Skip to content

US foreign policy for dummies

17/08/2013

US Foreign PolicyA lot of people are pretty confused by US foreign policy.

Why attack one despotic mass murderer and support another?

Why arm religious fanatics today, assassinate them tomorrow?

Why is it more important to support one state in the Middle East than fifty states in North America and the Pacific?

How come Libya is the only ‘Arab Spring’ country that warranted a Western military response?

Why does Iran get sanctions and sabre-rattling for simply exercising its rights within the Nuclear Non-proliferation Treaty the US and Israel both blatantly flaunt?

Some people look at things like attacking Iraq to find non-existent WMD and fight terrorists that weren’t there until they created them or bombing wedding parties to protect school girls living along the proposed TAPI pipeline and say “Look! It’s obvious! It’s all about oil!” and they’d be right.

Well, half-right.

It’s not because America is trying to secure its future oil supplies.

US firms got few oil deals in Iraq. Besides, America can meet its own demand for fossil fuels simply by destroying its environment.

If it was planning for the future it would be flat out shifting to renewables not committing itself to an endless military buildup in pursuit of oil.

It’s partly because the US wants to control the future oil supplies of other countries, especially potential strategic or economic competitors, by controlling all the ocean straits and mountain passes it must go through.

But mainly it’s because Uncle Sam needs to make sure that everyone in the world pays US dollars when they fill up their tanks. Because when that stops, the US economy will collapse.

At the end of World War II the US undertook two major strategic diplomatic and economic initiatives that would ensure its dominance of the post war West and eventually the whole world.

The first was the Bretton-Woods agreement that put hundreds of countries under the economic thumb of the US controlled IMF, GATT and World Bank and established the US dollar as the international reserve currency, backed by a firm link to the gold bullion in Fort Knox. The US was the biggest creditor nation in history and embarked on a spending spree on the back of demobbed ex-military labour and a shift of some of its enormous wartime production capacity to consumer goods.

Second was the deals it cut with the newly installed monarchs of former British and French colonies built over oil fields to only buy and sell oil in US dollars.

That’s right. Since World War Two pretty much all oil trade in the non-communist world has been carried out in greenbacks.

So the US needs a huge military to enable them to dominate so many bits of the planet. And it needs to keep that military fed and trained and justified.

So it starts wars. Sometimes it starts land wars in Asia. There are some really stupid people in America.

Then it made a mistake that could have been avoided by reading a little history.

Like Afghanistan, Vietnam has a long pedigree of fighting off colonial invaders.
After Kublai Khan did what Genghis couldn’t and overran the country it took the Vietnamese almost a millennium to evict the Chinese.
They saw off the French in little more than a century.
The US arse was kicked back into the South China sea within a decade.

Practice makes perfect.

By the end of the Vietnam War the US was a debtor nation and to avoid a currency crisis had broken the link between the greenback and its dwindling gold reserves.
But the yankee dollar didn’t die.

Vietnam veterans weren’t put to work in all the war factories turned over to civilian purposes. That wasn’t happening. Factories were closing down or being shipped overseas. So they threw the veterans onto the streets instead. US industrial production and real wage levels slumped.

Now with the gold bricks kicked away and the supporting factories sold off the US dollar must collapse, right?
Well it slumped a bit too, but still refuses to die.

Because the yankee dollar floats on oil.

Countries and companies that want to deal on the international oil market hold big US dollar denominated reserves for the quick liquidity needed to take advantage of fluctuations. Oil exporters are major sinks for US generated debt. By accumulating so much in US treasury bonds that they and countries like Japan and China sit on they are soaking up the toxic US debt that would destroy the world economy even as they pump the toxic chemicals that are destroying the world’s ecosystems.

And every bomb detonated and sabre rattled in the Middle East pushes up oil prices and pushes more quantitatively eased US dollars out of the US economy where they would otherwise be causing Weimar type inflationary pressure.

What happens if the world stops buying oil with US dollars?

Well, few people who live in America or sell to America want to think about that.

Let’s just say Canada and Mexico would have problems with illegal immigrants for generations to come.

So anyone who hints at the possibility of trading oil in other currencies must be mercilessly crushed.

It wasn’t WMD or the invasion of Kuwait that doomed Saddam Hussein. It was realigning the large Iraqi oil bourse to trade in euros that did him in.

Gaddafi had crossed swords with the US before, but he’d become the world’s darling when he let Western oil companies into Libya. But then he tried to start up a Pan-African economic community with independent financial institutions. And trade oil in other than US dollars. So he was a goner.

Iran has been known to trade oil for almost any currency – or barter it for goods directly – so its oil market must be kept small and crippled with sanctions even when US intelligence agencies agree it is not trying to build an atomic bomb.

So if you want to know where the US will next be sending its armies or its proxies, if you want to know who is about to be blasted with cruise missiles or hellfire armed drones, if you want to know where the next wave of collateral murder will strike …

Watch the oil.

But follow the money.

Advertisements

From → politics

7 Comments
  1. it’s all about the business.

    Like

    • Yeah, but which one?

      I don’t think Naomi Klein’s ‘Disaster Capitalism’ works well as a foreign policy conspiracy theory because half the time it’s not US businesses who get to clean up after US bombing anyway.

      It only works in Iraq if you assume the bulk of the oil and rebuilding contracts were supposed to go to US companies even though they didn’t.

      And it doesn’t explain ‘Why Iraq?’, much less ‘Why Libya?’. Why doesn’t America just keep manufacturing crises in its own hemisphere like it did through so much of the post-WWII period?

      The US dollar’s status as the world reserve currency is absolutely vital to maintaining US levels of debt. Without US secondary industry or the gold standard to hold it up, that leaves oil trading. You can only get so far by stretching intellectual property laws, especially as US innovation continues to dry up.

      Look at the last three decades of US foreign policy through the prism of maintaining a lock on oil trading and, viola, so many strangely shaped pieces just fall into place.

      Like

  2. I’m just putting the “oil trading” under a general umbrella of “business”. It may be the main culprit in the campaigns of warring opportunity you list (sounds persuasive to me), but it’s also part of a larger mindset of amoral business practices undermining civilization and the environment.

    Like

  3. Anna C. permalink

    Excellent post. One thing I would like to specify is that Americans are just exasperated by the American government as the rest of the world is.

    Like

  4. WOW. Thank you for this education! I thought that Naomi Klein KNEW it…But apparently I did not have all the resources I needed…I will look into this. I appreciate your information. (i have eye problems, big time, so I cannot read all that I want to. But I molto molto appreciate — and frankly trust too — condensations like yours!)

    pam

    Like

    • Yeah, Ms Klein’s ‘disaster capitalism’ has a fair bit going for it, especially taken in the context of Marx’s ‘crisis of capitalism’ – which is looking more prescient every day despite Marx’s hopelessness at coming up with an alternative.

      But I think she’s a bit stronger on personality politics than she is on macro-economic analysis and her reasoning as to why particular countries are chosen to be the next disaster area often seem a bit like paranoid conspiracy theories to me. I reckon it’s not so much nasty people making cynical economic decisions as it is impersonal strategic and economic logic working itself out through institutions that are structured to ensure there will be moral cripples in key decision making roles.

      Liked by 1 person

  5. Great post, cabrogal!

    Like

Over to you

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: