Difference between revisions of "Petrodollar"

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'''Petrodollar''' may be simply defined as oil revenues denominated in U.S. dollars. <ref name=oweiss1974>Oweiss, Ibrahim M. (1974) Petrodollars: Problems and Prospects, Address before the Conference on The World Monetary Crisis
+
'''Petrodollar''' may be simply defined as oil revenues denominated in U.S. dollars (Oweiss 1974)
−
Arden House, Harriman Campus, Columbia University http://faculty.georgetown.edu/imo3/petrod/petro2.htm</ref>
+
<ref name=oweiss1974>Oweiss, Ibrahim M. (1974) Petrodollars: Problems and Prospects, Address before the Conference on The World Monetary CrisisArden House, Harriman Campus, Columbia University http://faculty.georgetown.edu/imo3/petrod/define.htm</ref>.
  
 
Consequently to buy oil, dollars are needed. On a large scale exchanging local currency for dollars is too costly. The prefered way for countries to get dollars is therefore to export goods and services for dollars - or to get a loan from banks who hold enough dollar denominated assets, ie. the IMF or other big western banks.  
 
Consequently to buy oil, dollars are needed. On a large scale exchanging local currency for dollars is too costly. The prefered way for countries to get dollars is therefore to export goods and services for dollars - or to get a loan from banks who hold enough dollar denominated assets, ie. the IMF or other big western banks.  
  
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On the other hand the term "revenues" includes surpluses on such a scale that the oil producing countries could buy up a large proportion of Western assets. The term '''Petrodollar''' refers also to the management of these revenues. Walter Levy, speaker at the [[Bilderberg Conference]] 1973 made clear that "Serious problems would be caused by unprecedented foreign exchange accumulations of countries such as Saudi Arabia and Abu Dhabi." <ref name=CoW>Engdahl, F.W. (2004) A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto ISBN 0-7453-2309-X, p.143.</ref>{{#tag:ref|
+
On the other hand the term "revenues" includes surpluses on such a scale that the oil producing countries could buy up a large proportion of Western assets. The term '''Petrodollar''' refers also to the management of these revenues. Walter Levy, speaker at the [[Bilderberg Conference]] 1973 made clear that "Serious problems would be caused by unprecedented foreign exchange accumulations of countries such as Saudi Arabia and Abu Dhabi" (Engdahl 2004)
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This view is also expressed by the {{ccm}} today when finding that countries like Saudi Arabia are the '''culprits''' responsible for global '''imbalances''' when running surpluses. Rejecting advice on how to handle surpluses may be interpreted as dwindling power of the dollar empire. See ie. <ref>[http://www.economist.com/node/21553424 Petrodollar profusion - Oil exporters are the main drivers of global imbalances, The Economist, Apr 26th 2012]</ref>|group=note}}
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<ref name=CoW>Engdahl, F.W. (2004) A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto ISBN 0-7453-2309-X, p.143.</ref>.
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These OPEC countries were advised on how to invest their surpluses by Western investment bankers and subsequently signed contracts with the U.S. on military bases, large arms deals, military training and cooperation on governmental and economic levels. Their governments' dependency on U.S. specialists remains unchanged to the present day.<ref>Christopher M. Blanchard (2014) Saudi Arabia: Background and U.S. Relations. Congressional Research Service 7-5700 http://www.crs.gov RL33533</ref>
+
{{#tag:ref|
 +
This view is also expressed by the {{ccm}} today when finding that countries like Saudi Arabia are the '''culprits''' responsible for global '''imbalances''' when running surpluses. Rejecting advice on how to handle surpluses may be interpreted as dwindling power of the dollar empire. See ie. The Economist, Apr 26th 2012 "[http://www.economist.com/node/21553424 Petrodollar profusion - Oil exporters are the main drivers of global imbalances".
 +
|group=note}}
 +
 +
These OPEC countries were advised on how to invest their surpluses by Western investment bankers and subsequently signed contracts with the U.S. on military bases, large arms deals, military training and cooperation on governmental and economic levels. Their governments' dependency on U.S. specialists remains unchanged to the present day (Blanchard 2014)
 +
<ref>Christopher M. Blanchard (2014) Saudi Arabia: Background and U.S. Relations. Congressional Research Service 7-5700 http://www.crs.gov RL33533</ref>.
  
 
==Overview==
 
==Overview==
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price international oil sales in dollars only - despite US assurances to its
 
price international oil sales in dollars only - despite US assurances to its
 
European and Japanese allies that such a unique monetary/geopolitical
 
European and Japanese allies that such a unique monetary/geopolitical
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arrangement would not transpire. <ref>William R. Clark (2005) ''[http://www.petrodollarwarfare.com/ Petrodollar Warfare:] Oil, Iraq and the Future of the Dollar'', New Society Publishers, ISBN: 978-0865715141</ref>
+
arrangement would not transpire (Clark 2005)
 +
<ref name=clark2005>William R. Clark (2005) Petrodollar Warfare: Oil, Iraq and the Future of the Dollar, New Society Publishers, ISBN: 978-0865715141 http://www.petrodollarwarfare.com/</ref>.
  
 
Less mentioned by the {{ccm}} is the fact that  
 
Less mentioned by the {{ccm}} is the fact that  
 
part of the agreements was the recycling of the oil producing countries' surpluses into U.S. dept securities held at Western banks. Restrictions on cross-border capital flows or investments were lifted.
 
part of the agreements was the recycling of the oil producing countries' surpluses into U.S. dept securities held at Western banks. Restrictions on cross-border capital flows or investments were lifted.
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{{#tag:ref|These restrictions were a key component of the Bretton Woods agreement. "The capital controls were necessary otherwise speculators could have had a field day by betting that a certain currency would go down by selling it off against the US dollar and thereby forcing it to go down purely from their speculative activity. Large financial firms with access to lots of US dollars could therefore force a foreign currency of a weaker country to collapse as they desired." <ref name=WOM5>http://www.robinupton.com/people/WizardsOfMoney/ WIZARDS OF MONEY - 5. Monetary Terrorism</ref> Exactely these currency attacks occured later when the petrodollar recycling scheme was in place.|group=note}}
+
{{#tag:ref|These restrictions were a key component of the Bretton Woods agreement. "The capital controls were necessary otherwise speculators could have had a field day by betting that a certain currency would go down by selling it off against the US dollar and thereby forcing it to go down purely from their speculative activity. Large financial firms with access to lots of US dollars could therefore force a foreign currency of a weaker country to collapse as they desired" (Smithy 2003b) <ref name=WOM5> Smithy (2003b) WIZARDS OF MONEY - 5. Monetary Terrorism http://www.robinupton.com/people/WizardsOfMoney/</ref>.
 +
Exactely these currency attacks occured later when the petrodollar recycling scheme was in place. Examples include the Mexican Peso crisis of 1994-95, the Asian financial crisis of the late 1990s and the Russian ruble crisis.|group=note}}
  
 
Until 1975 the other OPEC countries agreed to similar deals.  
 
Until 1975 the other OPEC countries agreed to similar deals.  
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{{FA|Petrodollar/recycling}}
 
{{FA|Petrodollar/recycling}}
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Petrodollar recycling is the handling of the oil producing countries' surpluses. These surpluses are commonly turned into either U.S. government securities (allowing the printing of more U.S. dollars<ref>http://www.robinupton.com/people/WizardsOfMoney/ WIZARDS OF MONEY - 1. How Money is Created </ref> which are in turn used to buy oil and other goods and services) or are spent in arms deals including payments for U.S. military bases in the Middle East.
+
Petrodollar recycling is the handling of the oil producing countries' surpluses. These surpluses are commonly turned into either U.S. government securities (allowing the creation of more U.S. dollars by international banks
 +
(Smithy 2003a) <ref name=WOM1>Smithy (2003a) WIZARDS OF MONEY - 1. How Money is Created http://www.robinupton.com/people/WizardsOfMoney/</ref>
 +
which are in turn used to buy oil and other goods and services) or are spent in arms deals including payments for U.S. military bases in the Middle East.
 +
{{Q|"The process of petrodollar recycling makes it possible for commercial banks of industrialized nations, international lending institutions, and Arab banking consortia to provide financial assistance to less-developed countries (LDCs). Western Europe, Japan, and the United States buy oil from oil-exporting countries (OECs). LDCs pay for oil imports and other foreign goods and services with money borrowed from Western commercial banks. The process of recycling is complete when those commercial banks and institutions obtain cash and investments from OECs" (Oweiss 1974)<ref name=oweiss1974/>.{{#tag:ref|
 +
"to provide financial assistance" is a bit of an euphemism here. These were loans with high interest rates which increased the dollar money supply and allowed Western banks to engage in currency speculation.
 +
|group=note}}
 +
}}
 +
It is easy to see that <i>"commercial banks of industrialized nations, international lending institutions</i> [IMF], <i>and Arab banking consortia"</i> were the big winners of this scheme.
  
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{{Q|"The process of petrodollar recycling makes it possible for commercial banks of industrialized nations, international lending institutions, and Arab banking consortia to provide financial assistance to less-developed countries (LDCs). Western Europe, Japan, and the United States buy oil from oil-exporting countries (OECs). LDCs pay for oil imports and other foreign goods and services with money borrowed from Western commercial banks. The process of recycling is complete when those commercial banks and institutions obtain cash and investments from OECs."(Oweiss 1974)<ref name=oweiss1974/>}}
+
Petrodollars were also recycled directly by an agreement between the U.S. Treasury and the Saudi Arabian Monetary Agency (SAMA), whose mission was
 +
{{QB|"to establish a new relationship through the Federal Reserve Bank of New York with the [U.S.] Treasury borrowing operation. Under this arrangement, SAMA will purchase new US Treasury securities with maturities of at least one year" (Bennet 1975)<ref>Letter of Jack F. Bennett (assistant secretary of the U.S. Treasury) to Henry Kissinger, February 1975. ‘Subject: Special Arrangements for Purchase of U.S. Government Securities by the Saudi Arabian Government.’ International Currency Review. Vol. 20, no. 6, January 1991.</ref>.
 +
}}
 +
It is noteworthy that under this agreement the Saudis accept the promis to be payed later, while at the same time increasing the U.S. (military) budget for that amount.
 +
A high oil price therefore leads to rising demand for U.S. dollars on a global scale without negatively affecting key parts of the U.S. economy.
 +
{{#tag:ref|Academically speaking,  
 +
since the volume of oil that should have been supplied in observance of standard microeconomic theory exceeded the volume actually supplied "the difference [...] is in fact a subsidy granted, in real terms, to oil-importing nations such as the United States, Germany, France, and Japan" (Oweiss 1974)
 +
<ref name=oweiss1974/>.
 +
In other words, through the recycling mechanism these close trading partners of the U.S. can buy oil with a [[fiat currency]] print at will.
 +
|group=note}}  
  
−
The framework for this recycling scheme was layed down by an agreement between the U.S. Treasury and the Saudi Arabian Monetary Agency (SAMA), whose mission was "to establish a new relationship through the Federal Reserve Bank of New York with the [U.S.] Treasury borrowing operation. Under this arrangement, SAMA will purchase new US Treasury securities with maturities of at least one year".<ref>Letter of Jack F. Bennett (assistant secretary
+
In addition, petrodollars were recycled into banks managed by Saudi/U.S joint ventures used to finance [[transnational black ops]], ie. [[Riggs Bank]] and [[BCCI]] from 1976 onwards. The Saudi intelligence personel running these banks have been named as Saudi Arabia's most important financiers of Osama bin Laden and his Al Qaeda group (see ie. v.d. Reijden 2013
−
of the U.S. Treasury) to Henry Kissinger, February 1975. ‘Subject: Special Arrangements for Purchase of U.S. Government Securities by the Saudi Arabian Government.’ International Currency Review. Vol. 20, no. 6, January 1991.</ref>
+
<ref>Joël v.d. Reijden (2013) 911_WTC_part_2_who_did_it, ISGP archives, https://wikispooks.com/ISGP/911/911_WTC_part_2_who_did_it.htm#saudi
 +
</ref>
 +
, Scott 2014
 +
<ref name=scott2014>Scott, Peter Dale (2014) The State, the Deep State, and the Wall Street Overworld, http//wikispooks.com/w/index.php?title=Document:The_State,_the_Deep_State,_and_the_Wall_Street_Overworld</ref>
 +
, Komisar 2007
 +
<ref name=komisar2007>Lucy Komisar. "The BCCI Game: Banking on America, Banking on Jihad", In: A Game as Old as Empire (2007) Berrett-Koehler, San Francisco ISBN, accessed Nov. 14, 2014, http://www.truth-out.org/archive/item/69782:ties-between-the-bush-family-and-osama-bin-laden</ref>
 +
).
 +
 +
==Containment of Oil Exporting Governments==
  
−
It is noteworthy that under this agreement a higher oil price leads to a rising demand for U.S. dollars on a global scale without negatively affecting key parts of the U.S. economy.
+
Osama bin Laden arose from internal opposition to the House of Saud. In the view of the Arab clergy and public these westernized roulers were "oppressive and corrupt political regimes",  forced on Muslims by America, disrespecting religion and selling Arabian autonomy for dollars (Clark 2005, p.194)
 +
<ref name=clark2005/>.
  
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==Financial and Political implications==
+
When reading through the declassified Report of the [[Comptroller Generale of the U.S]] on the [[U.S.-Saudi Joint Comission on Economic Cooperation]]
 +
<ref>U.S. Government Accountability Office. "The U.S.-Saudi Arabian Joint Commission on Economic Cooperation" ID-79-7: Published: Mar 22, 1979. Publicly Released: Mar 29, 1979. http://www.gao.gov/assets/130/126054.pdf</ref>
 +
the dimension of this 'joint venture' becomes visible. From military to finance to construction to advice on how to run a 'modern' government: it reads like a gigantic takeover by U.S. corporations. Today Saudi Arabia can not opperate without its 9 million foreign professionals. Other OECD countries have similar deals.
  
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The end of the Bretton Woods system caused a
+
The internal opposition was driven by the conflict with Israel. OECD's governments seem to acquiesce to the occupation of Arab land since the 1967 [[Six-day War]]. This and the rising military presence of the U.S. in the region is seen as a permanent humiliation. Beginning with the late 70s
−
depreciation of the dollar and increase in the dollar price of most internationally traded
+
Bin Laden received large funds from influencial Saudi Arabians which might have helped calming him down, however, since 2003 some 90 people were killed by suicide bombings and kidnappings. One could argue, the Arab-Israeli conflict acts like a dial to drive up pressure on the House of Saud and to motivate acts of terrorism. (Goff 2004a
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commodities due to inflationary pressure of up to 100% (Hamilton 2011).
+
<ref name=goff2004a/>,  
−
<ref name=hamilton2011>James D. Hamilton (2011) Historical Oil Shocks. Department of Economics, University of California, San Diego, December 22, 2010, Revised: February 1, 2011
+
Komisar 2007
−
</ref> Given declining production rates from
+
<ref name=komisar2007/>).
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U.S. fields, further increases in the price of oil would have been expected but did not materialize until the Yom Kippur war, Okt. 1973.
 
−
{{#tag:ref|The [[official narrative]] is that the ensuing OPEC embargo is responsible for both recession and raising oil prices, but Barsky and Kilian (2001)
 
−
<ref>Barsky, R. B. and Kilian, L. (2001) Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative. in B.S. Bernanke and K. Rogoff (eds.) NBER Macroeconomics Annual 2001. Cambridge, MA: MIT Press.</ref> show that inflationary pressure is an equally likely explanation. The Yom Kippur war itself did not come as a surprise, nor did the embargo. Interestingly, warnings of King Faisal were blocked by U.S. officials and the {{ccm}}.|group=note}}
 
  
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To ensure sufficient global demand for the dollar, high oil prices are essential.  
+
An example of how this dial works is the '[[oil crisis]]' of 1973. The perception of shortage created by the {{ccm}}  bamboozled the Western public to accept hardship in the form of higher oil prices and recession and to distract from the power grab that came with the recycling scheme. To announce an 'embargo' - in the face of the provocative, open support of Israel in the [[Yom Kippur War]] by the U.S. - was one of the few options available to Saudi King Faisal to calm down public rage and to save his face (Bichler et. al. 1989c, p.15f)  
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{{#tag:ref|The [[official narrative]] goes a long way to deny this fact. Rowley et. al. (1989)<ref name =rowley1989>Rowley, Robin and Bichler, Shimshon and Nitzan, Jonathan. (1989) The Armadollar-Petrodollar Coalition and the Middle East. Working Papers (Part 3). Department of Economics. McGill University. Montreal. Vol. 89. No. 10. pp. 1-54. http://bnarchives.yorku.ca/134/01/890101RBN_ADPD_Coalition_and_the_ME.pdf</ref> note that "the pivotal   
+
<ref name=bichler1989c>Bichler, Shimshon and Nitzan, Jonathan and Rowley, Robin. (1989c) The Armadollar-Petrodollar Coalition - Demise or new Order? Working Papers (Part 4). Department of Economics. McGill University. Montreal. Vol. 89. No. 11. pp. 1-63. http://bnarchives.yorku.ca/135/01/890101RBN_ADPD_Coalition_Demise_or_New_Order.pdf</ref>.
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significance of high oil prices was abruptly uncovered in
 
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1986, when Saudi Arabia flooded the oil market with additional supplies and
 
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caused the price of crude petroleum to drop below $10 per barrel. This
 
−
action was recognized as so hazardous to the interests of the Armadollar-
 
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Petrodollar Coalition that some immediate political response was called for.
 
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Subsequently, the vice president [Bush] was sent to the Middle East with the task
 
−
of openly asking Saudi Arabia to reconsider the action and reinstate lower
 
−
levels for production." |group=note}}
 
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Since the volume of oil that should have been supplied in observance of standard microeconomic theory exceeded the volume actually supplied, Oweiss (1974)<ref name=oweiss1974/> noted that "the difference [...] is in fact a subsidy granted, in real terms, to oil-importing nations such as the United States, Germany, France, and Japan." In other words, these close trading partners of the U.S. can buy oil with a [[fiat currency]] print at will. Consequently - after the Saudi government had bought the first $2.5 billion U.S. treasury bills in 1974 from its oil surplus funds - the U.S. administration secretly lobbied OPEC through its puppet regime in Iran to increase prices.
 
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{{#tag:ref|At first, the Saudi officials seemed not to grasp the idea. In 1969 the Saudi petroleum minister, Yamani,
 
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explained his policy toward the U.S. as follows: "For our part, we do not want the majors to lose their power
 
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and be forced to abandon their role as a buffer element between the
 
−
producers and the consumers. We want the present setup to continue as long
 
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as possible and at all costs to avoid any disastrous clash of interests
 
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which would shake the foundations of the whole oil industry." (Barnet 1980, p. 61)<ref>Barnet, R. J . (1980) The Lean Years. Politics in the Age of Scarcity (New York: Simon and Schuster).</ref>
 
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In retrospective he said: "The oil companies were in real trouble at that time, they had
 
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borrowed a lot of money and they needed a high oil price to save them." He was convinced of this by the attitude of the Shah of Iran, who in one crucial day in 1974 moved from the Saudi view to advocating higher prices.<ref> Observer (UK) interview with Sheikh Yaki Yamani (Saudi Arabian Oil Minister from 1962–1986) at the Royal Institute of International Affairs, January 14, 2001</ref>|group=note}}
 
  
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Contrary, the effect on less-developed countries was devastating. In desparate need for oil they took out loans from Western banks, under which many (foreseeable) defaulted when the FED raised interest rates. The IMF who promoted these loans then went on to prescribe austerity measures and bailed out troubled Western banks. The resulting weakness of the LDC's economies would be further exploited by currency speculators. The absence of capital controls was a nessessary precondition for this form of "monetary terrorism".<ref name=WOM5 />
+
==Financial Containment==
  
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On the side of oil exporting nations "the placement of petrodollar surpluses [...] in the United States may be regarded politically as 'hostage capital'. In the event of a major political conflict between the United States and an oil-exporting nation, the former with all its military power can confiscate or freeze these assets or otherwise limit their use. [...] '''It follows, therefore, that governments placing their petrodollar surpluses in the United States may lose part of their economic and political independence'''. Consequently, the more petrodollar surpluses are placed in the United States by a certain oil-exporting nation, the less independent such a nation becomes." (Oweiss 1974)<ref name=oweiss1974/>{{#tag:ref|According to Spiro (1999)<ref>Spiro, David E. (1999). The hidden hand of American hegemony: petrodollar recycling and international markets. Ithaca, NY : Cornell University Press.</ref> 70 percent of all Saudi assets in the United States were being held in a New York Fed account.|group=note}}
+
On the side of oil exporting nations  
 +
{{Q|"the placement of petrodollar surpluses [...] in the United States may be regarded politically as 'hostage capital'. In the event of a major political conflict between the United States and an oil-exporting nation, the former with all its military power can confiscate or freeze these assets or otherwise limit their use. [...] (Oweiss 1974)<ref name=oweiss1974/>}}
  
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The U.S. government resorted to such weapons twice in the 1980s against Iran and Libya. In 2006 when Iran began selling oil for Yen, Renminbi, Rubles and Euro its foreign assets were frozen - allegedly because of its nuclear program. {{#tag:ref|The U.S. National Intelligence Estimate 2007 stated that Tehran had put a stop to weapons production in 2003 contradicting its assessment from 2005, however, the sanctions were not lifted.<ref>http://en.ria.ru/world/20071208/91488137.html Iran stops accepting U.S. dollars for oil, RIA Novosti</ref>|group=note}}
+
According to Spiro (1999)
 +
<ref>Spiro, David E. (1999). The hidden hand of American hegemony: petrodollar recycling and international markets. Ithaca, NY : Cornell University Press.</ref>
 +
70 percent of all Saudi assets in the United States were being held in a New York Fed account.  
 +
{{#tag:ref|
 +
If OECs purchase new US Treasury securities with petrodollars they give away their oil for the promise to be payed later,
 +
while at the same time giving Western banks the power to increase the money supply based on these assets.
 +
In addition they pay for military "protection" of their country by the same forces which siphon off their oil.
 +
 +
Moreover, the [[Bank of International Settlements]] acknowleges that on the long run, "foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency."
 +
<ref>{{cite news| url=http://www.forbes.com/afxnewslimited/feeds/afx/2008/06/30/afx5166493.html |work=Forbes | title=BIS says global downturn could be 'deeper and more protracted' than expected|author=Whitehouse, Steve|date=June 30, 2008|accessdate=January 22, 2011|postscript=-Thomson Financial News|archiveurl=https://web.archive.org/web/20100601020319/http://www.forbes.com/feeds/afx/2008/06/30/afx5166493.html|archivedate=June 1, 2010
 +
}}</ref>  
 +
|group=note}}
  
 +
As of 2004 "Sixty percent of Saudi foreign investment is in the United States, and the Saudi Royals are heavily invested in the US financial sector. This investment is growing, rising from a Saudi-to-US FDI in 1998 of $2.7 billion to $4.4 billion by 2001 when the World Trade Center fell. Any blow to the US financial establishment reverberates through Saudi Arabia, and this heavy Saudi investment significantly disinclines either country to disentangle with the other. It also reinforces dollar hegemony with the petrodollar" (Goff 2004a)
 +
<ref name=goff2004a>Stan Goff. "The War for Saudi Arabia", Sanders Research Associates, December 30, 2004, accessed Nov. 14, 2014, http://freedomroad.org/2004/12/military-matters-30-the-war-for-saudi-arabia-2 </ref>
 +
 +
The Saudi establishment literally sits in the same boat with the U.S's.
 +
 +
"It follows, therefore, that governments placing their petrodollar surpluses in the United States may lose part of their economic and political independence. Consequently, the more petrodollar surpluses are placed in the United States by a certain oil-exporting nation, the less independent such a nation becomes." (Oweiss 1974)<ref name=oweiss1974/>
 +
 +
While freezing assets to apply pressure seems not necessary in the case of Saudi Arabia due to common interests of its establishment and the shacky position of the ruling kingdom, the U.S. government resorted to such weapons twice in the 1980s against Iran and Libya. In 2006 when Iran began selling oil for Yen, Renminbi, Rubles and Euro its foreign assets were frozen - allegedly because of its nuclear program.
 +
{{#tag:ref|The U.S. National Intelligence Estimate 2007 stated that Tehran had put a stop to weapons production in 2003 contradicting its assessment from 2005, however, the sanctions were not lifted.
 +
<ref>RIA Novosti (08 Dez 2007) Iran stops accepting U.S. dollars for oil http://en.ria.ru/world/20071208/91488137.html</ref>
 +
|group=note}}
 +
 +
==The Unfree Market==
 +
 +
{{Q|"Money supply and debt have exploded in the absence of gold convertibility [...] Today's money is not backed by gold. It is now backed by nothing at all, except our trust in the monetary system." - Smithy (2003a) <ref name=WOM1 /> }}
 +
 +
This "trust" itself is backed by coercion (the world's dependency on oil) and ultimately by the U.S military (Goff 2004b)
 +
<ref name=goff2004b>Stan Goff. "Persian Peril", From The Wilderness Publications, 2004, accessed Nov. 14, 2014, http://www.fromthewilderness.com/free/ww3/080904_persian_peril.shtml</ref>.
 +
 +
The "explosion" of the money supply led to various financial bubbles and increased speculative activity ultimatively culminating in the [[banking crisis of 2007/08]]. In the center of all this were the big international banks who received recycled petrodollars and used them to create loans and financial instruments for speculation. They grew unbelieveable powerful with this scheme knowing fully well they would be bailed out if something went wrong - a distortion of the free market called '''[[Moral Hazard]]''' in risk management. No wonder 90 percent of the core of the network of global corporate control belongs to the financial sector today (Vitali et.al. (2011)
 +
<ref name=network>Vitali, S. and Glattfelder, James B. and Battiston, S. (2011) [https://wikispooks.com/wiki/File:The_Network_of_Global_Corporate_Control.pdf The Network of Global Corporate Control]. PLoS ONE 6(10): e25995. doi:10.1371/journal.pone.0025995 </ref>.
 +
 +
When oil prices quadrupled 1971-1975 the revenues of big oil, international banks and defence contractors skyrocketed in a similar dimension (Rowley et. al. 1989
 +
<ref name =rowley1989/>
 +
, Bichler et. al. 1989a
 +
<ref name=bichler1989a>Bichler, Shimshon and Nitzan, Jonathan and Rowley, Robin. (1989a) The Political Economy of Armaments. Working Papers (Part 1). Department of Economics. McGill University. Montreal. Vol. 89. No. 7. pp. 1-34. </ref>).
 +
 +
The ever increasing U.S. military budget becomes the most profitable investment opportunity - shielded from international competition - while the economic performance of Western industrial countries declines (Bichler et. al. 1989b)
 +
<ref name =bichler1989b>Bichler, Shimshon and Nitzan, Jonathan and Rowley, Robin. (1989b) The Political Economy of Armament and Oil – A Series of Four Articles. Working Papers (Part 2). Department of Economics. McGill University. Montreal. Vol. 89 </ref>.
 +
 +
This led to an unprecedented concentration in the degree of monopoly, power and control over world affairs in the hands of Transnational Corporations (TNCs) - which per se are financial institutions to manage their profits - with revolving doors to politics and intelligence (Scott 2014
 +
<ref name=scott2014/>
 +
, Vitali et.al. 2011
 +
<ref name=network/>).
 +
 +
The petrodollar recycling scheme gives the U.S. and western based TNCs an advantage in what is often portrayed - but in reality is not - a 'free market'. It allows the U.S. to run the largest trade deficit in world history, while the dollar "is propped up by dollar-denominated Saudi oil sales on one side and by American bullets on the other" (Goff 2004a)
 +
<ref name=goff2004a/>.
 +
 +
==The Price of Oil==
 +
 +
{{Q|"Oil is not a normal commodity. No other commodity has five US navy battle groups
 +
patrolling the sea lanes to secure it. - Mark Jones<ref name=goff2004a/>}}
 +
 +
The [[official narrative]] is that a [[OPEC embargo]] led to significant oil shortages which triggerd a global recession. The embargo was presumably politically motivated to punish the U.S. for its support of Israel in the [[Yom Kippur War]]. There are several problems with this view.
 +
First, the shortfall corresponded to only 7.5% of global output
 +
and second, the embargo was lifted after 5 month without achieving any political goal (Hamilton 2011)
 +
<ref name=hamilton2011>James D. Hamilton (2011) Historical Oil Shocks. Department of Economics, University of California, San Diego, December 22, 2010, Revised: February 1, 2011
 +
</ref>.
 +
 +
The [[official narrative | official counter narrative]] is, that further increases in the price of oil were to be expected according to standart economic theory due to inflationary pressure, col. termed the '[[FED]] printing money' (Barsky and Kilian 2001)
 +
<ref>Barsky, R. B. and Kilian, L. (2001) Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative. in B.S. Bernanke and K. Rogoff (eds.) NBER Macroeconomics Annual 2001. Cambridge, MA: MIT Press.</ref>.
 +
 +
The problem here is, the price of crude oil was set by decree - arrived at by agreements in oligopolistic structures (Bichler et. al. 1989b)<ref name=bichler1989b/> - and the U.S. side was part of these structures (Scott 2014)<ref name=scott2014/>.
 +
 +
Why is this question so important? Obviously the idea that on both sides of the atlantic moneyed interests are playing together rather than against each other is a dangerous one.
 +
{{#tag:ref|
 +
Rarely mentioned is the fact that with the Yom Kippur war the Arab kingdom came under severe pressure from its religious leaders and its people over its quiet resignation to the Israeli occupation of Syrian and Egyptian territory since 1967 (following the [[Six-Day War]]). This was seen as so humiliating that a member of the Saudi Bin Laden family was motivated to found a forerunner organization to Al Kaida in opposition to the Saudi ruling family's close ties to America.
 +
 +
The United States' provocative support of Israel triggered an embargo, which in turn triggered a sudden 'shitstorm' in the {{ccm}}.
 +
 +
The Yom Kippur war did not come as a surprise, nor did the embargo, but was portrayed as such by the {{ccm}}. Warnings of King Faisal were blocked by U.S. officials and the {{ccm}} during the six month build-up to the war.
 +
 +
The Saudi government was cornered between its population and American monetary interests. In rage that he could not escape the scapegoat position, King Faisal threatened to "burn the oil wells and return to the tents", pointing out that the U.S needed his oil, but he in turn doesn't need the dollars, in response to Kissinger who made a joke about the embargo on his visit to the kingdom in 1974. After his murder in 1975, the [[official narrative]] remarks that he was followed by more "pragmatic" leaders.
 +
|group=note}}
 +
 +
To ensure sufficient global demand for the dollar, high oil prices were - and are - essential.
 +
{{#tag:ref|The [[official narrative]] goes a long way to deny this fact. Rowley et. al. (1989)<ref name =rowley1989>Rowley, Robin and Bichler, Shimshon and Nitzan, Jonathan. (1989) The Armadollar-Petrodollar Coalition and the Middle East. Working Papers (Part 3). Department of Economics. McGill University. Montreal. Vol. 89. No. 10. pp. 1-54. http://bnarchives.yorku.ca/134/01/890101RBN_ADPD_Coalition_and_the_ME.pdf</ref> point out that "the pivotal   
 +
significance of high oil prices was abruptly uncovered in
 +
1986, when Saudi Arabia flooded the oil market with additional supplies and
 +
caused the price of crude petroleum to drop below $10 per barrel. This
 +
action was recognized as so hazardous to the interests of the Armadollar-
 +
Petrodollar Coalition that some immediate political response was called for.
 +
Subsequently, the vice president [Bush] was sent to the Middle East with the task
 +
of openly asking Saudi Arabia to reconsider the action and reinstate lower
 +
levels for production."
 +
|group=note}}
 +
Consequently - after the Saudi government had bought the first $2.5 billion U.S. treasury bills in 1974 from its oil surplus funds - the U.S. administration secretly lobbied OPEC through its puppet regime in Iran to increase prices.
 +
{{#tag:ref|At first, the Saudi officials seemed not to grasp the idea. In 1969 the Saudi petroleum minister, Yamani,
 +
explained his policy toward the U.S. as follows: "For our part, we do not want the majors to lose their power
 +
and be forced to abandon their role as a buffer element between the
 +
producers and the consumers. We want the present setup to continue as long
 +
as possible and at all costs to avoid any disastrous clash of interests
 +
which would shake the foundations of the whole oil industry." (Barnet 1980, p. 61)<ref>Barnet, R. J . (1980) The Lean Years. Politics in the Age of Scarcity, New York: Simon and Schuster, ISBN</ref>
 +
In retrospective he said: "The oil companies were in real trouble at that time, they had
 +
borrowed a lot of money and they needed a high oil price to save them." He was convinced of this by the attitude of the Shah of Iran, who in one crucial day in 1974 moved from the Saudi view to advocating higher prices.
 +
<ref> Oliver Morgan and Faisal Islam. "Saudi dove in the oil slick", The Observer (UK), January 14, 2001, interview with Sheikh Yaki Yamani (Saudi Arabian Oil Minister from 1962–1986) at the Royal Institute of International Affairs, http://www.theguardian.com/business/2001/jan/14/globalrecession.oilandpetrol</ref>
 +
 +
In a declassified Memo July 27, 1973 Kissinger lectures the Shah, that Egypt might use the oil embargo if they concerted its policy with the U.S (White House 1973)
 +
<ref>White House Memorandum of Conversation (July 27, 1973) Participants: The Shah of Iran, Kissinger, Helms, Saunders. Declassified Jan 9, 2009. http://www.nixonlibrary.gov/virtuallibrary/releases/jun09/072773_memcon.pdf</ref>
 +
|group=note}}
 +
 +
==Dollar Hegemony==
 +
 +
The effect of rising oil prices on less-developed countries was devastating. In desparate need for oil they took out loans from Western banks, under which many defaulted when the FED raised interest rates. The IMF who promoted these loans then went on to prescribe austerity measures and bailed out troubled Western banks. The resulting weakness of the LDC's economies and the introduction of [[Moral Hazard]] by the IMF would be further exploited by currency speculators. The absence of capital controls was a necessary precondition for this form of '''monetary terrorism''' (Smithy 2003b)<ref name=WOM5 />, which led to attacks on, and collapse of, Mexican, Asian and Latin American currencies:
 +
{{QB|
 +
"The axing of the gold standard backing the US dollar led to the "floating" of most national currencies, which were no longer pegged to a gold conversion standard.
 +
 +
This lead to phenomenal growth in speculation against international currencies, which later led to massive '''economic and social crises''' in various countries that were speculated against. Examples include the Mexican Peso crisis of 1994-95, the Asian financial crisis of the late 1990s, followed by the Russian ruble crisis. Since the death of the gold standard and the floating of most major currencies we have seen currency speculation increase to an '''astonishing 98% of all international transactions'''. This means that "real economic" transactions account for a mere 2% of international transactions, and we truly live in the midst of a global casino. This data on currency speculation is derived from data from the [[Bank for International Settlements]] and summarized in the book "The Future of Money" by [[Bernard Lietaer]], Century Press" (Smithy 2003b) <ref name=WOM5/>.}}
 +
 
==Petrodollar Wars==
 
==Petrodollar Wars==
  
−
{{Q|"'''I am saddened that it is politically inconvenient to acknowledge what everyone knows: the [[Iraq war]] is largely about oil.'''" ([[Allan Greenspan]] (2007) [http://en.wikipedia.org/wiki/The_Age_of_Turbulence The Age of Turbulence])}}
 
  
−
News outlets in mid-2000-2002 carried articles about Saddam's efforts to sell oil on markets exclusively in Euros.<ref>[http://www.time.com/time/magazine/article/0,9171,998512,00.html Foreign Exchange: Saddam Turns His Back on Greenbacks]</ref><ref>[http://www.rferl.org/content/article/1095057.html Radio Free Europe - Iraq: Baghdad Moves To Euro]</ref> This may have been viewed as a push by [[Iraq]] to influence other OPEC states to challenge the reserve currency status in oil trading of the USD. This may have been an unacceptable outcome in the global economy with respect to the flow of petrodollars.
+
{{Q|"'''I am saddened that it is politically inconvenient to acknowledge what everyone knows: the [[Iraq war]] is largely about oil.'''" - [[Allan Greenspan]] (2007) [http://en.wikipedia.org/wiki/The_Age_of_Turbulence The Age of Turbulence]}}
 +
 
 +
News outlets in mid-2000-2002 carried articles about Saddam's efforts to sell oil on markets exclusively in Euros.
 +
<ref>William Dowell. "Foreign Exchange: Saddam Turns His Back on Greenbacks", Time Magazine, New York City,  Monday, Nov. 13, 2000, accessed Nov. 14, 2014, http://www.time.com/time/magazine/article/0,9171,998512,00.html </ref>
 +
<ref>Charles Recknagel. "Iraq: Baghdad Moves To Euro", Radio Free Europe, November 01, 2000, accessed Nov. 14, 2014, http://www.rferl.org/content/article/1095057.html
 +
</ref>  
 +
This may have been viewed as a push by [[Iraq]] to influence other OPEC states to challenge the reserve currency status in oil trading of the USD. This may have been an unacceptable outcome in the global economy with respect to the flow of petrodollars.
  
−
Since the beginning of 2003, Iran has required [[euro]] in payment of exports toward Asia and Europe. The government opened an [[Iranian Oil Bourse]] on the free trade zone on the island of [[Kish, Iran|Kish]],<ref>[http://www.iran-daily.com/1383/2199/html/economy.htm  Kish Oil Exchange Planned], [[Iran Daily]], January 24, 2006</ref><ref>[http://www.atimes.com/atimes/Middle_East/HC22Ak01.html A frenzied Persian new year], March 22, 2006, [[Asia Times]]</ref> for the express purpose of trading oil priced in other currencies, including euros.   
+
Since the beginning of 2003, Iran has required [[euro]] in payment of exports toward Asia and Europe. The government opened an [[Iranian Oil Bourse]] on the free trade zone on the island of [[Kish, Iran|Kish]],
 +
<ref>"Kish Oil Exchange Planned", Iran Daily, January 24, 2006, http://www.iran-daily.com/</ref>
 +
<ref>Pepe Escobar. "A frenzied Persian new year", Asia Times, March 22, 2006, accessed Nov. 14, 2014, http://www.atimes.com/atimes/Middle_East/HC22Ak01.html</ref>  
 +
for the express purpose of trading oil priced in other currencies, including euros.   
  
 
[[Libya]] decided to challenge the petrodollar system and stop selling all their oil for dollars, shortly before it was attacked.  Qaddafi initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Qaddafi suggested establishing a united African continent, with its 200 million people using this single currency. … The initiative was viewed negatively by the USA and the European Union, with French president [[Nicolas Sarkozy]] calling Libya a threat to the financial security of mankind; but [[Gaddafi]] continued his push for the creation of a united Africa. Gaddafi’s proposal to introduce a gold dinar for Africa revived the notion of an Islamic gold dinar floated in 2003 by [[Malaysian Prime Minister]] [[Mahathir Mohamad]], as well as by some Islamist movements. The notion, which contravenes [[IMF]] rules and is designed to bypass them, has had trouble getting started.  
 
[[Libya]] decided to challenge the petrodollar system and stop selling all their oil for dollars, shortly before it was attacked.  Qaddafi initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Qaddafi suggested establishing a united African continent, with its 200 million people using this single currency. … The initiative was viewed negatively by the USA and the European Union, with French president [[Nicolas Sarkozy]] calling Libya a threat to the financial security of mankind; but [[Gaddafi]] continued his push for the creation of a united Africa. Gaddafi’s proposal to introduce a gold dinar for Africa revived the notion of an Islamic gold dinar floated in 2003 by [[Malaysian Prime Minister]] [[Mahathir Mohamad]], as well as by some Islamist movements. The notion, which contravenes [[IMF]] rules and is designed to bypass them, has had trouble getting started.  
  
−
But today the countries stocking more and more gold rather than dollars include not just [[Libya]] and [[ Iran]], but also [[China]], [[Russia]], [[India]] and [[Brazil]]. <ref>[[Document:The_Libyan_War,_American_Power_and_the_Decline_of_the_Petrodollar_System|The Libyan War, American Power and the_Decline of the_Petrodollar System]]</ref> <ref>[http://www.spectator.co.uk/features/9298552/the-wars-that-really-are-about-the-oil/ The Wars That Really Are About The Oil] - spectator 30 August 2014</ref> In May 2014, China agreed to buy $400 billion of Russian-produced natural gas over 30-years, valued in domestic currencies, in what was touted as Gazprom’s biggest contract ever.  In August, Russia signed a historic deal with Iran to purchase $20 billion of oil in rubles, bypassing Western sanctions against Iran while hastening the petrodollar’s decline.  Aug 14 (Reuters) - President Vladimir Putin said on Thursday Russia should aim to sell its oil and gas for Roubles globally because the dollar monopoly in energy trade was damaging Russia's economy. <ref>[http://www.wnd.com/2014/08/putin-the-petrodollar-must-die/ Putin: 'The petrodollar must die'] - WND 15 August 2014</ref>
+
But today the countries stocking more and more gold rather than dollars include not just [[Libya]] and [[ Iran]], but also [[China]], [[Russia]], [[India]] and [[Brazil]] (Scott 2011)
 +
<ref name=scott2011>Scott, Peter Dale. (2011) The Libyan War, American Power and the Decline of the Petrodollar System. [[Document:The_Libyan_War,_American_Power_and_the_Decline_of_the_Petrodollar_System]]</ref>.
 +
<ref>Michael Lind. "The Wars That Really Are About The Oil", Spectator (UK), Aug 30, 2014, accessed Nov. 14, 2014, http://www.spectator.co.uk/features/9298552/the-wars-that-really-are-about-the-oil/
 +
</ref>  
 +
In May 2014, China agreed to buy $400 billion of Russian-produced natural gas over 30-years, valued in domestic currencies, in what was touted as Gazprom’s biggest contract ever.  In August, Russia signed a historic deal with Iran to purchase $20 billion of oil in rubles, bypassing Western sanctions against Iran while hastening the petrodollar’s decline.  Aug 14 (Reuters) - President Vladimir Putin said on Thursday Russia should aim to sell its oil and gas for Roubles globally because the dollar monopoly in energy trade was damaging Russia's economy.
 +
<ref>Jerome R. Corsi. "Putin: 'The petrodollar must die'. On mission to reduce global role of U.S. currency", Whistleblower/WND Weekly, Aug 15, 2014, accessed Nov. 14, 2014, http://www.wnd.com/2014/08/putin-the-petrodollar-must-die/</ref>
 +
 
 +
==Petrodollar vs. Peak Oil==
 +
 
 +
Global oil production will slowly decline from its peak around 2015 to 2200 (Hirsch 2005)
 +
<ref>Hirsch, Robert L. (2005) Peaking of World Oil Production - Reacent Forecasts,[http://www.netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/DOE-NETL-2007-1263-PeakingWorldOilProd-RecentForecasts.pdf ASPO]</ref>.
 +
{{#tag:ref|
 +
This is largely because the expected Return on Investment (ROI) for new discoveries is reduced. There might be abundant oil reserves from a variety of sources - biotic and abiotic - but no way to extract them with a positive ROI.
 +
|group=note}}
 +
 +
With an "oil-for-dollars" agreement there seems to be a problem if oil production is running out. However, dependency of the global economy on oil will probably not only continue for the next 100 years but '''competition will increase'''.
 +
This is because the ratio of energy needed to extract oil vs. the energy one gets from burning oil is way higher than any other competing energy resource. Ie. for Saudi oil the ratio was 200:1 according to Clark (2005, p.100)<ref name=clark2005/>, for fracking it is 3:2 and for "bio" fuels derived from plants it is less than one (negative). Moreover to get started with alternative energies oil is needed (Kuhlman 2007)
 +
<ref>Alexander Kuhlman, "The fallacy of Alternatives", In: "Peak Oil: The End of the Oil Age", 2007, accessed Nov. 14, 2014, http://www.oildecline.com/index.htm</ref>.
 +
 
 +
Different oil fields peak at different times. Saudi wells are rated last, with the biggest remaining reserves and the highest ROI. As long as Saudi Arabia keeps buying U.S. securities and the region is militarily controlled by the U.S. the petrodollar monopoly can stay in place although it has lost much of its mesmerizing quality (Rowley 1989)<ref name=rowley1989/>.
 +
 
 +
It is important to understand that rising oil prices tightens the influence, control and revenues of the established oil-military-banking-political complex at the expense of the global population. However, the consumer price of oil must be kept in a certain range - artificially low - otherwise consumers are looking for alternatives to oil witch could threaten the petrodollar hegemony from the other side (Smithy 2003c)
 +
<ref name=WOM20>Smithy (2003c) WIZARDS OF MONEY - 20. The Battle Of The Dragons, Oil vs Insurance http://www.robinupton.com/people/WizardsOfMoney/</ref>
 +
 
 +
==Outlook==
 +
The global medium of exchange as we know it is also a medium of social control (Smithy 2003a) <ref name=WOM1/>.
 +
 
 +
For most of us it is difficult to imagine that it could come without coercion; such a switch in point of view, however, is proposed by [[B. Lietaer]] in his book "The Future of Money: Beyond Greed and Scarcity" (Lietaer 2001)
 +
<ref>Lietaer, Bernard (2001) [http://www.transaction.net/money/book/index.html "The Future of Money: Beyond Greed and Scarcity"]Random House. ISBN </ref>.
 +
 
 +
His proposal is based on a diversity of freely associated local and national currencies designed for special purposes aswell as a global reference, the "Terra". He argues this diversity creates resilience - a feature badly needed in times of monetary monoculture.
 
{{SMWDocs}}
 
{{SMWDocs}}
 
==Footnotes==
 
==Footnotes==
−
{{reflist|group=note}}
+
{{reflist|group=note|2}}
 
==References==
 
==References==
−
{{Reflist|30em}}
+
{{reflist|2}}
 +
 
 
===Further reading===
 
===Further reading===
−
* Spiro, David E. (1999). ''The hidden hand of American hegemony : petrodollar recycling and international markets''. Ithaca, NY : Cornell University Press.
+
* Spiro, David E. (1999) ''The hidden hand of American hegemony : petrodollar recycling and international markets''. Ithaca, NY : Cornell University Press.
 
* William R. Clark (2005) ''[http://www.petrodollarwarfare.com/ Petrodollar Warfare:] Oil, Iraq and the Future of the Dollar'', New Society Publishers, ISBN: 978-0865715141
 
* William R. Clark (2005) ''[http://www.petrodollarwarfare.com/ Petrodollar Warfare:] Oil, Iraq and the Future of the Dollar'', New Society Publishers, ISBN: 978-0865715141
 +
* Nitzan, Jonathan and Bichler, Shimshon (2009) Capital as Power. A Study of Order and Creorder. RIPE Series in Global Political Economy. London and New York. Routledge.
  
 
===Page credit===
 
===Page credit===

Revision as of 12:48, 14 November 2014

Concept.png Petrodollar Rdf-entity.pngRdf-icon.png
Petrodollar.jpg
Typecommercial
Start1974
Interest ofUS/Federal Reserve
Subpage(s)•Petrodollar/Recycling
Denomination of the majority of the worlds oil in U.S. dollars has been the backbone of U.S. dollar hegemony since the U.S. unilaterally terminated the rights of foreign central banks to convert dollars to gold in 1971.

Petrodollar may be simply defined as oil revenues denominated in U.S. dollars (Oweiss 1974) [1].

Consequently to buy oil, dollars are needed. On a large scale exchanging local currency for dollars is too costly. The prefered way for countries to get dollars is therefore to export goods and services for dollars - or to get a loan from banks who hold enough dollar denominated assets, ie. the IMF or other big western banks.

On the other hand the term "revenues" includes surpluses on such a scale that the oil producing countries could buy up a large proportion of Western assets. The term Petrodollar refers also to the management of these revenues. Walter Levy, speaker at the Bilderberg Conference 1973 made clear that "Serious problems would be caused by unprecedented foreign exchange accumulations of countries such as Saudi Arabia and Abu Dhabi" (Engdahl 2004) [2]. [note 1]

These OPEC countries were advised on how to invest their surpluses by Western investment bankers and subsequently signed contracts with the U.S. on military bases, large arms deals, military training and cooperation on governmental and economic levels. Their governments' dependency on U.S. specialists remains unchanged to the present day (Blanchard 2014) [3].

Overview

In 1947, by the Bretton Woods agreements, the dollar became the world's reserve currency. To establish trust in the dollar the exchange rate to gold was fixed at 35$/ounce. However, the U.S.Federal Reserve increased the money supply by 340% from 1947 to 1971. At the same time its gold reserves decreased. Since 1969 foreign countries began to exchange dollars for gold at a rate not maintainable.

In 1971, after exessive spending on the Vietnam War the U.S. unilateraly terminated the rights of foreign central banks to convert dollars to gold. The end of Bretton Woods is marked by a devaluation of the dollar vs. gold, a stockmarket crash, global recession and the breakdown of the international dollar-pegged monetary system. The U.S. went from oil export to import after its own production peaked. OPEC began discussing the viability of pricing oil trades based on a basket of currencies.

In the face of these dramatic events which threatend American military and monetary supremacy (the two pillars of the empire) the Nixon administration began high-level talks with Saudi Arabia to unilaterally price international oil sales in dollars only - despite US assurances to its European and Japanese allies that such a unique monetary/geopolitical arrangement would not transpire (Clark 2005) [4].

Less mentioned by the commercially-controlled media is the fact that part of the agreements was the recycling of the oil producing countries' surpluses into U.S. dept securities held at Western banks. Restrictions on cross-border capital flows or investments were lifted. [note 2]

Until 1975 the other OPEC countries agreed to similar deals.

Recycling

Full article: Petrodollar/recycling

Petrodollar recycling is the handling of the oil producing countries' surpluses. These surpluses are commonly turned into either U.S. government securities (allowing the creation of more U.S. dollars by international banks (Smithy 2003a) [6] which are in turn used to buy oil and other goods and services) or are spent in arms deals including payments for U.S. military bases in the Middle East.

"The process of petrodollar recycling makes it possible for commercial banks of industrialized nations, international lending institutions, and Arab banking consortia to provide financial assistance to less-developed countries (LDCs). Western Europe, Japan, and the United States buy oil from oil-exporting countries (OECs). LDCs pay for oil imports and other foreign goods and services with money borrowed from Western commercial banks. The process of recycling is complete when those commercial banks and institutions obtain cash and investments from OECs" (Oweiss 1974)[1].[note 3]

It is easy to see that "commercial banks of industrialized nations, international lending institutions [IMF], and Arab banking consortia" were the big winners of this scheme.

Petrodollars were also recycled directly by an agreement between the U.S. Treasury and the Saudi Arabian Monetary Agency (SAMA), whose mission was

"to establish a new relationship through the Federal Reserve Bank of New York with the [U.S.] Treasury borrowing operation. Under this arrangement, SAMA will purchase new US Treasury securities with maturities of at least one year" (Bennet 1975)[7].

It is noteworthy that under this agreement the Saudis accept the promis to be payed later, while at the same time increasing the U.S. (military) budget for that amount. A high oil price therefore leads to rising demand for U.S. dollars on a global scale without negatively affecting key parts of the U.S. economy. [note 4]

In addition, petrodollars were recycled into banks managed by Saudi/U.S joint ventures used to finance transnational black ops, ie. Riggs Bank and BCCI from 1976 onwards. The Saudi intelligence personel running these banks have been named as Saudi Arabia's most important financiers of Osama bin Laden and his Al Qaeda group (see ie. v.d. Reijden 2013 [8] , Scott 2014 [9] , Komisar 2007 [10] ).

Containment of Oil Exporting Governments

Osama bin Laden arose from internal opposition to the House of Saud. In the view of the Arab clergy and public these westernized roulers were "oppressive and corrupt political regimes", forced on Muslims by America, disrespecting religion and selling Arabian autonomy for dollars (Clark 2005, p.194) [4].

When reading through the declassified Report of the Comptroller Generale of the U.S on the U.S.-Saudi Joint Comission on Economic Cooperation [11] the dimension of this 'joint venture' becomes visible. From military to finance to construction to advice on how to run a 'modern' government: it reads like a gigantic takeover by U.S. corporations. Today Saudi Arabia can not opperate without its 9 million foreign professionals. Other OECD countries have similar deals.

The internal opposition was driven by the conflict with Israel. OECD's governments seem to acquiesce to the occupation of Arab land since the 1967 Six-day War. This and the rising military presence of the U.S. in the region is seen as a permanent humiliation. Beginning with the late 70s Bin Laden received large funds from influencial Saudi Arabians which might have helped calming him down, however, since 2003 some 90 people were killed by suicide bombings and kidnappings. One could argue, the Arab-Israeli conflict acts like a dial to drive up pressure on the House of Saud and to motivate acts of terrorism. (Goff 2004a [12], Komisar 2007 [10]).

An example of how this dial works is the 'oil crisis' of 1973. The perception of shortage created by the commercially-controlled media bamboozled the Western public to accept hardship in the form of higher oil prices and recession and to distract from the power grab that came with the recycling scheme. To announce an 'embargo' - in the face of the provocative, open support of Israel in the Yom Kippur War by the U.S. - was one of the few options available to Saudi King Faisal to calm down public rage and to save his face (Bichler et. al. 1989c, p.15f) [13].

Financial Containment

On the side of oil exporting nations

"the placement of petrodollar surpluses [...] in the United States may be regarded politically as 'hostage capital'. In the event of a major political conflict between the United States and an oil-exporting nation, the former with all its military power can confiscate or freeze these assets or otherwise limit their use. [...] (Oweiss 1974)[1]

According to Spiro (1999) [14] 70 percent of all Saudi assets in the United States were being held in a New York Fed account. [note 5]

As of 2004 "Sixty percent of Saudi foreign investment is in the United States, and the Saudi Royals are heavily invested in the US financial sector. This investment is growing, rising from a Saudi-to-US FDI in 1998 of $2.7 billion to $4.4 billion by 2001 when the World Trade Center fell. Any blow to the US financial establishment reverberates through Saudi Arabia, and this heavy Saudi investment significantly disinclines either country to disentangle with the other. It also reinforces dollar hegemony with the petrodollar" (Goff 2004a) [12]

The Saudi establishment literally sits in the same boat with the U.S's.

"It follows, therefore, that governments placing their petrodollar surpluses in the United States may lose part of their economic and political independence. Consequently, the more petrodollar surpluses are placed in the United States by a certain oil-exporting nation, the less independent such a nation becomes." (Oweiss 1974)[1]

While freezing assets to apply pressure seems not necessary in the case of Saudi Arabia due to common interests of its establishment and the shacky position of the ruling kingdom, the U.S. government resorted to such weapons twice in the 1980s against Iran and Libya. In 2006 when Iran began selling oil for Yen, Renminbi, Rubles and Euro its foreign assets were frozen - allegedly because of its nuclear program. [note 6]

The Unfree Market

"Money supply and debt have exploded in the absence of gold convertibility [...] Today's money is not backed by gold. It is now backed by nothing at all, except our trust in the monetary system." - Smithy (2003a) [6]

This "trust" itself is backed by coercion (the world's dependency on oil) and ultimately by the U.S military (Goff 2004b) [17].

The "explosion" of the money supply led to various financial bubbles and increased speculative activity ultimatively culminating in the banking crisis of 2007/08. In the center of all this were the big international banks who received recycled petrodollars and used them to create loans and financial instruments for speculation. They grew unbelieveable powerful with this scheme knowing fully well they would be bailed out if something went wrong - a distortion of the free market called Moral Hazard in risk management. No wonder 90 percent of the core of the network of global corporate control belongs to the financial sector today (Vitali et.al. (2011) [18].

When oil prices quadrupled 1971-1975 the revenues of big oil, international banks and defence contractors skyrocketed in a similar dimension (Rowley et. al. 1989 [19] , Bichler et. al. 1989a [20]).

The ever increasing U.S. military budget becomes the most profitable investment opportunity - shielded from international competition - while the economic performance of Western industrial countries declines (Bichler et. al. 1989b) [21].

This led to an unprecedented concentration in the degree of monopoly, power and control over world affairs in the hands of Transnational Corporations (TNCs) - which per se are financial institutions to manage their profits - with revolving doors to politics and intelligence (Scott 2014 [9] , Vitali et.al. 2011 [18]).

The petrodollar recycling scheme gives the U.S. and western based TNCs an advantage in what is often portrayed - but in reality is not - a 'free market'. It allows the U.S. to run the largest trade deficit in world history, while the dollar "is propped up by dollar-denominated Saudi oil sales on one side and by American bullets on the other" (Goff 2004a) [12].

The Price of Oil

"Oil is not a normal commodity. No other commodity has five US navy battle groups patrolling the sea lanes to secure it. - Mark Jones[12]

The official narrative is that a OPEC embargo led to significant oil shortages which triggerd a global recession. The embargo was presumably politically motivated to punish the U.S. for its support of Israel in the Yom Kippur War. There are several problems with this view. First, the shortfall corresponded to only 7.5% of global output and second, the embargo was lifted after 5 month without achieving any political goal (Hamilton 2011) [22].

The official counter narrative is, that further increases in the price of oil were to be expected according to standart economic theory due to inflationary pressure, col. termed the 'FED printing money' (Barsky and Kilian 2001) [23].

The problem here is, the price of crude oil was set by decree - arrived at by agreements in oligopolistic structures (Bichler et. al. 1989b)[21] - and the U.S. side was part of these structures (Scott 2014)[9].

Why is this question so important? Obviously the idea that on both sides of the atlantic moneyed interests are playing together rather than against each other is a dangerous one. [note 7]

To ensure sufficient global demand for the dollar, high oil prices were - and are - essential. [note 8] Consequently - after the Saudi government had bought the first $2.5 billion U.S. treasury bills in 1974 from its oil surplus funds - the U.S. administration secretly lobbied OPEC through its puppet regime in Iran to increase prices. [note 9]

Dollar Hegemony

The effect of rising oil prices on less-developed countries was devastating. In desparate need for oil they took out loans from Western banks, under which many defaulted when the FED raised interest rates. The IMF who promoted these loans then went on to prescribe austerity measures and bailed out troubled Western banks. The resulting weakness of the LDC's economies and the introduction of Moral Hazard by the IMF would be further exploited by currency speculators. The absence of capital controls was a necessary precondition for this form of monetary terrorism (Smithy 2003b)[5], which led to attacks on, and collapse of, Mexican, Asian and Latin American currencies:

"The axing of the gold standard backing the US dollar led to the "floating" of most national currencies, which were no longer pegged to a gold conversion standard.

This lead to phenomenal growth in speculation against international currencies, which later led to massive economic and social crises in various countries that were speculated against. Examples include the Mexican Peso crisis of 1994-95, the Asian financial crisis of the late 1990s, followed by the Russian ruble crisis. Since the death of the gold standard and the floating of most major currencies we have seen currency speculation increase to an astonishing 98% of all international transactions. This means that "real economic" transactions account for a mere 2% of international transactions, and we truly live in the midst of a global casino. This data on currency speculation is derived from data from the Bank for International Settlements and summarized in the book "The Future of Money" by Bernard Lietaer, Century Press" (Smithy 2003b) [5].

Petrodollar Wars

"I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil." - Allan Greenspan (2007) The Age of Turbulence

News outlets in mid-2000-2002 carried articles about Saddam's efforts to sell oil on markets exclusively in Euros. [27] [28] This may have been viewed as a push by Iraq to influence other OPEC states to challenge the reserve currency status in oil trading of the USD. This may have been an unacceptable outcome in the global economy with respect to the flow of petrodollars.

Since the beginning of 2003, Iran has required euro in payment of exports toward Asia and Europe. The government opened an Iranian Oil Bourse on the free trade zone on the island of Kish, [29] [30] for the express purpose of trading oil priced in other currencies, including euros.

Libya decided to challenge the petrodollar system and stop selling all their oil for dollars, shortly before it was attacked. Qaddafi initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Qaddafi suggested establishing a united African continent, with its 200 million people using this single currency. … The initiative was viewed negatively by the USA and the European Union, with French president Nicolas Sarkozy calling Libya a threat to the financial security of mankind; but Gaddafi continued his push for the creation of a united Africa. Gaddafi’s proposal to introduce a gold dinar for Africa revived the notion of an Islamic gold dinar floated in 2003 by Malaysian Prime Minister Mahathir Mohamad, as well as by some Islamist movements. The notion, which contravenes IMF rules and is designed to bypass them, has had trouble getting started.

But today the countries stocking more and more gold rather than dollars include not just Libya and Iran, but also China, Russia, India and Brazil (Scott 2011) [31]. [32] In May 2014, China agreed to buy $400 billion of Russian-produced natural gas over 30-years, valued in domestic currencies, in what was touted as Gazprom’s biggest contract ever. In August, Russia signed a historic deal with Iran to purchase $20 billion of oil in rubles, bypassing Western sanctions against Iran while hastening the petrodollar’s decline. Aug 14 (Reuters) - President Vladimir Putin said on Thursday Russia should aim to sell its oil and gas for Roubles globally because the dollar monopoly in energy trade was damaging Russia's economy. [33]

Petrodollar vs. Peak Oil

Global oil production will slowly decline from its peak around 2015 to 2200 (Hirsch 2005) [34]. [note 10]

With an "oil-for-dollars" agreement there seems to be a problem if oil production is running out. However, dependency of the global economy on oil will probably not only continue for the next 100 years but competition will increase. This is because the ratio of energy needed to extract oil vs. the energy one gets from burning oil is way higher than any other competing energy resource. Ie. for Saudi oil the ratio was 200:1 according to Clark (2005, p.100)[4], for fracking it is 3:2 and for "bio" fuels derived from plants it is less than one (negative). Moreover to get started with alternative energies oil is needed (Kuhlman 2007) [35].

Different oil fields peak at different times. Saudi wells are rated last, with the biggest remaining reserves and the highest ROI. As long as Saudi Arabia keeps buying U.S. securities and the region is militarily controlled by the U.S. the petrodollar monopoly can stay in place although it has lost much of its mesmerizing quality (Rowley 1989)[19].

It is important to understand that rising oil prices tightens the influence, control and revenues of the established oil-military-banking-political complex at the expense of the global population. However, the consumer price of oil must be kept in a certain range - artificially low - otherwise consumers are looking for alternatives to oil witch could threaten the petrodollar hegemony from the other side (Smithy 2003c) [36]

Outlook

The global medium of exchange as we know it is also a medium of social control (Smithy 2003a) [6].

For most of us it is difficult to imagine that it could come without coercion; such a switch in point of view, however, is proposed by B. Lietaer in his book "The Future of Money: Beyond Greed and Scarcity" (Lietaer 2001) [37].

His proposal is based on a diversity of freely associated local and national currencies designed for special purposes aswell as a global reference, the "Terra". He argues this diversity creates resilience - a feature badly needed in times of monetary monoculture.

 

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Footnotes

  1. ↑ This view is also expressed by the commercially-controlled media today when finding that countries like Saudi Arabia are the culprits responsible for global imbalances when running surpluses. Rejecting advice on how to handle surpluses may be interpreted as dwindling power of the dollar empire. See ie. The Economist, Apr 26th 2012 "[http://www.economist.com/node/21553424 Petrodollar profusion - Oil exporters are the main drivers of global imbalances".
  2. ↑ These restrictions were a key component of the Bretton Woods agreement. "The capital controls were necessary otherwise speculators could have had a field day by betting that a certain currency would go down by selling it off against the US dollar and thereby forcing it to go down purely from their speculative activity. Large financial firms with access to lots of US dollars could therefore force a foreign currency of a weaker country to collapse as they desired" (Smithy 2003b) [5]. Exactely these currency attacks occured later when the petrodollar recycling scheme was in place. Examples include the Mexican Peso crisis of 1994-95, the Asian financial crisis of the late 1990s and the Russian ruble crisis.
  3. ↑ "to provide financial assistance" is a bit of an euphemism here. These were loans with high interest rates which increased the dollar money supply and allowed Western banks to engage in currency speculation.
  4. ↑ Academically speaking, since the volume of oil that should have been supplied in observance of standard microeconomic theory exceeded the volume actually supplied "the difference [...] is in fact a subsidy granted, in real terms, to oil-importing nations such as the United States, Germany, France, and Japan" (Oweiss 1974) [1]. In other words, through the recycling mechanism these close trading partners of the U.S. can buy oil with a fiat currency print at will.
  5. ↑ If OECs purchase new US Treasury securities with petrodollars they give away their oil for the promise to be payed later, while at the same time giving Western banks the power to increase the money supply based on these assets. In addition they pay for military "protection" of their country by the same forces which siphon off their oil. Moreover, the Bank of International Settlements acknowleges that on the long run, "foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency." [15]
  6. ↑ The U.S. National Intelligence Estimate 2007 stated that Tehran had put a stop to weapons production in 2003 contradicting its assessment from 2005, however, the sanctions were not lifted. [16]
  7. ↑ Rarely mentioned is the fact that with the Yom Kippur war the Arab kingdom came under severe pressure from its religious leaders and its people over its quiet resignation to the Israeli occupation of Syrian and Egyptian territory since 1967 (following the Six-Day War). This was seen as so humiliating that a member of the Saudi Bin Laden family was motivated to found a forerunner organization to Al Kaida in opposition to the Saudi ruling family's close ties to America. The United States' provocative support of Israel triggered an embargo, which in turn triggered a sudden 'shitstorm' in the commercially-controlled media. The Yom Kippur war did not come as a surprise, nor did the embargo, but was portrayed as such by the commercially-controlled media. Warnings of King Faisal were blocked by U.S. officials and the commercially-controlled media during the six month build-up to the war. The Saudi government was cornered between its population and American monetary interests. In rage that he could not escape the scapegoat position, King Faisal threatened to "burn the oil wells and return to the tents", pointing out that the U.S needed his oil, but he in turn doesn't need the dollars, in response to Kissinger who made a joke about the embargo on his visit to the kingdom in 1974. After his murder in 1975, the official narrative remarks that he was followed by more "pragmatic" leaders.
  8. ↑ The official narrative goes a long way to deny this fact. Rowley et. al. (1989)[19] point out that "the pivotal significance of high oil prices was abruptly uncovered in 1986, when Saudi Arabia flooded the oil market with additional supplies and caused the price of crude petroleum to drop below $10 per barrel. This action was recognized as so hazardous to the interests of the Armadollar- Petrodollar Coalition that some immediate political response was called for. Subsequently, the vice president [Bush] was sent to the Middle East with the task of openly asking Saudi Arabia to reconsider the action and reinstate lower levels for production."
  9. ↑ At first, the Saudi officials seemed not to grasp the idea. In 1969 the Saudi petroleum minister, Yamani, explained his policy toward the U.S. as follows: "For our part, we do not want the majors to lose their power and be forced to abandon their role as a buffer element between the producers and the consumers. We want the present setup to continue as long as possible and at all costs to avoid any disastrous clash of interests which would shake the foundations of the whole oil industry." (Barnet 1980, p. 61)[24] In retrospective he said: "The oil companies were in real trouble at that time, they had borrowed a lot of money and they needed a high oil price to save them." He was convinced of this by the attitude of the Shah of Iran, who in one crucial day in 1974 moved from the Saudi view to advocating higher prices. [25] In a declassified Memo July 27, 1973 Kissinger lectures the Shah, that Egypt might use the oil embargo if they concerted its policy with the U.S (White House 1973) [26]
  10. ↑ This is largely because the expected Return on Investment (ROI) for new discoveries is reduced. There might be abundant oil reserves from a variety of sources - biotic and abiotic - but no way to extract them with a positive ROI.

References

  1. ↑ a b c d e Oweiss, Ibrahim M. (1974) Petrodollars: Problems and Prospects, Address before the Conference on The World Monetary CrisisArden House, Harriman Campus, Columbia University http://faculty.georgetown.edu/imo3/petrod/define.htm
  2. ↑ Engdahl, F.W. (2004) A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto ISBN 0-7453-2309-X, p.143.
  3. ↑ Christopher M. Blanchard (2014) Saudi Arabia: Background and U.S. Relations. Congressional Research Service 7-5700 http://www.crs.gov RL33533
  4. ↑ a b c William R. Clark (2005) Petrodollar Warfare: Oil, Iraq and the Future of the Dollar, New Society Publishers, ISBN: 978-0865715141 http://www.petrodollarwarfare.com/
  5. ↑ a b c Smithy (2003b) WIZARDS OF MONEY - 5. Monetary Terrorism http://www.robinupton.com/people/WizardsOfMoney/
  6. ↑ a b c Smithy (2003a) WIZARDS OF MONEY - 1. How Money is Created http://www.robinupton.com/people/WizardsOfMoney/
  7. ↑ Letter of Jack F. Bennett (assistant secretary of the U.S. Treasury) to Henry Kissinger, February 1975. ‘Subject: Special Arrangements for Purchase of U.S. Government Securities by the Saudi Arabian Government.’ International Currency Review. Vol. 20, no. 6, January 1991.
  8. ↑ Joël v.d. Reijden (2013) 911_WTC_part_2_who_did_it, ISGP archives, https://wikispooks.com/ISGP/911/911_WTC_part_2_who_did_it.htm#saudi
  9. ↑ a b c Scott, Peter Dale (2014) The State, the Deep State, and the Wall Street Overworld, http//wikispooks.com/w/index.php?title=Document:The_State,_the_Deep_State,_and_the_Wall_Street_Overworld
  10. ↑ a b Lucy Komisar. "The BCCI Game: Banking on America, Banking on Jihad", In: A Game as Old as Empire (2007) Berrett-Koehler, San Francisco ISBN, accessed Nov. 14, 2014, http://www.truth-out.org/archive/item/69782:ties-between-the-bush-family-and-osama-bin-laden
  11. ↑ U.S. Government Accountability Office. "The U.S.-Saudi Arabian Joint Commission on Economic Cooperation" ID-79-7: Published: Mar 22, 1979. Publicly Released: Mar 29, 1979. http://www.gao.gov/assets/130/126054.pdf
  12. ↑ a b c d Stan Goff. "The War for Saudi Arabia", Sanders Research Associates, December 30, 2004, accessed Nov. 14, 2014, http://freedomroad.org/2004/12/military-matters-30-the-war-for-saudi-arabia-2
  13. ↑ Bichler, Shimshon and Nitzan, Jonathan and Rowley, Robin. (1989c) The Armadollar-Petrodollar Coalition - Demise or new Order? Working Papers (Part 4). Department of Economics. McGill University. Montreal. Vol. 89. No. 11. pp. 1-63. http://bnarchives.yorku.ca/135/01/890101RBN_ADPD_Coalition_Demise_or_New_Order.pdf
  14. ↑ Spiro, David E. (1999). The hidden hand of American hegemony: petrodollar recycling and international markets. Ithaca, NY : Cornell University Press.
  15. ↑ {{URL|example.com|optional display text}}
  16. ↑ RIA Novosti (08 Dez 2007) Iran stops accepting U.S. dollars for oil http://en.ria.ru/world/20071208/91488137.html
  17. ↑ Stan Goff. "Persian Peril", From The Wilderness Publications, 2004, accessed Nov. 14, 2014, http://www.fromthewilderness.com/free/ww3/080904_persian_peril.shtml
  18. ↑ a b Vitali, S. and Glattfelder, James B. and Battiston, S. (2011) The Network of Global Corporate Control. PLoS ONE 6(10): e25995. doi:10.1371/journal.pone.0025995
  19. ↑ a b c Rowley, Robin and Bichler, Shimshon and Nitzan, Jonathan. (1989) The Armadollar-Petrodollar Coalition and the Middle East. Working Papers (Part 3). Department of Economics. McGill University. Montreal. Vol. 89. No. 10. pp. 1-54. http://bnarchives.yorku.ca/134/01/890101RBN_ADPD_Coalition_and_the_ME.pdf
  20. ↑ Bichler, Shimshon and Nitzan, Jonathan and Rowley, Robin. (1989a) The Political Economy of Armaments. Working Papers (Part 1). Department of Economics. McGill University. Montreal. Vol. 89. No. 7. pp. 1-34.
  21. ↑ a b Bichler, Shimshon and Nitzan, Jonathan and Rowley, Robin. (1989b) The Political Economy of Armament and Oil – A Series of Four Articles. Working Papers (Part 2). Department of Economics. McGill University. Montreal. Vol. 89
  22. ↑ James D. Hamilton (2011) Historical Oil Shocks. Department of Economics, University of California, San Diego, December 22, 2010, Revised: February 1, 2011
  23. ↑ Barsky, R. B. and Kilian, L. (2001) Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative. in B.S. Bernanke and K. Rogoff (eds.) NBER Macroeconomics Annual 2001. Cambridge, MA: MIT Press.
  24. ↑ Barnet, R. J . (1980) The Lean Years. Politics in the Age of Scarcity, New York: Simon and Schuster, ISBN
  25. ↑ Oliver Morgan and Faisal Islam. "Saudi dove in the oil slick", The Observer (UK), January 14, 2001, interview with Sheikh Yaki Yamani (Saudi Arabian Oil Minister from 1962–1986) at the Royal Institute of International Affairs, http://www.theguardian.com/business/2001/jan/14/globalrecession.oilandpetrol
  26. ↑ White House Memorandum of Conversation (July 27, 1973) Participants: The Shah of Iran, Kissinger, Helms, Saunders. Declassified Jan 9, 2009. http://www.nixonlibrary.gov/virtuallibrary/releases/jun09/072773_memcon.pdf
  27. ↑ William Dowell. "Foreign Exchange: Saddam Turns His Back on Greenbacks", Time Magazine, New York City, Monday, Nov. 13, 2000, accessed Nov. 14, 2014, http://www.time.com/time/magazine/article/0,9171,998512,00.html
  28. ↑ Charles Recknagel. "Iraq: Baghdad Moves To Euro", Radio Free Europe, November 01, 2000, accessed Nov. 14, 2014, http://www.rferl.org/content/article/1095057.html
  29. ↑ "Kish Oil Exchange Planned", Iran Daily, January 24, 2006, http://www.iran-daily.com/
  30. ↑ Pepe Escobar. "A frenzied Persian new year", Asia Times, March 22, 2006, accessed Nov. 14, 2014, http://www.atimes.com/atimes/Middle_East/HC22Ak01.html
  31. ↑ Scott, Peter Dale. (2011) The Libyan War, American Power and the Decline of the Petrodollar System. Document:The_Libyan_War,_American_Power_and_the_Decline_of_the_Petrodollar_System
  32. ↑ Michael Lind. "The Wars That Really Are About The Oil", Spectator (UK), Aug 30, 2014, accessed Nov. 14, 2014, http://www.spectator.co.uk/features/9298552/the-wars-that-really-are-about-the-oil/
  33. ↑ Jerome R. Corsi. "Putin: 'The petrodollar must die'. On mission to reduce global role of U.S. currency", Whistleblower/WND Weekly, Aug 15, 2014, accessed Nov. 14, 2014, http://www.wnd.com/2014/08/putin-the-petrodollar-must-die/
  34. ↑ Hirsch, Robert L. (2005) Peaking of World Oil Production - Reacent Forecasts,ASPO
  35. ↑ Alexander Kuhlman, "The fallacy of Alternatives", In: "Peak Oil: The End of the Oil Age", 2007, accessed Nov. 14, 2014, http://www.oildecline.com/index.htm
  36. ↑ Smithy (2003c) WIZARDS OF MONEY - 20. The Battle Of The Dragons, Oil vs Insurance http://www.robinupton.com/people/WizardsOfMoney/
  37. ↑ Lietaer, Bernard (2001) "The Future of Money: Beyond Greed and Scarcity"Random House. ISBN

Further reading

  • Spiro, David E. (1999) The hidden hand of American hegemony : petrodollar recycling and international markets. Ithaca, NY : Cornell University Press.
  • William R. Clark (2005) Petrodollar Warfare: Oil, Iraq and the Future of the Dollar, New Society Publishers, ISBN: 978-0865715141
  • Nitzan, Jonathan and Bichler, Shimshon (2009) Capital as Power. A Study of Order and Creorder. RIPE Series in Global Political Economy. London and New York. Routledge.

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