[rad-green] America Escalates its “Democratic ” Oil War in the Near East -- by Michael Hudson

*https://thesaker.is/america-escalates-its-democratic-oil-war-in-the-near-east/
<https://thesaker.is/america-escalates-its-democratic-oil-war-in-the-near-east/>*

*The Saker                         January 5, 2020*

America Escalates its “Democratic” Oil War in the Near East


*by Michael Hudson exclusively for the Saker Blog*

The mainstream media are carefully sidestepping the method behind America’s
seeming madness in assassinating Islamic Revolutionary Guard general Qassim
Suleimani to start the New Year. The logic behind the assassination this
was a long-standing application of U.S. global policy, not just a
personality quirk of Donald Trump’s impulsive action. His assassination of
Iranian military leader Suleimani was indeed a unilateral act of war in
violation of international law, but it was a logical step in a
long-standing U.S. strategy. It was explicitly authorized by the Senate in
the funding bill for the Pentagon that it passed last year.

The assassination was intended to escalate America’s presence in Iraq to
keep control the region’s oil reserves, and to back Saudi Arabia’s Wahabi
troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are
actually America’s foreign legion) to support U.S. control of Near Eastern
oil as a buttress to the U.S. dollar. That remains the key to understanding
this policy, and why it is in the process of escalating, not dying down.

I sat in on discussions of this policy as it was formulated nearly fifty
years ago when I worked at the Hudson Institute and attended meetings at
the White House, met with generals at various armed forces think tanks and
with diplomats at the United Nations. My role was as a balance-of-payments
economist having specialized for a decade at Chase Manhattan, Arthur
Andersen and oil companies in the oil industry and military spending. These
were two of the three main dynamic of American foreign policy and
diplomacy. (The third concern was how to wage war in a democracy where
voters rejected the draft in the wake of the Vietnam War.)

The media and public discussion have diverted attention from this strategy
by floundering speculation that President Trump did it, except to counter
the (non-)threat of impeachment with a wag-the-dog attack, or to back
Israeli lebensraum drives, or simply to surrender the White House to neocon
hate-Iran syndrome. The actual context for the neocon’s action was the
balance of payments, and the role of oil and energy as a long-term lever of
American diplomacy.

*The balance of payments dimension*

The major deficit in the U.S. balance of payments has long been military
spending abroad. The entire payments deficit, beginning with the Korean War
in 1950-51 and extending through the Vietnam War of the 1960s, was
responsible for forcing the dollar off gold in 1971. The problem facing
America’s military strategists was how to continue supporting the 800 U.S.
military bases around the world and allied troop support without losing
America’s financial leverage.

The solution turned out to be to replace gold with U.S. Treasury securities
(IOUs) as the basis of foreign central bank reserves. After 1971, foreign
central banks had little option for what to do with their continuing dollar
inflows except to recycle them to the U.S. economy by buying U.S. Treasury
securities. The effect of U.S. foreign military spending thus did not
undercut the dollar’s exchange rate, and did not even force the Treasury
and Federal Reserve to raise interest rates to attract foreign exchange to
offset the dollar outflows on military account. In fact, U.S. foreign
military spending helped finance the domestic U.S. federal budget deficit.

Saudi Arabia and other Near Eastern OPEC countries quickly became a
buttress of the dollar. After these countries quadrupled the price of oil
(in retaliation for the United States quadrupling the price of its grain
exports, a mainstay of the U.S. trade balance), U.S. banks were swamped
with an inflow of much foreign deposits – which were lent out to Third
World countries in an explosion of bad loans that blew up in 1972 with
Mexico’s insolvency, and destroyed Third World government credit for a
decade, forcing it into dependence on the United States via the IMF and
World Bank).

To top matters, of course, what Saudi Arabia does not save in dollarized
assets with its oil-export earnings is spent on buying hundreds of billion
of dollars of U.S. arms exports. This locks them into dependence on U.S.
supply of replacement parts and repairs, and enables the United States to
turn off Saudi military hardware at any point of time, in the event that
the Saudis may try to act independently of U.S. foreign policy.

So maintaining the dollar as the world’s reserve currency became a mainstay
of U.S. military spending. Foreign countries to not have to pay the
Pentagon directly for this spending. They simply finance the U.S. Treasury
and U.S. banking system.

Fear of this development was a major reason why the United States moved
against Libya, whose foreign reserves were held in gold, not dollars, and
which was urging other African countries to follow suit in order to free
themselves from “Dollar Diplomacy.” Hillary and Obama invaded, grabbed
their gold supplies (we still have no idea who ended up with these billions
of dollars worth of gold) and destroyed Libya’s government, its public
education system, its public infrastructure and other non-neoliberal
policies.

The great threat to this is dedollarization as China, Russia and other
countries seek to avoid recycling dollars. Without the dollar’s function as
the vehicle for world saving – in effect, without the Pentagon’s role in
creating the Treasury debt that is the vehicle for world central bank
reserves – the U.S. would find itself constrained militarily and hence
diplomatically constrained, as it was under the gold exchange standard.

That is the same strategy that the U.S. has followed in Syria and Iraq.
Iran was threatening this dollarization strategy and its buttress in U.S.
oil diplomacy.

*The oil industry as buttress of the U.S. balance of payments and foreign
diplomacy*

The trade balance is buttressed by oil and farm surpluses. Oil is the key,
because it is imported by U.S. companies at almost no balance-of-payments
cost (the payments end up in the oil industry’s head offices here as
profits and payments to management), while profits on U.S. oil company
sales to other countries are remitted to the United States (via offshore
tax-avoidance centers, mainly Liberia and Panama for many years). And as
noted above, OPEC countries have been told to keep their official reserves
in the form of U.S. securities (stocks and bonds as well as Treasury IOUs,
but not direct purchase of U.S. companies being deemed economically
important). Financially, OPEC countries are client slates of the Dollar
Area.

America’s attempt to maintain this buttress explains U.S. opposition to any
foreign government steps to reverse global warming and the extreme weather
caused by the world’s U.S.-sponsored dependence on oil. Any such moves by
Europe and other countries would reduce dependence on U.S. oil sales, and
hence on U.S. ability to control the global oil spigot as a means of
control and coercion, are viewed as hostile acts.

Oil also explains U.S. opposition to Russian oil exports via Nordstream.
U.S. strategists want to treat energy as a U.S. national monopoly. Other
countries can benefit in the way that Saudi Arabia has done – by sending
their surpluses to the U.S. economy – but not to support their own economic
growth and diplomacy. Control of oil thus implies support for continued
global warming as an inherent part of U.S. strategy.

*How a “democratic” nation can wage international war and terrorism*

The Vietnam War showed that modern democracies cannot field armies for any
major military conflict, because this would require a draft of its
citizens. That would lead any government attempting such a draft to be
voted out of power. And without troops, it is not possible to invade a
country to take it over.

The corollary of this perception is that democracies have only two choices
when it comes to military strategy: They can only wage airpower, bombing
opponents; or they can create a foreign legion, that is, hire mercenaries
or back foreign governments that provide this military service.

Here once again Saudi Arabia plays a critical role, through its control of
Wahabi Sunnis turned into terrorist jihadis willing to sabotage, bomb,
assassinate, blow up and otherwise fight any target designated as an enemy
of “Islam,” the euphemism for Saudi Arabia acting as U.S. client state.
(Religion really is not the key; I know of no ISIS or similar Wahabi attack
on Israeli targets.) The United States needs the Saudis to supply or
finance Wahabi crazies. So in addition to playing a key role in the U.S.
balance of payments by recycling its oil-export earnings are into U.S.
stocks, bonds and other investments, Saudi Arabia provides manpower by
supporting the Wahabi members of America’s foreign legion, ISIS and
Al-Nusra/Al-Qaeda. Terrorism has become the “democratic” mode of today U.S.
military policy.

What makes America’s oil war in the Near East “democratic” is that this is
the only kind of war a democracy can fight – an air war, followed by a
vicious terrorist army that makes up for the fact that no democracy can
field its own army in today’s world. The corollary is that, terrorism has
become the “democratic” mode of warfare.

From the U.S. vantage point, what *is* a “democracy”? In today’s Orwellian
vocabulary, it means any country supporting U.S. foreign policy. Bolivia
and Honduras have become “democracies” since their coups, along with
Brazil. Chile under Pinochet was a Chicago-style free market democracy. So
was Iran under the Shah, and Russia under Yeltsin – but not since it
elected Vladimir Putin president, any more than is China under President Xi.

The antonym to “democracy” is “terrorist.” That simply means a nation
willing to fight to become independent from U.S. neoliberal democracy. It
does not include America’s proxy armies.

*Iran’s role as U.S. nemesis*

What stands in the way of U.S. dollarization, oil and military strategy?
Obviously, Russia and China have been targeted as long-term strategic
enemies for seeking their own independent economic policies and diplomacy.
But next to them, Iran has been in America’s gun sights for nearly seventy
years.

America’s hatred of Iran is starts with its attempt to control its own oil
production, exports and earnings. It goes back to 1953, when Mossadegh was
overthrown because he wanted domestic sovereignty over Anglo-Persian oil.
The CIA-MI6 coup replaced him with the pliant Shah, who imposed a police
state to prevent Iranian independence from U.S. policy. The only physical
places free from the police were the mosques. That made the Islamic
Republic the path of least resistance to overthrowing the Shah and
re-asserting Iranian sovereignty.

The United States came to terms with OPEC oil independence by 1974, but the
antagonism toward Iran extends to demographic and religious considerations.
Iranian support its Shi’ite population and those of Iraq and other
countries – emphasizing support for the poor and for quasi-socialist
policies instead of neoliberalism – has made it the main religious rival to
Saudi Arabia’s Sunni sectarianism and its role as America’s Wahabi foreign
legion.

America opposed General Suleimani above all because he was fighting against
ISIS and other U.S.-backed terrorists in their attempt to break up Syria
and replace Assad’s regime with a set of U.S.-compliant local leaders – the
old British “divide and conquer” ploy. On occasion, Suleimani had
cooperated with U.S. troops in fighting ISIS groups that got “out of line”
meaning the U.S. party line. But every indication is that he was in Iraq to
work with that government seeking to regain control of the oil fields that
President Trump has bragged so loudly about grabbing.

Already in early 2018, President Trump asked Iraq to reimburse America for
the cost of “saving its democracy” by bombing the remainder of Saddam’s
economy. The reimbursement was to take the form of Iraqi Oil. More
recently, in 2019, President Trump asked, why not simply grab Iraqi oil.
The giant oil field has become the prize of the Bush-Cheney post 9-11 Oil
War. “‘It was a very run-of-the-mill, low-key, meeting in general,” a
source who was in the room told Axios.’ And then right at the end, Trump
says something to the effect of, he gets a little smirk on his face and he
says, ‘So what are we going to do about the oil?’”[1]
<https://thesaker.is/america-escalates-its-democratic-oil-war-in-the-near-east/#post-45348-footnote-2>

Trump’s idea that America should “get something” out of its military
expenditure in destroying the Iraqi and Syrian economies simply reflects
U.S. policy.

In late October, 2019, *The New York Times* reported that: “In recent days,
Mr. Trump has settled on Syria’s oil reserves as a new rationale for
appearing to reverse course and deploy hundreds of additional troops to the
war-ravaged country. He has declared that the United States has “secured”
oil fields in the country’s chaotic northeast and suggested that the
seizure of the country’s main natural resource justifies America further
extending its military presence there. ‘We have taken it and secured it,’
Mr. Trump said of Syria’s oil during remarks at the White House on Sunday,
after announcing the killing of the Islamic State leader, Abu Bakr
al-Baghdadi.” [2]
<https://thesaker.is/america-escalates-its-democratic-oil-war-in-the-near-east/#post-45348-footnote-3>
A
CIA official reminded the journalist that taking Iraq’s oil was a Trump
campaign pledge.

That explains the invasion of Iraq for oil in 2003, and again this year, as
President Trump has said: “Why don’t we simply take their oil?” It also
explains the Obama-Hillary attack on Libya – not only for its oil, but for
its investing its foreign reserves in gold instead of recycling its oil
surplus revenue to the U.S. Treasury – and of course, for promoting a
secular socialist state.

It explains why U.S. neocons feared Suleimani’s plan to help Iraq assert
control of its oil and withstand the terrorist attacks supported by U.S.
and Saudi’s on Iraq. That is what made his assassination an immediate drive.

American politicians have discredited themselves by starting off their
condemnation of Trump by saying, as Elizabeth Warren did, how “bad” a
person Suleimani was, how he had killed U.S. troops by masterminding the
Iraqi defense of roadside bombing and other policies trying to repel the
U.S. invasion to grab its oil. She was simply parroting the U.S. media’s
depiction of Suleimani as a monster, diverting attention from the policy
issue that explains why he was assassinated *now*.

*The counter-strategy to U.S. oil, and dollar and global-warming diplomacy*

This strategy will continue, until foreign countries reject it. If Europe
and other regions fail to do so, they will suffer the consequences of this
U.S. strategy in the form of a rising U.S.-sponsored war via terrorism, the
flow of refugees, and accelerated global warming and extreme weather.

Russia, China and its allies already have been leading the way to
dedollarization as a means to contain the balance-of-payments buttress of
U.S. global military policy. But everyone now is speculating over what
Iran’s response should be.

The pretense – or more accurately, the diversion – by the U.S. news media
over the weekend has been to depict the United States as being under
imminent attack. Mayor de Blasio has positioned policemen at conspicuous
key intersections to let us know how imminent Iranian terrorism is – as if
it were Iran, not Saudi Arabia that mounted 9/11, and as if Iran in fact
has taken any forceful action against the United States. The media and
talking heads on television have saturated the air waves with warnings of
Islamic terrorism. Television anchors are suggesting just where the attacks
are most likely to occur.

The message is that the assassination of General Soleimani was to protect
us. As Donald Trump and various military spokesmen have said, he had killed
Americans – and now they must be planning an enormous attack that will
injure and kill many more innocent Americans. That stance has become
America’s posture in the world: weak and threatened, requiring a strong
defense – in the form of a strong offense.

But what is Iran’s actual interest? If it is indeed to undercut U.S. dollar
and oil strategy, the first policy must be to get U.S. military forces out
of the Near East, including U.S. occupation of its oil fields. It turns out
that President Trump’s rash act has acted as a catalyst, bringing about
just the opposite of what he wanted. On January 5 the Iraqi parliament met
to insist that the United States leave. General Suleimani was an invited
guest, not an Iranian invader. It is U.S. troops that are in Iraq in
violation of international law. If they leave, Trump and the neocons lose
control of oil – and also of their ability to interfere with
Iranian-Iraqi-Syrian-Lebanese mutual defense.

Beyond Iraq looms Saudi Arabia. It has become the Great Satan, the
supporter of Wahabi extremism, the terrorist legion of U.S. mercenary
armies fighting to maintain control of Near Eastern oil and foreign
exchange reserves, the cause of the great exodus of refugees to Turkey,
Europe and wherever else it can flee from the arms and money provided by
the U.S. backers of Isis, Al Qaeda in Iraq and their allied Saudi Wahabi
legions.

The logical ideal, in principle, would be to destroy Saudi power. That
power lies in its oil fields. They already have fallen under attack by
modest Yemeni bombs. If U.S. neocons seriously threaten Iran, its response
would be the wholesale bombing and destruction of Saudi oil fields, along
with those of Kuwait and allied Near Eastern oil sheikhdoms. It would end
the Saudi support for Wahabi terrorists, as well as for the U.S. dollar.

Such an act no doubt would be coordinated with a call for the Palestinian
and other foreign workers in Saudi Arabia to rise up and drive out the
monarchy and its thousands of family retainers.

Beyond Saudi Arabia, Iran and other advocates of a multilateral diplomatic
break with U.S. neoliberal and neocon unilateralism should bring pressure
on Europe to withdraw from NATO, inasmuch as that organization functions
mainly as a U.S.-centric military tool of American dollar and oil diplomacy
and hence opposing the climate change and military confrontation policies
that threaten to make Europe part of the U.S. maelstrom.

Finally, what can U.S. anti-war opponents do to resist the neocon attempt
to destroy any part of the world that resists U.S. neoliberal autocracy?
This has been the most disappointing response over the weekend. They are
flailing. It has not been helpful for Warren, Buttigieg and others to
accuse Trump of acting rashly without thinking through the consequences of
his actions. That approach shies away from recognizing that his action did
indeed have a rationale—do draw a line in the sand, to say that yes,
America WILL go to war, will fight Iran, will do anything at all to defend
its control of Near Eastern oil and to dictate OPEC central bank policy, to
defend its ISIS legions as if any opposition to this policy is an attack on
the United States itself.

I can understand the emotional response or yet new calls for impeachment of
Donald Trump. But that is an obvious non-starter, partly because it has
been so obviously a partisan move by the Democratic Party. More important
is the false and self-serving accusation that President Trump has
overstepped his constitutional limit by committing an act of war against
Iran by assassinating Soleimani.

Congress endorsed Trump’s assassination and is fully as guilty as he is for
having approved the Pentagon’s budget with the Senate’s removal of the
amendment to the 2019 National Defense Authorization Act that Bernie
Sanders, Tom Udall and Ro Khanna inserted an amendment in the House of
Representatives version, explicitly not authorizing the Pentagon to wage
war against Iran or assassinate its officials. When this budget was sent to
the Senate, the White House and Pentagon (a.k.a. the military-industrial
complex and neoconservatives) removed that constraint. That was a red flag
announcing that the Pentagon and White House did indeed intend to wage war
against Iran and/or assassinate its officials. Congress lacked the courage
to argue this point at the forefront of public discussion.

Behind all this is the Saudi-inspired 9/11 act taking away Congress’s sole
power to wage war – its 2002 Authorization for Use of Military Force,
pulled out of the drawer ostensibly against Al Qaeda but actually the first
step in America’s long support of the very group that was responsible for
9/11, the Saudi airplane hijackers.

The question is, how to get the world’s politicians – U.S., European and
Asians – to see how America’s all-or-nothing policy is threatening new
waves of war, refugees, disruption of the oil trade in the Strait of
Hormuz, and ultimately global warming and neoliberal dollarization imposed
on all countries. It is a sign of how little power exists in the United
Nations that no countries are calling for a new Nurenberg-style war crimes
trial, no threat to withdraw from NATO or even to avoid holding reserves in
the form of money lent to the U.S. Treasury to fund America’s military
budget.

Michael Hudson

   1.
   https://www.axios.com/trump-to-iraqi-pm-how-about-that-oil-1a31cbfa-f20c-4767-8d18-d518ed9a6543.html.
   The article adds: “In the March meeting, the Iraqi prime minister replied,
   ‘What do you mean?’ according to the source in the room. And Trump’s like,
   ‘Well, we did a lot, we did a lot over there, we spent trillions over
   there, and a lot of people have been talking about the oil.’” ↑
   <https://thesaker.is/america-escalates-its-democratic-oil-war-in-the-near-east/#post-45348-footnote-ref-2>
   2. Michael Crowly, “‘Keep the Oil’: Trump Revives Charged Slogan for new
   Syria Troop Mission,” *The New York Times*, October 26, 2019.
   https://www.nytimes.com/2019/10/26/us/politics/trump-syria-oil-fields.html.
   The article adds: “‘I said keep the oil,’ Mr. Trump recounted. ‘If they are
   going into Iraq, keep the oil. They never did. They never did.’” ↑
   <https://thesaker.is/america-escalates-its-democratic-oil-war-in-the-near-east/#post-45348-footnote-ref-3>

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