* William Engdahl: “A Century of War” – Part I


Richard Moore


F. William Engdahl's
"A Century of War" - Part I
By Stephen Lendman
12 February, 2008

F. William Engdahl is a leading researcher, economist and analyst of the New 
World Order who's written on issues of energy, politics and economics for over 
30 years. He contributes regularly to publications like Japan's Nihon Keizai 
Shimbun, Foresight magazine, Grant's Investor.com, European Banker and Business 
Banker International. He's also a frequent speaker at geopolitical, economic and
energy related international conferences and is a distinguished Research 
Associate of the Centre for Research on Globalization where he's a regular 

Engdahl wrote two important books. This writer reviewed his latest one in three 
parts called "Seeds of Destruction: The Hidden Agenda of Genetic Manipulation." 
It's the diabolical story of how Washington and four Anglo-American agribusiness
giants plan world domination by patenting animal and vegetable life forms. They 
aim to control food worldwide, make it all genetically engineered, and use it as
a weapon to reward friends and punish enemies.

The book is a sequel to Engdahl's first one and subject of this review - "A 
Century of War: Anglo-American Oil Politics and the New World Order." It's 
breathtaking in scope and content, and a shocking and essential history of 
geopolitics and strategic importance of oil. The book is reviewed in-depth so 
readers will know the type future Henry Kissinger had in mind in 1970 when he 
said: "Control oil and you control nations; control food and you control 
people." Engdahl recounts the story in his two masterful books, both critically 
essential reading.

The story line in his first one began late in the 19th century when oil's 
advantage was first realized, and First Lord of the Admiralty Winston Churchill 
told Parliament in 1919:

"We must become the owners, or at any rate the controllers at the source, of at 
least a proportion of the supply (of oil) which we require....and obtain our oil
supply, so far as possible, from sources under British control, or British 

After defeating Napoleon in 1815, Britain was supreme until America emerged 
predominant during WW II. Engdahl explains how: through two pillars and one 
commodity - unchallengeable military power and the dollar as the world's reserve
currency combined with the quest to control global oil and other energy 

Engdahl calls his book "no ordinary history of oil" because what he recounts is 
suppressed in the mainstream and what passes for education in America. It 
settles for mediocrity, ignorance, and a barely literate public by design. As a 
result, people don't know that US manipulators arranged "the greatest confidence
game the world had ever seen" - a "special hegemony" to:

-- print limitless dollar paper certificates to buy every imaginable product;

-- accumulate endless trade deficits;
-- "inflate (the) currency beyond imagination;"
-- have the government pay interest on its own money; and

-- create an unprecedented public and private debt to enrich an elite few at the
expense of the greater good.

So far it's worked because people haven't caught on, other nations need our 
markets, fear our might, and countries like China, Japan and petrodollar 
recyclers remain lenders of last resort. Combined, it let America rule the 
world, control its energy, and crush all upstart competition. Washington had a 
good role model, and that's where the story begins.

The Three Pillars of the British Empire

Geopolitical history for the last 100 years was shaped around the quest for what
Big Oil acolyte Daniel Yergin called "The Prize: The Epic Quest for Oil, Money 
and Power" with two countries at its epicenter - first Britain and now America 
with its UK junior partner that built its rule on three essential pillars:

-- controlling the seas and setting the terms of trade;

-- dominating world banking and manipulating the world's largest gold supply; 

-- controlling world raw materials with oil the key one at the turn of the 
century; with these working, it devised an "informal empire" to loot world 
wealth and maintain a balance of power on the continent.

Britain's "genius" was being able to shift alliances without letting sentiment 
interfere with its interests. Post-Waterloo, it operated "on an extremely 
sophisticated marriage between top (London) bankers and financiers, government 
cabinet ministers," key industrialists and espionage chiefs. By keeping 
everything secret, it "wielded immense power over credulous and unsuspecting 
foreign economies." By the late 19th century, however, things began to change, 
and a new strategy was needed. Key to it was oil geopolitics as a vital naval 
supremacy ingredient.

The Lines are Drawn: Germany and the Geopolitics of the Great War

The importance of oil and emergence of continental economies (especially in 
Germany) provided the backdrop to WW I. By the late 19th century, British 
bankers and political elites were alarmed that German industrial and 
technological development began surpassing its own that was in decline. Included
was a modern German merchant and naval fleet and an ambitious railway project 
linking Berlin with Baghdad, then part of the Ottoman empire. At stake was 
British hegemony, and preserving it led to war.

Prior to its outbreak, coal was king, German output was impressive and so was 
its growth:

-- its steel production increased 1000% in 20 years, leaving Britain far behind 
by 1900;

-- its state-backed rail infrastructure doubled in track kilometers from 1870 to

-- with the advent of centralized electric power generation and long-distance 
transmission, its electrical industry exploded to dominate half the world's 
trade by 1913;

-- impressive research built the country's chemical industry and made Germany 
the world leader in analine dye production, pharmaceuticals and chemical 

-- German agriculture thrived; it made "astonishing" gains from the introduction
of "scientific agriculture chemistry" and produced an 80% grain harvest increase
from 1887 to 1914;

-- population growth was dramatic - 75% to 67 million between 1870 and 1914;

-- Germany's merchant fleet rocketed to second place in the world behind Britain
and at a pace to overtake it;

-- steel and engineering advances were achieved; and consider another British 

-- early in the century, British Dreadnought battleship leadership was 
surpassed; Germany's super model was superior and that spelled trouble for UK 
sea power supremacy; by 1910, "dramatic remedies" were needed; Germany's 
economic emergence had to be confronted, its growing naval strength as well, and
for the first time oil was a factor.

A Global Fight for Control of Petroleum Begins

By 1882, British Admiral Lord Fisher saw oil's potential as qualitatively 
superior to coal. It required one-quarter the tonnage, one-third the engine 
weight, and expanded a fleet's "radius of action" fourfold. It was first used in
1885 after Gottlieb Daimler developed the internal combustion engine. Another 20
years passed, however, before its importance was realized, and that created a 
problem. Britain had no oil and needed a supply.

Up to then, its Middle East presence was limited, but that changed after oil was
discovered in Masjed Soleiman, Persia (now Iran) in 1908. It secured Britain an 
"extraordinarily significant exclusive right (to potential) vast untapped 
petroleum deposits" for the country's newly formed Anglo-Persian Oil Company 

Earlier in 1899, German industrialists and bankers got Ottoman approval for a 
Berlin-Baghdad railway. The aim - to establish strong economic ties to Turkey 
and develop new markets in the East. Once extended to Kuwait, it would be the 
fastest, cheapest rail link to the Indian subcontinent, and that spelled trouble
for Britain. It would challenge UK supremacy and had to be confronted.

The project was costly and needed help to complete, so Germany turned to 
Britain. London, for its part however, used "every device known to delay and 
obstruct progress. The game lasted" until war began in 1914 and after Britain 
secured an exclusive oil development "lease in perpetuity" in what today is Iraq
and Kuwait. Yet competition remained because Germany got the Ottoman emperor to 
grant its Baghdad Railway Company full rights to all oil and minerals on a 
parallel 20 kilometers of land on either side of the rail line. By 1912, oil's 
importance was apparent, and geologists discovered it between Mosul and Baghdad.

WW I stalled efforts for a German-owned oil company, independent of Rockefeller 
interests. At a time, the US produced over 63% of world supply, Russia's Baku 
19% and Mexico 5%. Britain's new APOC was barely a player when First Lord of the
Admiralty Winston Churchill convinced the government to buy a majority interest 
in what today is British Petroleum (BP). "From that point, oil was at the core 
of British strategic interests," and the game was this - secure its own 
supplies, deny them to key rivals like Germany, and do it if necessary by war.

That became London's scheme early in the century when Britain, France and Russia
allied in a Triple Entente against Germany and the Austro-Hungarian powers. By 
1907, it was solidified, effectively encircled Germany, and it laid the 
foundation for the coming showdown with Kaiser Wilhelm II. From then until 1914,
preparations were made for the "final elimination of the German threat." 
Included was a "series of continuous crises and regional (Balkans) wars (in) the
'soft underbelly' of Central Europe." Three months after the alliance, Austria's
heir to the throne was assassinated in Sarajavo, and it "detonated the Great 

Oil Becomes the Weapon, the Near East the Battleground

WW I was no different from other wars. Imperial, territorial and economic 
rivalries were at its root. It lasted from July 28, 1914 to November 11, 1918 
and at a time Britain was effectively bankrupt, had big plans along with other 
combatants, plus a "secret weapon" that later emerged: the special relationship 
of "His Majesty's Treasury" with The House of Morgan.

The conflict matched the Allied powers of Britain, France, Russia, Belgium, 
Serbia, Greece, Romania, Montenegro, Italy, Portugal, Japan and for its last 
seven months the US against the Central Powers of Germany, Austria-Hungary, 
Bulgaria and Ottoman Turkey. The timeline was as follows:

-- on June 28, Archduke Ferdinand and his wife were assassinated;
-- on July 28, Austria declared war on Serbia;
-- on August 1, Germany declared war on Russia;

-- on August 3, Germany declared war on France and invaded Belgium on August 4; 

-- on August 4, Britain declared war on Germany, and the world was at war. Four 
years later, its toll was horrific, and four empires were destroyed - Ottoman 
Turkey, Austria-Hungary, Germany and Russia. Later on, so would Britain's, but 
in 1914 schemes and intrigue drove the winners to reallocate the spoils, 
especially where it was thought large oil deposits lay.

Well before 1914, Britain's geostrategy was threefold:
-- create and preserve an unchallengeable global empire;
-- defeat its main rival Germany; and

-- secure and control the most strategically important resource - oil that was 
crucial to winning the war.

At its end, Britain's Foreign Secretary Lord Curzon commented: "The Allies were 
carried to victory on a flood of oil." Germany ran short and lost because it 
couldn't mount a decisive offensive in 1918. In 1915, however, Britain gambled 
and lost. It failed to defeat Turkey in the Battle of Gallipoli, and the stakes 
involved were high - to secure Russia's rich Baku oil fields at a time they 
supplied almost a fifth of world production. It was early in the war, Britain 
ultimately prevailed, and in no small measure by preemptively occupying Baku in 
August, 1918 to deny Germany its vital resources.

Throughout the war, oil's importance was key and the reason for the Allies' 
secret 1916 Sykes-Picot agreement. It spelled "betrayal and Britain's intent 
to....control....the undeveloped petroleum reserves of the Arabian Gulf after 
the war." Britain was devious. While France and Germany clashed along the 
Western Front, London moved 1.4 million troops to the Gulf and eastern 
Mediterranean on the pretext of bolstering Russia. After 1918, a million forces 
remained on what became a "British Lake" by 1919 with access to the region's 
oil. Its potential was later learned, France was cheated out of its share, Saudi
Arabia's value was unknown, and turned out to be a major British blunder that 
didn't elude America in the 1930s.

Partitioning the Ottoman Empire proceeded post-war and included an 
"extraordinary new element." Now known as the Balfour Declaration, it was a 
classified British policy statement supporting a Jewish homeland in Palestine at
a time Jews comprised 1% of the population. It came on November 2, 1917, a year 
of conflict remained, and it was the basis for the post-1919 British mandate 
over Palestine that gave London "strategic possibilities of enormous 
importance." British elites and its principal think tank (the Royal Institute 
for International Affairs or Chatham House) supported a "Jewish-dominated 
Palestine, beholden to England for its survival (and) surrounded by a balkanized
group of squabbling Arab states."

The scheme was to link England's colonial possessions from South Africa's gold 
and diamond mines, north to Egypt and the Suez canal, through Mesopotamia (Iraq 
and Kuwait), Persia (Iran) and East into India and what today is Pakistan and 
Bangladesh. Controlling this territory became crucial. It meant dominating the 
world's most strategically valuable resources before their vast potential was 

Combined and Conflicting Goals: The United States Rivals Britain

Britain was the world's major post-WW I power, its territorial winner, and 
borrowed Wall Street money secured the victory, but with a problem. The country 
was deeply in debt, mired in depression, and the US now loomed as the world's 
economic power. In the 1920s, a rivalry ensued pitting America against Britain's
three imperial pillars: control of world sea lanes, its banking and finance, and
its strategic raw materials. At stake was whether London or Washington would be 
the world's new capital, with no assured winner at the time. Later, it was very 
clear that WW II's seeds were planted in a place called Versailles and a 1919 
treaty in its name.

Its terms were outrageous and onerous. They made unimaginable demands, and 
therein lay the problem. In May 1921, Germany got an ultimatum with six days to 
accept or the industrial Ruhr Valley would be militarily occupied. Even worse, 
the country lost its colonial possessions and all their raw material resources. 
In the end, all combatants were losers. Their combined debt overwhelmed world 
finance and monetary policy from 1919 to the 1929 Wall Street crash. The entire 
pyramid was built on punitive war debts with Morgan and other major New York 
banks uncompromising on the terms. They was so burdensome that yearly payments 
exceeded America's annual 1920s foreign trade. In addition, paying it took 
precedence over rebuilding and modernizing war-torn European economies.

At the same time, oil's importance grew as Britain exploited the spoils at 
France and America's expense. In March 1921, Winston Churchill was UK secretary 
of state for colonial affairs, the British Colonial Office Middle East 
Department was established, and Mesopotamia was renamed Iraq and became a 
British colony. Anglo-Persian Oil officials got administrative control, American
companies gained no British Middle East concessions, and a fierce battle raged 
over the region's oil throughout the 1920s. Then it moved to Latin America.

In the 19th century, US Senator Henry Cabot Lodge stated "commerce follows the 
flag" and by it meant economic progress requires expansion. In 1912, it got 
Mexico targeted after oil was discovered in Tampico in 1910. Woodrow Wilson sent
in troops to seize control from Britain and the UK-connected Mexican Eagle Oil 
Company that had concessions for half the country's oil at the time. As war in 
Europe loomed, Britain backed off, and America secured Tampico's enormous 

Britain, nonetheless, pressed on, and by the early 1920s controlled "a 
formidable arsenal of apparently private companies" that, in fact, let His 
Majesty's government "dominate and ultimately control all" major world 
oil-containing regions. Four companies were empowered that were also an 
"integral part of British secret intelligence activities:"

-- Royal Dutch Shell that rivaled Rockefeller's Standard Oil, even in America 
through California Oil Fields and Oklahoma-based Roxana Petroleum;

-- the Anglo-Persian Oil Company that became the Anglo-Iranian Oil Company and 
is now British Petroleum;

-- the little-known d'Arcy Exploitation Company; it was tied to the Foreign 
Office and British intelligence, and its agents showed up wherever there was oil
development potential; and

-- the nominally Canadian company called British Controlled Oilfields (BCO); it 
was secretly government- owned as were Shell and the others.

In 1912, British companies controlled about 12% of world oil production. By 
1925, it was most of it, America noticed, but in 1922, London and Washington 
united against a common threat and called a truce to their post-Versailles 

The Anglo-Americans Close Ranks

In April 1922, Germany and Russia stunned the West by their bilateral Rapello 
Treaty. Under it, Russia waived its war reparations claims in return for 
Germany's industrial technology. The news shocked the continent, especially as 
it emerged from a British-organized Genoa meeting with other strategic aims in 

While secretly financing an anti-Soviet counterrevolution, London approached 
Russia regarding Baku's oil fields, hoping to arrange lucrative deals for Royal 
Dutch Shell and other UK oil companies. Rockefeller's Standard Oil also eyed 
them, but was disadvantaged by Britain's favored position and its own unsavory 
reputation. Yet it proceeded through Harry Sinclair of Sinclair Petroleum as a 
perceived independent middleman with no Rockefeller taint.

Moscow was interested because Sinclair had ties to President Harding, and a deal
meant US diplomatic recognition and an end to Russia's international isolation 
post-1917. Sinclair agreed, Harding approved, but events then intervened.

It was scandal in Wyoming in a place called Teapot Dome. It involved political 
influence and the awarding of no-bid oil leases to Sinclair Oil (then called 
Mammoth Oil) and a whole lot more with illegal payoffs and no-interest loans as 
part of the deal. Harding, though not directly involved, was implicated, a year 
later he was dead ("under strange circumstances"), Coolidge became President, 
dropped the Baku project, and ended plans to recognize Russia. At the time, it 
was thought British intelligence was involved, blocked the bid to give UK oil 
companies an edge, but Germany's deal with Russia intervened.

It was Germany's second option at a time its onerous debt made dealing with 
Britain preferable. Efforts failed because London was hard-line, stuck to its 
punitive repayment process, and imposed stiff tariffs to make things worse with 
Germany already on its knees.

The looting ruined the country's economy and forced the Reichsbank to print 
enormous amounts of money to survive. Inevitable inflation followed and by 1923 
was catastrophic. In January, the mark dropped to 18,000 to the dollar. By July,
it was at 353,000, by August 4,620,000, and by November an astonishing 
4,200,000,000,000. It was effectively worthless in the greatest ever (before or 
since) inflation that destroyed the country's savings and made further 
calamitous events inevitable.

The misery was compounded when Germany lost its assets. Britain took its 
colonies, and also seized was Alsace-Lorraine and Silesia with its rich mineral 
and agricultural resources. Gone was 75% of the country's iron ore, 68% of zinc 
ore, 26% of coal as well as Alsatian textile industries and potash mines. In 
addition, Germany's entire merchant fleet was taken, a portion of its transport 
and fishing fleet plus locomotives, railroad cars and trucks - all justified as 
war debts that were fixed at an impossible to pay 132 billion gold marks at 6% 
annual interest, and with it an ultimatum. Agree in six days or Allied troops 
would occupy the Ruhr. Unsurprisingly, the Reichstag approved.

It made dealing with Russia essential as Germany sought practical ways to 
survive. It proved impossible, France objected to a minor treaty obligation and 
occupied the Ruhr anyway. In the meantime, inflation soared, German industrial 
activity was erased, Reichsbank and other German bank assets were seized, and 
the currency became worthless.

In 1923, a so-called Dawes Plan (named for US banker Charles Dawes) was adopted.
It was the Anglo-American banking community's way to reassert fiscal control 
over Germany, assure reparations were paid, and continue the state-sponsored 
looting. It continued until 1929 when the debt pyramid collapsed, an ensuing 
banking crisis followed, capital flowed out of the country, its economy crashed,
the world headed into depression, and radical political elements gained 

Reichbank president, Hjalmar Schacht, was a key figure. He resigned his post to 
organize financial support for the man he and Bank of England governor Montagu 
Norman wanted as chancellor. From 1926, Schacht secretly backed the radical 
National Socialist German workers party, the NSDAP Nazis. Britain also favored 
the "Hitler Project," support for it went right to the top and included figures 
like Prime Minister Chamberlain and the Prince of Wales (later King Edward VIII 
in 1936 until he abdication later in the year).

Throughout the period, Wall Street and Washington were comfortable with the 
Nazis, and a key government official met Hitler in 1922. He came away saying he 
"was deeply impressed by his personality and thought it likely he would play an 
important part in German politics."

By this time, the Anglo-American power struggle was resolved. So, too, the oil 
wars with the creation of an "enormously powerful Anglo-American oil cartel," 
later called the "Seven Sisters." British and American companies struck a deal. 
They ended competition, kept existing market shares, and secretly set prices 
with governments of both countries arranging a Red Line agreement. From then to 
now, Big Oil ruled the energy world and devised how to deal with "outsiders."

Later, the consequences from Baron Kurt von Schroeder's January 4, 1932 meeting 
would have to be faced after he, Heinrich von Papen and Hitler secretly arranged
a Nazi takeover. A year later, another meeting followed preparatory to acting. 
The Weimar government was weak, the scheme was to topple it, and it made Hitler 
Reichschancellor on January 30, 1933. On August 2, 1934 he seized absolute power
as Fuhrer. British interests backed him, Royal Dutch Shell financed him, and the
Bank of England "moved with indecent haste to reward" him with a vital line of 
credit. The rest, as they say, is history, and from it would emerge a new world 

Oil and the New World Order of Bretton Woods

In 1945, the world had changed. Post-WW I, Britain was preeminent with an empire
spanning one-fourth the globe. Thirty years later, it was disintegrating and "in
the throes of the largest upheaval of perhaps any empire in history" (although 
it happened most prominently to Rome, but it took longer). It wasn't from 
"beneficence" or a matter of principle. It was unavoidable because the war took 
its toll. It shattered Britain's financial power, its industry was decaying, its
housing stock was dilapidated, and its people exhausted. Britain was "utterly 
dependent on America," so the baton passed to the only major power left standing
in a ravaged post-war world.

A "special relationship" between them emerged post-Versailles. Britain led it 
then, it hoped post-1945 to continue indirectly, and a new element was added - 
the post-war CIA that worked with Britain in the war as the OSS (Office of 
Strategic Services). The relationship continued as the two countries have mutual
interests and jointly share intelligence, except that Britain now is junior in a
US-dominated world.

Post-war, Anglo-American oil interests had enormous power. It was assured by the
1944 Bretton Woods system that was built around three dominant pillars - the 
IMF, World Bank and managed "free trade" from GATT. Clauses were built into each
to ensure Anglo and especially American dominance over monetary and trade 
issues. Both countries have voting control, and the arrangement created a "gold 
exchange system." Under it, each member country's currency was pegged to the 
dollar that, in turn, was set at a fixed $35 an ounce gold price. It suited Big 
Oil fine as America by then had the bulk of world gold reserves.

They also benefitted from the Marshall Plan as more than 10% of it went for 
American oil, and five US companies supplied over half of western Europe's 
supply at a dear price (that was pennies on the dollar compared to today). They 
profited enormously, nonetheless, as oil became the key commodity fueling world 
growth that without which would halt.

Partnered with Big Oil and its trade were Wall Street and New York international
banks. They profited hugely from its capital inflows, and it ensured their 
advantage that was built into the Bretton Woods system. They also had cartel 
power by having consolidated to hold disproportionate control over world 

Britain, as well, had its post-war priorities in the wake of its lost empire. 
Its leadership regrouped around the power and profits of oil and other strategic
raw materials with US help. It made Iran a target, Britain humiliated its 
nationalist elements, occupied the country, and demanded concessions for its 
government-linked Royal Dutch Shell. Finally in December, 1944, nationalist 
leader Mohammed Mossadegh introduced a bill to bar foreign country oil 
negotiations. A bitter fight ensued, by 1948 foreign troops were withdrawn, but 
the country remained under UK control through its Anglo-Iranian Oil Company at a
time Iran's southern region had the world's richest known reserves.

In late 1947, the Iranian government demanded an increase in its oil revenue 
share (meager at the time) and cited Venezuela where Standard Oil had a 50 - 50 
arrangement. London wasn't pleased, talks dragged on, and the strategy was to 
stall and delay. In late 1949, Mossadegh headed a parliamentary commission, a 50
- 50 split was demanded, Britain refused, and by 1951 Mossadegh was Prime 
Minister. Around the same time, Iran's parliament nationalized the Anglo-Iranian
Oil Company and paid fair compensation for it. Britain, nonetheless, was 
outraged and reacted.

Full economic sanctions and an oil embargo followed. In addition, Iranian assets
in British banks were frozen, and major Anglo-American oil companies supported 
London. Iran's economy was devastated. Its oil revenues plummeted from $400 
million in 1950 to less than $2 million from July 1951 to August 1953 when 
Mossadegh was ousted by a CIA-British SIS coup. Shah Reza Pahlevi returned to 
power, sanctions were lifted, and America and Britain regained their client 
state until 1979 when the same Anglo-American interests turned on the Shah and 
deposed him. More on that below.

An Italian company defied the sanctions at the time - Azienda Generale Italiana 
Petroli (AGIP). Its founder and head was Enrico Mattei, a man to be reckoned 
with. He sought indigenous energy resources for Italy that Anglo-American oil 
interests wouldn't co-opt. It was no simple task, yet he got a new law passed 
that established a central semi-autonomous state energy company called Ente 
Nazionale Idrocarburi (ENI). AGIP became a subsidiary.

As its leader in 1957, he negotiated an unprecedented deal with Iran - 75% of 
profits to the National Iranian Oil Company and 25% to ENI. Washington, London 
and Big Oil weren't pleased. If unchecked, this type arrangement would upset 
their entire world oil order benefitting them at the expense of host countries. 
Mattei had to be stopped, and the US and Britain pressured the Shah to opt out -
to no avail.

Mattei became a major irritant. He challenged Big Oil with low gasoline prices. 
He also offered deals with former colonies on more favorable terms than the 
majors, including the prospect of local refineries so supplier countries could 
be more than just raw material sources.

Finally, in October 1960 he went too far and enraged Washington and London. He 
negotiated a deal with Moscow they opposed. In 1958, he contracted to buy one 
million annual tons of Soviet crude. He then signed an exchange agreement for 
2.4 million tons for five years but not to be paid in cash. Instead it would be 
in large-diameter oil pipe that Russia badly needed to construct a huge pipeline
network bringing Volga-Urals oil to Czechoslovakia, Poland and Hungary - 15 
million tons annually when completed. The deal helped both sides with Mattei 
getting Russian oil at below market price and the Soviets getting a pipe works 
plant completed for them in September, 1962.

A month later, Mattei was dead. His private plane crashed on takeoff killing him
and two others on board. To this day, deliberate sabotage was suspected, and why
not. Mattei was at the peak of his powers, he'd already signed deals with Iran, 
Russia, Morocco, Sudan, Tanzania, Ghana, India and Argentina and upset the 
established order. He also planned to meet President Kennedy who, at the time, 
was pressing Big Oil to reach accommodation with him. A year later, Kennedy was 
also dead, and the finger pointed to "US intelligence, through a complex web of 
organized crime cutouts."

A Sterling Crisis and the Adenauer-De Gaulle Threat

In 1957, western European countries headed by France, West Germany and Italy 
signed the Treaty of Rome. It established the European Economic Community (EEC) 
that came into force on January 1, 1959. Germany was recovering from the war, 
and Charles De Gaulle regained power in France with vigorous restructuring plans
- to rebuild the country's infrastructure, expand its devastated industrial and 
agricultural economy, and restore fiscal stability.

It was already under way in continental Europe, the result of unprecedented EEC 
trade-driven growth. De Gaulle and Germany's Konrad Adenauer led the effort with
the French President exerting a strong independent voice. The two leaders 
bonded, and the Treaty Between and French Republic and Federal Republic of 
Germany was concluded on January 22, 1963. It assured close cooperation and 
coordination of economic and industrial policy. Washington and London were 
alarmed at the prospect of an independent alliance that included Italy under 
Aldo Moro.

An Anglo-American alliance was hatched to counter it. It targeted Europe and 
took the form of pushing the EEC to open to US imports and be firmly part of a 
Washington-London-dominated NATO. Britain also demanded inclusion in the six 
nation Common Market. De Gaulle strongly opposed it, but was denied when 
Atlanticist Ludwig Erhard became Germany's Chancellor in April 1963. He favored 
admitting Britain and agreed to support London's 19th century "balance of power"
strategy against continental Europe. Though formally ratified, the Franco-German
accord was lifeless, and the culmination of Adenauer's work was lost - stolen by
the America and Britain at the last moment.

Washington supported the EEC but not as an independent alliance. It might have 
become that in 1957 at a time recession hit America and lasted into the 1960s. 
It led to debate in the US with the New York Council of Foreign Relations and 
Rockefeller Brothers Fund drafting options at a time Henry Kissinger emerged. It
was also when Big Oil and New York banks (the East Coast establishment) were 
dominant and viewed the world as their market. They also controlled the media 
and used it to promote their interests over what was best for the nation and 
greater good.

Rebuilding US infrastructure, investing in modern factories, improving the 
national economy and developing a skilled labor force were ignored. Instead, 
investment flowed abroad for greater returns. Cheating on quality also became 
fashionable, and productive pride lost out to bottom line priorities to please 
Wall Street.

It came with a cost, however, and part of it was the state's financial health. 
As dollars flowed abroad, US gold reserves plunged enough to threaten the 
Bretton Woods system. The problem was a "fatal flaw" in its design. Its rules 
established a "gold exchange standard" requiring IMF countries to fix the value 
of their currencies to the US dollar and indirectly to gold at $35 an ounce.

By the 1960s, European growth outpaced the US, and domestic investment sought to
take advantage of double the returns it could get domestically. It was the 
beginning of the Eurodollar market, and the start of a decade of "ever worsening
international monetary crises." By the late 1970s, it became a cancer that 
"threatened to destroy its entire host - the world monetary system." It also 
influenced the Johnson administration to believe that a full-scale southeast 
Asian conflict could stimulate a stagnant economy and show the world who was 
still boss.

In the 1960s, New York bankers, Big Oil and the defense establishment advocated 
war and a homeland garrison state to boost profits, but consider the strategy. 
DOD Secretary Robert McNamara and Pentagon planners obliged. They designed a 
protracted "no-win war from the outset" to rev up spending and secure the 
defense component of the economy. Deficits resulted, the dollar inflated, and 
Washington forced its trading partners to accept war costs in the form of 
cheapened greenbacks.

It led to European central banks accumulating large Eurodollars reserves they 
then earned interest on from US treasuries. The net effect was continental 
bankers funded US deficits the way they do now, along with China and Japan. 
Engdahl quoted futurist Herman Kahn saying: "We've pulled off the biggest ripoff
in history (running) rings around the British empire." Nonetheless, London 
planned a comeback with "expatriate American dollars." More on that below.

Lyndon Johnson waged war on two fronts, and failed at both. Vietnam cost him his
presidency while his War on Poverty and Great Society barely made a difference 
but amassed huge European-financed deficits. At the same time, industrial and 
scientific investment declined, financial speculation grew, a service-oriented 
economy was favored, and America headed down the same "road to ruin" Britain 
followed earlier.

Few understood that Johnson's domestic policy had little to do with alleviating 
poverty. It was a corporate scheme to exploit economic decay, curb wage growth 
and back a 19th century colonial-style looting. Inciting "race war" was part of 
the plan. Engdahl described it as a domestic Vietnam pitting blacks against 
whites, unemployed against employed, and high wage earners against lower paid 
ones in a "new Great Society, while Wall Street bankers benefited from slashed 
union wages and cuts in infrastructure investment." They, in turn, recycled 
their profits into cheap Asian and South American labor markets for still 
greater profits. It's the same scheme writ large today.

By 1967, trouble was evident. The Bretton Woods system was threatened as US 
external debt soared and the nation's gold reserves plummeted to one-third their
liability. At the same time, Britain's economy was "a rotting mess and getting 
worse." Faith in the pound sterling was eroding because the UK, like America, 
neglected its industrial base, amassed large trade deficits, and was a net 
currency exporter. Something had to give, and it was the pound.

At this time, De Gaulle withdrew from the gold pool, and "the entire Bretton 
Woods edifice (shook) at its weakest link, the pound sterling." The crisis 
highlighted the core vulnerability of the international monetary system, the US 
dollar. Things came to a head on November 18, 1967. Britain devalued the pound 
by 14% for the first time since 1949. It abated the sterling crisis, but the 
dollar one was just beginning as international holders of the currency demanded 
gold in exchange.

Crisis built in 1968, and Business Week magazine devoted an astonishing nine 
articles and feature editorial to it in its March 23 issue headlined "Gold 
crisis jolts the West" on its front cover. A publisher's memo also addressed it 
and quoted Virgil's Aeneid, Book III: "Oh cursed lust for gold, to what dost 
thou not drive the hearts of men!" It affected Charles De Gaulle as well. His 
independence made him a target for removal that succeeded. It got him voted out 
of office a year later. For Washington and London, however, it was a Pyrrhic 

"A Century of War" will continue in Part II of this review to complete the story
to the present era under George Bush.

Stephen Lendman can be reached at •••@••.•••. Also visit his 
blog site at sjlendman.blogspot.com.

newslog archives: 

How We the People can change the world

Escaping the Matrix: http://escapingthematrix.org/

The Phoenix Project

The Post-Bush Regime: A Prognosis

Community Democracy Framework: 

cyberjournal: http://cyberjournal.org

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