline. Thus, the chain of events that ended the Cold War came not from American economic pressure, but rather from Gorbachev and his advisors’ fundamental understanding that domestic reform was inextricably linked to foreign policy reform.