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America's Interest-free loan is being called... national |
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 Thursday January 23, 2003 01:17 by Coilin Nunan - Feasta
 Why America NEEDS political control of Iraqi oil (An extract from a revised and updated version of a previously posted article) It will not come as news to anyone that the US dominates the world economically and militarily. But the exact mechanisms by which American hegemony has been established and maintained are perhaps less well understood than they might be. One tool used to great effect has been the dollar, but its efficacy has recently been under threat since Europe introduced the euro. The dollar is the de facto world reserve currency: the US currency accounts for approximately two thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all world exports are denominated in dollars. In addition, all IMF loans are denominated in dollars. But the more dollars there are circulating outside the US, or invested by foreign owners in American assets, the more the rest of the world has had to provide the US with goods and services in exchange for these dollars. The dollars cost the US next to nothing to produce, so the fact that the world uses the currency in this way means that the US is importing vast quantities of goods and services virtually for free. Since so many foreign-owned dollars are not spent on American goods and services, the US is able to run a huge trade deficit year after year without apparently any major economic consequences. The most recently published figures, for example, show that in November of last year US imports were worth 48% more than US exports. No other country can run such a large trade deficit with impunity. The financial media tell us the US is acting as the ‘consumer of last resort’ and the implication is that we should be thankful, but a more enlightening description of this state of affairs would be to say that it is getting a massive interest-free loan from the rest of the world. While the US’ position may seem inviolable, one should remember that the more you have, the more you have to lose. And recently there have been signs of how, for the first time in a long time, the US may be beginning to lose.... Continued at http://www.feasta.org/documents/papers/oil1.htm |
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Jump To Comment: 1 2What finances the U.S. trade deficit is(or has been the huge influx of capital into the U.S. After 9/11 many investors have withdrawn their funds. The Saudis are a case in point. Capitalsts no longer seeing the U.S. as a safe haven, are taking the moola elsewhere. The recent fall in the value of the dollar is because of this. Whether this continues depends.. on the course of the impending war, for example. Ultimately the U.S. dollar is backed by the B-52 bomber. To sustain this control of the world's economy is vital. The forthcoming WEF meeting, and the opposition to it is crucial in the battle against Anglo-US hegemony.
[From an interview on 14th January 2003 with James Woolsey, director of the CIA from 1993 to 1994 and now an adviser at the Pentagon, in the office of Donald Rumsfeld. The interview was conducted for Der Spiegel by Carolin Emcke and Gerhard Spoerl.]
......Spiegel. Back to the Axis of Evil: Iraq has oil, North Korea doesn't. As early as May 2001 the Bush government announced a new aim for its energy policy.Doesn't the dependence on imported oil make America particularly vulnerable?
Woolsey. Oil is the the life's blood of oil industrial nations. Two thirds of the known oil reserves lie in the Persian Gulf. When Saddam in 1990 marched into Kuweit and got closer to the Saudi oil fields he was a mere 100 kilometres away from bringing a half of the proven oil reserves of the world under his control.
Spiegel. So it's about oil this time...
Woolsey. But not only America's dependence on oil, but that of the entire world. In the short term our basic vulnerability lies in the fact that the Saudis can quickly throttle or boost the level of oil output, because they have access to over half the world wide "swing capacity", in total 4 million barrels. Therefore the Saudis have a decisive influence over the oil price. We must take the oil weapon away from the Middle East.
Spiegel. Was it carelessness (negligence) or short sightedness that the United States has found itself in a state of dependence on Saudi Arabia - a land that is now regarded as unreliable?
Woolsey. The former Israeli Prime Minister, Golda Meir, once said: "How can Israel be the chosen people, when God had us wandering in the desert for 40 years and then gave us the only place in the Middle East that has no oil?" Unhappily democracies like Israel do not have access to oil, but authoritarian regimes. From this it follows that the world, so long as it is dependent on oil, must somehow find ways of getting on with these countries. One can't deal with all problems at once. One needs a long term strategy.
Spiegel. And should we conclude from that the Iraq is the beginning of this strategy?
Woolsey. While almost all of Europe is democratic almost all the Middle East are hard cases for the spreading of democracy. We are starting now with Iraq, because Saddam is the most malicious and dangerous. We cannot leave him in government and instead democratise the regions all around him. One must begin at the centre of the problem.
Spiegel. Wouldn't you admit though that American foreign policy is not innocent in regard to the difficulties of the Middle East?
Woolsey. The Middle East is an excellent example to illustrate Churchill's saying that the Americans always do the right thing in the end, after however they have first tried out all the wrong alternatives.
Spiegel. How does the Middle East illustrate this?
Woolsey. For a long time we have regarded the Middle East as our petrol station. One reason that democracy has made no progress in the middle east is our fixation on oil. The best exaple of that was in 1991 when former President Bush sent a coalition against Iraq that won the war and then allowed a ceasefire that allowed Saddam's Republican Guard to remain intact - and then we held back and watched while they butchered the Kurdish and Shiite rebels. The world and the Middle East understood our message as being - after we have secured the supply of oil we're not interested in the fate of the people of the Middle East. I think that was the worst political decision in US foreign policy in the last quarter of a century.
Spiegel. And America is now going to rectify that decision?
Woolsey. The 1991 decision haunts us. People will die in the regime change in Iraq, far more than would have died if we had stood by the Kurds and Shiites or at least hindered the attacks of the Republican Guard.