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| − | ==Timeline==
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| − | 1947: Exxon, Mobil , Texaco and Chevron (then Socal) forme ARAMCO, the Arabian-American Company which obtained preferential access to Saudi Arabian oil.
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| − |
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| − | 1960: Formation of OPEC.
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| − | 1967: Israel occupies Syrian and Egyptian territory in the Six-Day War.
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| − | 1970: OPEC discusses pricing oil based on a basket of 10 currencies.
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| − | 1971: End of Bretton Woods.
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| − | 1973, May 11 to 13, Bilderberg Conference predicts 400% rise in crude oil price and gives advice how to manage the petrodollar flood.<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 </ref>
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| − |
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| − | 1973: Saudi Arabia warns USA that further supply of Israel with weapons may lead to an oil embargo.
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| − | 1973, October 6 to 25, Yom Kippur War
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| − |
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| − | 1973: After the embargo ("oil shock") Nixon threatens Saudi Arabia with military intervention.
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| − | <ref>Palmer, M.A. (1992) Guardians of the Gulf, 1st Edition, Free Press, New York, p. 100, see also: http://www.historyofwar.org/articles/weapons_rdf.html and
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| − | http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-system-part-3/</ref>
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| − | 1974: "Though a finalized peace deal failed to
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| − | materialize, the prospect of a negotiated end to hostilities between Israel and Syria proved sufficient to
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| − | convince the relevant parties to lift the embargo in March 1974."<ref>http://history.state.gov/milestones/1969-1976/oil-embargo</ref>
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| − |
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| − | 1973-75: In the face of rising crude oil prices and a plummeting "free-floating" dollar, the US administration proposes deals to the OPEC Cartel members what came to be referred to as the petrodollar recycling system.
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| − |
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| − | ==The Petrodollar Scheme==
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| − |
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| − | The USA agreed to or even encouraged high crude oil prices offering old weapons (see ie. Engdahl, 2004, Rowley et.al, 1989), infrastructure and military protection (especially from Israel), if in turn OPEC sells exclusivly for dollars and - most importantly - reinvest their surplus in U.S. debt securities held in Western banks (Oweiss, 1974, Clackson, 2014).
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| − |
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| − | This so called Petrodollar recycling system{{#tag:ref|Petrodollar recycling is a term officially used by the U.S. administration, see ie.
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| − | <ref name=report />
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| − | |group=note}} provides at least three immediate benefits to the United States:
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| − |
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| − | * It increases global demand for U.S. dollars
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| − | ** the value of the (shaken) U.S. dollar is bolstered, inflation stopped, international trust restored<ref>http://inflationdata.com/articles/2014/05/30/oil-petrodollars-gold/</ref>
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| − | ** gives the United States the ability to expand its money supply without risking inflation or devaluation
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| − | ** increases the price of assets denominated in U.S.dollars, ie. real estate<ref name=robinson2>http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-part-2/</ref>
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| − | ** pressures client state economies to export goods in return for U.S. dollars
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| − | * It increases global demand for U.S. debt securities
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| − | * It gives the United States the ability to buy oil with a currency it can print at will<ref name=robinson2 />
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| − |
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| − | Secondary benefits (from rising oil prices and partnerships) include:
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| − |
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| − | * large Western banks receive hudge capital inflow, avoiding expected liquidity problems due to global recession
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| − | * the higher the crude oil price the higher the revenues for the major oil companies<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.
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| − | http://bnarchives.yorku.ca/134/01/890101RBN_ADPD_Coalition_and_the_ME.pdf</ref>
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| − | * increased level of monopoly for the major oil companies
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| − | * exploitation of lesser developed 'oil shocked' economies through major bank loans and IMF measures
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| − | * investment banks get increased leverage in the offshore Eurodollar market
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| − | * investment banks get hot money for speculation and currency attacks
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| − | * North sea oil can now compete with the higer price levels
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| − | * U.S. armament industry gets increasing returns (despite decrease in U.S.military spending 1973-1978)
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| − | * Unprecedented concentration of control in the military-oil-banking-congressional complex through interleaved ownerships, common interests and revolving doors
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| − | * access to military bases in the Middle East
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| − | * access to intelligence in the Middle East
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| − | * OPEC states increasingly depend on U.S. goodwill:
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| − | ** specialists in military and civilian sector are needed<ref name=report>Report of the U.S.-Saudi Arabian Joint Commission on Economic Cooperation, ID-79-7: Published: Mar 22, 1979. Publicly Released: Mar 29, 1979.
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| − | http://www.gao.gov/products/ID-79-7<!--,http://www.gao.gov/assets/130/126054.pdf--></ref>
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| − | ** assets in Western banks may be frozen<ref>Oweiss, Ibrahim M. (1974) Petrodollars: Problems and Prospects, Address before the Conference on The World Monetary Crisis
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| − | Arden House, Harriman Campus, Columbia University http://faculty.georgetown.edu/imo3/petrod/petro2.htm</ref>
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| − |
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| − | In sum, while the majority of the world economy is suffering from higher oil prices, the petrodollar system has its winners. This leads to a concentration of power and control over world affairs in the hands of industries which suffered from a lack of competition ever since: big oil, big banks and armament industries.
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| − |
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| − | ==Key Citations==
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| − |
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| − | Petrodollars: Problems and Prospects
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| − | by
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| − | Dr. Ibrahim M.Oweiss
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| − | Address before the Conference on The World Monetary Crisis
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| − | Arden House, Harriman Campus, Columbia University
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| − | March 1 - 3, 1974
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| − |
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| − | http://faculty.georgetown.edu/imo3/petrod/petro2.htm
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| − |
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| − | First, the placement of petrodollar surpluses of the Arab oil exporting nations in the United States may be
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| − | regarded politically as hostage capital. In the event of a major political conflict between the United
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| − | States and an Arab oil-exporting nation, the former with all its military power can confiscate or freeze
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| − | these assets or otherwise limit their use. It can impose special regulations or at least use regulations for
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| − | a time, in order to attain certain political, economic, or other goals. It may be argued that such actions
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| − | are un-American, since they are a direct violation of the sacred principles of capitalism and economic
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| − | freedom. Nevertheless, the U.S. government resorted to such weapons twice in the l980s against Iranian and
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| − | Libyan assets. It follows, therefore, that governments placing their petrodollar surpluses in the United
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| − | States may lose part of their economic and political independence. Consequently, the more petrodollar
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| − | surpluses are placed in the United States by a certain oil-exporting nation, the less independent such a
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| − | nation becomes.
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| − | [...]
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| − | It is worth noting that the difference between the volume of oil actually supplied and the volume that
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| − | should have been supplied in observance of standard microeconomic theory is in fact a subsidy granted, in
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| − | real terms, to oil-importing nations such as the United States, Germany, France, and Japan.1
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| − | [...]
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| − | The process of petrodollar recycling makes it possible for commercial banks of industrialized nations,
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| − | international lending institutions, and Arab banking consortia to provide financial assistance to
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| − | less-developed countries (LDCs). Western Europe, Japan, and the United States buy oil from oil-exporting
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| − | countries (OECs). LDCs pay for oil imports and other foreign goods and services with money borrowed front
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| − | Western commercial banks. The process of recycling is complete when those commercial banks and institutions
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| − | obtain cash and investments from OECs.
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| − |
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| − | The Real Reason Russia is Demonized and Sanctioned: the American Petrodollar
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| − | by
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| − | Alexander Clackson
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| − | Global Research, September 18, 2014
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| − |
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| − | http://www.globalresearch.ca/the-real-reason-russia-is-demonized-and-sanctioned-the-american-petrodollar/5402592
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| − |
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| − | in 1973 the Richard Nixon administration began negotiations with the government of Saudi Arabia to establish
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| − | what came to be referred to as the petrodollar recycling system. Under the arrangement, the Saudis would
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| − | only sell their oil in U.S. dollars, and would invest the majority of their excess oil profits into U.S.
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| − | banks and Capital markets. The IMF would then use this money to facilitate loans to oil importers who were
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| − | having difficulties covering the increase in oil prices. The payments and interest on these loans would of
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| − | course be denominated in U.S. dollars.
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| − | [...]
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| − | This agreement was formalised in the “The U.S.-Saudi Arabian Joint Commission on Economic Cooperation”<ref>U.S. Saudi Arabian Joint Commission Program Office (ICS)
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| − |
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| − | "Manages and directs all activities of the U.S. Saudi Arabian
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| − | Joint Commission on Economic Cooperation which includes inter-
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| − | agency activity in the United States and Saudi Arabia involving more
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| − | than 40 projects. The U.S. Saudi Arabian Joint Commission Program
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| − | office formulates, recommends, implements Treasury Department
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| − | policy and positions relating to economic and financial aspects of rela-
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| − | tions between the United States government and Saudi Arabia.
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| − | Assembles information and provides relevant analyses to the Deputy
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| − | Assistant Secretary for Technical Assistance as requested."
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| − | http://www.archives.gov/records-mgmt/rcs/schedules/departments/department-of-the-treasury/rg-0056/n1-056-99-001_sf115.pdf </ref> put
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| − | together by Nixon’s Secretary of State Henry Kissinger in 1974. The system was expanded to include the rest
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| − | of OPEC by 1975. This was a major economic success for the U.S. As long as the world needs oil, and as long
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| − | as oil is only sold in U.S. dollars, there will be a demand for dollars, and that demand is what gives the
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| − | dollar its value.
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| − | [...]
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| − | The petrodollar is the only life support machine left for the U.S. and this is precisely why Washington goes
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| − | after any country that tries to destroy it.
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| − |
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| − | http://history.state.gov/milestones/1969-1976/oil-embargo
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| − |
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| − | The Nixon administration began parallel negotiations with key oil producers to end the embargo, and with
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| − | Egypt, Syria, and Israel to arrange an Israeli pullout from the Sinai and the Golan Heights. Initial
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| − | discussions between Kissinger and Arab leaders began in November 1973 and culminated with the First
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| − | Egyptian-Israeli Disengagement Agreement on January 18, 1974. Though a finalized peace deal failed to
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| − | materialize, the prospect of a negotiated end to hostilities between Israel and Syria proved sufficient to
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| − | convince the relevant parties to lift the embargo in March 1974.
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| − |
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| − | Engdahl, Century of War, p.142<ref name=CoW />
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| − |
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| − | A sudden sharp increase in the world price of oil, therefore,
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| − | meant an equally dramatic increase in world demand for U.S. dollars
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| − | to pay for that necessary oil.
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| − |
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| − | p.147
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| − |
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| − | The entire constellation of events
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| − | surrounding the outbreak of the October War was secretly orchestrated
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| − | by Washington and London, using the powerful secret diplomatic
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| − | channels developed by Nixon’s national security adviser, Henry
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| − | Kissinger. Kissinger effectively controlled the Israeli policy response
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| − | through his intimate relation with Israel’s Washington ambassador,
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| − | Simcha Dinitz. In addition, Kissinger cultivated channels to the
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| − | Egyptian and Syrian side. His method was simply to misrepresent to
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| − | each party the critical elements of the other, ensuring the war and
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| − | its subsequent Arab oil embargo.
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| − |
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| − | p.162ff
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| − |
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| − | The dynamic created by the Anglo-American decoupling of the
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| − | dollar from gold in August 1971, followed by the 400 per cent forced
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| − | inflation of the price of oil, had created a catastrophe for the majority
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| − | of the world’s population who lived in the developing sector.
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| − |
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| − | Under the threat of losing access to further borrowings from the
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| − | World Bank and the private banks of the industrial nations, these
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| − | less-developed countries were forced to divert precious funds from
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| − | industrial and agricultural development into simply reducing this
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| − | balance-of-payments deficit. Their oil imports had to be paid, and
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| − | paid in dollars, while the cost of their raw materials exports had fallen
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| − | sharply in the global recession of 1974–75.
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| − | Private U.S. and European banks stepped into the breach [...]
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| − |
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| − | David Mulford, at the time the head of White
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| − | Weld & Co.’s London Eurodollar operations, was appointed director
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| − | and principal investment adviser of the Saudi Arabian Monetary
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| − | Agency (SAMA), the central bank of Saudi Arabia, the largest OPEC
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| − | oil producer and a country dominated by American Big Oil.
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| − |
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| − | Little publicity was given to this rather unusual appointment of a national
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| − | of the country against which Saudi Arabia had only months earlier
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| − | enjoined an oil embargo.
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| − |
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| − | Along with White Weld, SAMA enjoyed
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| − | the confidential investment advice of the elite London merchant
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| − | bank, Baring Brothers.
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| − |
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| − | The U.S. Treasury had signed an agreement
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| − | in Riyadh with the Saudi Arabian Monetary Agency, whose mission
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| − | was ‘to establish a new relationship through the Federal Reserve Bank
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| − | of New York with the [U.S.] Treasury borrowing operation. Under
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| − | this arrangement, SAMA will purchase new US Treasury securities
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| − | with maturities of at least one year,’ explained assistant secretary
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| − | of the U.S. Treasury, Jack F. Bennett, later to become a director of
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| − | Exxon. Bennett’s memo explaining the arrangements was dated February 1975
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| − | and addressed to Secretary of State Kissinger.4
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| − |
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| − | This arrangement, needless to say, proved enormously valuable
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| − | for the United States dollar and for the fi nancial institutions of New
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| − | York and the London Eurodollar markets. The world was forced to
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| − | buy huge amounts of dollars more or less continuously, in order
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| − | to purchase essential energy supplies. Even more extraordinary,
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| − | this OPEC dollar-pricing agreement remained in force despite the
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| − | subsequent enormous losses to OPEC as the dollar gyrated up and
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| − | down through the next decade and more.
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| − |
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| − | One consequence of the directed recycling of these petrodollars
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| − | into London and New York was the emergence of American banks
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| − | as the giants of world banking, paralleling the emergence of their
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| − | clients, the Seven Sisters oil multinationals, as the giants of world
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| − | industry. The Anglo-American oil and banking combination so
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| − | overwhelmed the scale of ordinary enterprise that their power and
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| − | influence seemed invincible.
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| − |
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| − | [affect of 'oil shock' and petrodollar system on lesser developed countries]
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| − | If the methods look more than a little like a perverse variation on
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| − | the old mafia ‘protection racket’ game, this is understandable. The
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| − | same Anglo-American interests which manipulated political events
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| − | to create a 400 per cent increase in the oil price then turned to the
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| − | countries which were the victims of assault and ‘offered’ to lend them
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| − | petrodollars to finance the purchase of the costly oil and other vital
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| − | imports — at a vastly inflated interest cost, of course.
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| − |
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| − | http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-system/
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| − |
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| − | the United States offered weapons and protection of their oil fields from
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| − | neighboring nations, including Israel.
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| − |
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| − | http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-part-2/
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| − |
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| − | According to the agreement, the United States would offer military protection for Saudi Arabia’s oil fields.
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| − | The U.S. also agreed to provide the Saudis with weapons, and perhaps most importantly, guaranteed protection
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| − | from Israel.
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| − |
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| − | The Armadollar-Petrodollar Coalition and the Middle East
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| − | Rowley, Robin and Bichler, Shimshon and Nitzan, Jonathan. (1989). Working Papers. Department of Economics.
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| − | McGill University. Montreal. Vol. 89. No. 10. pp. 1-54. (Working Paper; English).
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| − | http://bnarchives.yorku.ca/134/01/890101RBN_ADPD_Coalition_and_the_ME.pdf
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| − |
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| − | p.26ff:
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| − |
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| − | Six years later, the CIA backed a successful coup against the government of
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| − | Prime Minister Mossaddeq, who attempted to nationalize Iranian oil, and
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| − | consequently the monopoly of British Petroleum was lost. Iranian oil was
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| − | officially nationalized but, in effect, control was effectively divided
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| − | among the 5 American majors (whose new stake amounted to 40 per cent), Royal
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| − | Dutch/Shell (14 per cent), the French CFS (6 per cent) and British Petroleum
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| − | (40 per cent).
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| − |
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| − | Since the oil industry was first consolidated in the nineteenth
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| − | century, no prolonged period of price competition has occurred. Despite a
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| − | persistent concern with relative market shares, the principal oil companies
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| − | have exhibited a remarkable degree of cooperation and, for much of their
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| − | existence, they rarely permitted oil consumers to take advantage of any
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| − | differences among producers. Nevertheless, in the long period prior to the
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| − | emergence of OPEC, the Seven Sisters were unable to translate their joint
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| − | cooperation into spectacular price increases, such as those that came to
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| − | characterize the industry in the 1970s. The main key for higher profits was
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| − | generally acknowledged to be one of access to cheap oil rather than the
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| − | ability to increase unit mark-ups. Until the 1950s, the Tree flowe of
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| − | Middle East oil was secured largely through private arrangements between the
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| − | Seven Sisters and local rulers. Since production costs constituted only a
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| − | minor fraction of the final price, even the most conspicuous demands of
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| − | domestic kings were insignificant in comparison to access benefits that
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| − | accrued to the oil companies.
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| − |
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| − | [since the 1960ies] Royalty costs were dramatically increased and, eventually, reliance on the
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| − | traditional royalty arrangements was replaced by involvement in joint
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| − | ventures by the oil companies and local governments.
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| − |
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| − | [...]
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| − |
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| − | [A] broader cooperation with governments was called for. Indeed, OPEC countries
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| − | in the Middle East have been largely reluctant to take over the oil
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| − | companies. The reasons for their hesitancy are not hard to grasp. The Seven
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| − | Sisters control both the technology for production and the marketing system.
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| − | In times of crisis, they could enjoy the American or European military
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| − | support and also could expect this support to be extended to friendly OPEC
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| − | governments. More importantly, OPEC govements in the Middle East depend on
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| − | Western goodwill — for their oil revenues are economically meaningless
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| − | without the investment and consumption outlets provided by the Western
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| − | countries. A substantial OPEC challenge to the Seven Sisters could induce a
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| − | serious world crisis, which might then lead to the demise of the OPEC
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| − | governments themselves. 8
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| − |
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| − | Footnote 8. This view, for example ,. was openly expressed by Saudi Arabia. Barnet
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| − | (1980, p. 61) cites a comment in 1969 by the Saudi petroleum minister,
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| − | Yamani, on the strategy to develop an orderly alliance of market
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| − | participants: '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
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| − | 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.'
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| − |
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| − | p.22
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| − |
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| − | The effects of changes in the oil industry were not evenly distributed
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| − | within industrialized economies. Higher energy prices were transmitted
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| − | through a complex structure of oligopolistic agencies rather than through
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| − | the simple interaction of competitive supply and demand mechanisms.
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| − |
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| − | On the other hand, some 'winners' emerged from the
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| − | redistribution of corporate profits during the 1970s: (1) the major oil
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| − | companies experienced substantial increases in their 'degree of monopoly'
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| − | (as tentatively measured by the levels of their eventual mark-ups over
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| − | costs); (2) the large banks absorbed most of the world's petrodollars, which
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| − | they recirculated to oil-producing countries and energy-related projects ;
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| − | and (3) members of the Armament Core, who were relatively unharmed by higher
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| − | energy costs, experienced a boom in their petrodollar-financed military
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| − | exports.
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| − |
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| − | The oil crisis created a potential for the emergence of an Armadollar-
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| − | Petrodollar Coalition of major armament, energy and financial corporations,
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| − | through which the traditional relationship that existed between arms
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| − | producers and the U.S. government was enlarged. Furthermore, the governments
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| − | of OPEC countries, especially those located in the Middle East, actively
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| − | supplemented the role of the U.S. government in the arms business.
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| − |
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| − | p.28ff
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| − |
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| − | The large oil companies did not seem to grasp the opportunities offered
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| − | to them by attitudes within OPEC before the early 1970s.
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| − |
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| − | The price of crude oil apparently had an important impact on the overall petroprofits
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| − | of the Oil six since the two major oil crises of 1973 and 1979 led to
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| − | dramatic increases in levels of profits,
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| − | while subsequent price stability during the 1975-1978 period was associated with profit stability
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| − | and price declines after 1981 led to drastic reductions in profits.
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| − |
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| − | The potential impact of crude oil prices on overall profits is far from
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| − | trivial. As vertically integrated companies, the Oil Six are engaged in all
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| − | stages of production — drilling, extracting, shipping, refining and the
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| − | marketing of final petroleum products. Changes in crude oil prices should
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| − | have a positive effect on profitability accruing from exploration and
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| − | extraction but the changes may imply a negative impact on profits of
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| − | downstream operations. The patterns exhibited in Figure 8 suggest that this
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| − | secondary negative impact of higher prices for crude oil was small.
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| − |
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| − | Further reflection provides a simple explanation. The price of crude oil forms the
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| − | basis from which prices of subsequent petroleum products are determined.
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| − | Traditionally, the oil companies have succeeded in stabilizing the unit
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| − | markups over prime costs in their downstream operations. The absolute size
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| − | of profits thus depends on the level of prime costs, which is determined by
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| − | the prices of crude oil. During the late [[1950s]] and 19609, the large oil
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| − | companies were unsuccessful in their attempts to raise the price of crude
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| − | oil and hence, with stable markups in downstream operations, their overall
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| − | profits stagnated.
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| − |
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| − | p.30 (cont.)
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| − |
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| − | The situation changed after 1973 when OPEC governments
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| − | assumed the role of rationing production. These governments obviously sought
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| − | to increase their own revenues but, as evident in Figure 8, the changes in
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| − | oil prices that were brought about by their actions also had a profound
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| − | effect on the Oil Six's petroprofits.
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| − | Clearly, the year of 1973 can be identified with a qualitative change
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| − | in the nature of the oil business. During the pre-1973 period, the key
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| − | element to profits was viewed as the access to cheap crude oil but, since
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| − | 1973, the primary emphasis has shifted to price levels. Consequently, the
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| − | rhetoric of support for activities of large oil companies begin to emphasize
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| − | the notion of 'scarcity' for these firms no longer follow 'free flow'
| |
| − | doctrines but rather pursue a 'limited flow' principle, according to which
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| − | output is restricted to maintain higher prices. This cosmetic change in
| |
| − | rhetorical focus reflects more than a mere 'technical' change in business
| |
| − | strategy since the new 'limited flow' principle is associated with an
| |
| − | important change in the power structure that prevails in the United States;
| |
| − | namely, the emergence of an 'Armadollar-Petrodollar Coalition.'
| |
| − |
| |
| − | p.40
| |
| − |
| |
| − | For example, allegations have suggested that the
| |
| − | administration of President Nixon supported Iran's attempt to raise oil
| |
| − | prices. Both Nixon and Kissinger were promoting arms exports to the Shah's
| |
| − | regime and they possibly considered higher revenues from oil sales as a
| |
| − | primary source of funding for arms deliveries. l1 An alternative contention,
| |
| − | expressed by Sampson (1981a), has Kissinger persuading the Shah to increase
| |
| − | oil prices as a means of assisting Rockefeller since the Chase Manhattan
| |
| − | Bank was experiencing awkward liquidity difficulties that could be somewhat
| |
| − | eased by further deposits of petrodollars. The earlier support of military
| |
| − | sales to Israel by Nixon and his dismissal of the warning from Saudi Arabia
| |
| − | that such support could lead to an oil embargo are not inconsistent with
| |
| − | speculations that the U.S. government mediated the wishes of an emerging
| |
| − | coalition of arms and oil interests.
| |
| − |
| |
| − | Such speculations are stimulated by the apparent political ties of
| |
| − | government figures and industry representatives. Nixon, for example, was
| |
| − | closely associated with the oil industry, which provided financial
| |
| − | assistance to advance his political career and facilitate his election
| |
| − | campaigns, as described by Barnet (1980, pp. 23-4).
| |
| − |
| |
| − | p.46
| |
| − |
| |
| − | The links between armament and oil corporations have also been
| |
| − | reflected in a network of interlocking directorships. For example, during
| |
| − | the 1980s, the chairman and chief executive officer of Standard Oil of
| |
| − | Indiana (Swearingen) was a director of both Chase Manhattan and Lockheed;
| |
| − | the board of directors of McDonnell Douglas include a director of Phillips
| |
| − | Petroleum (Chetkovich) and a director of Shell Canada (MacDonald); the
| |
| − | chairman and president of United Technologies (Gray) was a director of both
| |
| − | Exxon and Citibank; Boeing shared one director with Mobil and three
| |
| − | directors with Chevron, including the chairman of Chevron (Keller); and the
| |
| − | Chevron board included a director from Allied Signal (Hills) and the
| |
| − | president and chief executive of Hewlett Packard (Yound) .19 Such interlocks
| |
| − | facilitate a sharing of common interests and they serve as an informal
| |
| − | mechanism for the transmission of views that permit strategic actions to be
| |
| − | coordinated. The extensive network has a potential role in the mediation of
| |
| − | cooperative efforts.
| |
| − |
| |
| − | p.48
| |
| − |
| |
| − | 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. Bush insisted that the government of the United
| |
| − | States was 'fundamentally, irrevocably committed' to maintaining the free
| |
| − | flow of oil and 'the interest in the United States is bound to be cheap
| |
| − | energy prices'. However, the vice president also qualified this message:
| |
| − |
| |
| − | "[There] is some point at which the national security interests of
| |
| − | the United States say, 'Hey, we must have a strong, viable
| |
| − | domestic interest.' We recognize that as we talk about national
| |
| − | interests that comes in conflict at some point — and I don't know
| |
| − | where that is — with the totally free market concept that we
| |
| − | basically favor in our economic approach to all industries.22 "
| |
| − |
| |
| − | To substantiate this sacrifice of the 'free market concept', President
| |
| − | Reagan ordered a study to examine the impact of falling energy prices on
| |
| − | 'national security'. This study, which was eventually completed and then
| |
| − | classified as 'top secret', was never published.
| |
| − |
| |
| − | http://alienscientist.com/bigoil.html
| |
| − | The process of petrodollar recycling underpins American economic hegemony,
| |
| − | which funds American military supremacy.
| |
| − |
| |
| − | declassified Memo July 27, 1973
| |
| − | http://www.nixonlibrary.gov/virtuallibrary/releases/jun09/072773_memcon.pdf
| |
| − | The Shah:
| |
| − | I told the Egyptians that eventually they might use that [oil embargo] as a weapon
| |
| − | [...]
| |
| − | Mr. Kissinger:
| |
| − | If Egypt ever concerted its policy with us, they might play this card.
| |
| − |
| |
| − | Engdahl, Century of War, p.287
| |
| − |
| |
| − | When Yamani, on instructions from the Saudi King, asked the Shah why Iran
| |
| − | demanded such a large OPEC price increase, the Shah replied, ‘For the
| |
| − | answer to your question, I suggest you go to Washington and ask Henry Kissinger.’
| |
| − |
| |
| − | The Armadollar-Petrodollar Coalition - Demise or new Order?
| |
| − | Shimshon Bichler, Robin Rowley and Jonathan Nitzan. (1989). Working Papers. Department of Economics.
| |
| − | McGill University. Montreal. (Part 4)
| |
| − |
| |
| − | p.15
| |
| − |
| |
| − | Middle Eastern wars were the instrument of oil crises rather than their cause.
| |
| − |
| |
| − | ==Footnotes==
| |
| − | {{reflist|group=note}}
| |
| − |
| |
| − | ==References==
| |
| − | <references/>
| |
