* William Engdahl: “A Century of War” -Part II

2008-02-24

Richard Moore

http://www.countercurrents.org/lendman190208A.htm

F. William Engdahl's
"A Century of War" (Part II)
By Stephen Lendman
19 February, 2008
Countercurrents.org

Part II continues the story of "A Century in War" in Part I. It's breathtaking 
in scope and content, and a shocking and essential history of geopolitics and 
the strategic importance of oil. Part I covered events from the late 19th 
century through the end of the 1960s. Part II completes the story to the present
era under George Bush.

Running the World Economy in Reverse: Who Made the 1970s Oil Shocks?

In 1969, the US was in recession, interest rates were cut, dollars flowed 
abroad, and the money supply expanded. In addition, in May 1971, America 
recorded its first monthly trade deficit that triggered a panic US dollar 
sell-off.

Things were desperate, gold reserves were one-quarter of official liabilities, 
and Nixon shocked the world on August 15. He unilaterally imposed a 90 day wage 
and price freeze, a 10% import surcharge, and most importantly closed the gold 
window, suspended dollar convertibility into the metal, and shredded the Bretton
Woods core provision. He also devalued the dollar by 8%, far less than what US 
allies wanted.

By this action, Nixon "pulled the plug on the world economy" and set off a 
series of events that shook it. Further deterioration followed with massive 
capital flight to Europe and Japan. It forced Nixon to act again on February 12,
1973. He announced a further 10% devaluation, major world currencies began a 
process called a "managed float," and world instability was the worst seen since
the 1930s.

Unknown was the reason behind the August, 1971 strategy. It was to buy time 
before initiating a bold new monetary "paradigm shift" - to revive a strong 
dollar and US world power with it. In May 1973, the scheme was hatched - to 
initiate a "colossal assault" on world industrial growth through a 400% increase
in oil prices. In addition, the resulting petrodollar flood had to be managed. A
global oil embargo was the scheme to rocket up its price and create an equally 
great demand for dollars.

Kissinger's Yom Kippur war began it when Egypt and Syria invaded Israel on 
October 6, 1973. It wasn't by accident as Washington and London carefully 
orchestrated the conflict while Kissinger controlled Israel's response. An oil 
embargo followed, OPEC prices skyrocketed 400% overnight, panic ensued, Arab oil
producers were scapegoated, and the key part of the scheme took shape. It was 
for much of the windfall oil revenue (mainly Saudi, the world's largest 
producer) to be recycled into US investments.

Following a Tehran January 1, 1974 meeting, a second price increase doubled the 
price of oil for even more recycling. The net effect - the worst American and 
European economic crisis since the 1930s with bankruptcies, unemployment, and in
the US, a bonus of stagflation. The fallout was horrific. It brought down most 
European governments but its effects on developing states were devastating. 
Nixon as well got caught in the "Watergate affair" that benefitted Henry 
Kissinger hugely. He became de facto president throughout the period while his 
boss battled to survive and lost. For Big Oil and major US and London banks, it 
was even sweeter. They profited handsomely.

Other issues were at stake as well, one of which was potentially cheaper nuclear
electricity as an alternative energy source. By the early 1970s, it was viewed 
favorably, and European governments favored building 160 to 200 nuclear plants 
by 1985. For the first time, America's nuclear export market was threatened as 
well as Big Oil's overall energy dominance. It got Anglo-American think tanks 
and journals to launch an "awesome propaganda offensive" to ensure the oil shock
strategy's success. The scheme was an "Anglo-American ecology agenda" (strongly 
anti-nuclear) that became "one of the most successful frauds in history."

A second Malthusian plot was also hatched through a classified Kissinger April 
1974 memo. It was a secret project called National Security Study Memorandum 200
(NSSM 200) that called for drastic global population reduction. It reasoned that
many developing nations are resource rich and vital to US growth. If Third World
populations grow too fast, their domestic demand will as well, and that will 
pressure price rises for their goods. Curbing population growth was the counter 
strategy. It's also self-defeating along with horrific fallout for targeted 
countries.

Europe, Japan and a Response to the Oil Shock

By late 1975, industrial countries began recovering but not developing ones. The
oil shock was crushing and prevented their ability to finance industrial and 
agricultural growth and the hopes of their people for a better life. Perversely,
it was also at a time the worst global drought in decades hit Africa, South 
America and parts of Asia especially hard. The fourfold increase in oil prices 
exacerbated conditions and increased developing states' current account deficits
sevenfold by 1976. They halted internal development to preserve revenue for debt
service and to buy oil. Conditions also let foreign banks and later the IMF 
provide loans that became an onerous debt bondage cycle.

At the same time in 1974, 70% of surplus OPEC revenues were recycled abroad into
equities, bonds, real estate and other investments as part of an exclusive OPEC 
decision to accept only US dollars for oil. It forced world nations to buy 
enormous amounts of dollars and do it when the currency was weak. This 
effectively replaced the gold standard with a "highly unstable (petrodollar) 
exchange system." Washington and New York banks planned to control it and thus 
benefit from artificially inflated oil prices.

The scheme transformed the world economy and began an unprecedented transfer of 
wealth to an elite minority. Engdahl called it "a perverse variation on the old 
mafia 'protection racket' game." Third World agricultural and industrial 
development suffered so a select few could prosper. It sent shock waves through 
the developing world and got a Colombo, Sri Lanka gathering to confront it.

Officials from 85 Non-Aligned Nations met in the Sri Lankan capital in August, 
1976 and produced a document unlike any others by developing states post-war. 
Its theme was "A fair and just economic development, and its contents stated 
that "economic problems have become the most difficult aspect of international 
relations (and) developing countries have become the victim(s) of this worldwide
crisis." Steps were proposed to address it, and they called for a "fundamental 
reorganization of the international trade system to improve" its terms. They 
also wanted the international monetary system overhauled and the "explosive 
issue" of foreign debt raised for the first time.

The proposal was then presented at the annual UN General Assembly meeting in New
York. It was a "political bombshell," and financial markets reacted sending bank
shares and the dollar lower. The fear was a potential alliance between key oil 
producing states and continental Europe and Japan. If in place, it could 
challenge Anglo-American dominance, had to be confronted, and Henry Kissinger 
got the job with "the full power and force of the US government." He warned EEC 
foreign ministers and disrupted any efforts they were considering to ally with 
OPEC and the non-aligned group.

Coordinating with Britain, he also forced key non-aligned nation strategists out
of office within months of their declaration. The threat was thwarted and 
leading New York and London banks took full advantage. They turned on the spigot
and increased lending to developing nations under draconian IMF terms.

Down but not out, North-South cooperation resurfaced in new ways. In late 1975, 
Brazil contracted with Germany to build a nuclear power plant complex. A similar
deal was made with France for an experimental fast breeder reactor. Mexico as 
well decided to go nuclear for part of its electricity to conserve oil and so 
did Pakistan and Iran. The Shah's oil revenues were substantial, and his idea 
was "to realize an old dream" - to create a modern energy infrastructure, built 
around nuclear power generation, that would transform the entire Middle East's 
power needs. In 1978, Iran had the world's fourth largest nuclear program, the 
largest among developing states, and the plan was for 20 new reactors by 1995.

The idea was simple - to diversify from Iran's dependence on oil and weaken 
Washington and London's pressure to recycle petrodollars. Also involved was 
investing in leading European companies to ally with the continent. Washington 
was alarmed and tried to block the plan but failed. Nonetheless, the Carter 
administration continued Kissinger's strategy behind a phony "human rights" 
mask. In reality, the game was unchanged - limit Third World growth and maintain
dollar hegemony. It failed miserably but threats to dollar dominance were 
stalled for a time.

They resurfaced in June, 1978 on the initiative of France and Germany. 
Responding to policy disagreements and a fluctuating dollar, they took steps to 
create a European currency zone and proposed Phase I of the European Monetary 
System (EMS) under which central banks of EEC countries agreed to stabilize 
their currencies relative to each other. EMS became operational in 1979 with 
notable positive results. This worried Washington and London as a threat to 
petrodollar supremacy, Britain refused to be an EMS partner, and Carter was 
unable to dissuade Germany from pursuing a nuclear option. The situation 
required drastic action.

It began in November 1978 with a White House Iran task force that recommended 
Washington end support for the Shah and replace him with Ayatollah Khomeini, 
then living in France. It would be by the same type coup that overthrew the 
Iranian government in 1953 along with broader aims that again are in play in the
region.

Key then (and now) was to balkanize the Middle East along tribal and religious 
lines - a simple divide and conquer strategy that worked in the 1990s Balkan 
wars. The aim was to create an "Arc of Crisis" that would spread to Central Asia
and the Soviet Union. Another 1978 event highlighted the urgency. At the time, 
the Shah was negotiating a 25-year oil agreement with British Petroleum (BP), 
but talks broke down in October. BP demanded exclusive rights to future Iranian 
output but refused to guarantee oil purchases. The Shah balked and was on the 
verge of independently seeking new buyers with eager ones lined up in Germany, 
France, Japan and elsewhere.

Washington and London were alarmed and acted. They implemented destabilization 
plans, starting with cutting Iranian oil purchases. Economic pressures followed,
and trained US and UK agitators exacerbated them by fanning religious discontent
and overall turmoil. Oil strikes as well were used. They crippled production and
made things worse. American security advisors recommended Iran's Savak secret 
police use repressive tactics to maximize antipathy to the Shah. The Carter 
administration cynically protested human rights abuses, and BBC correspondents 
exaggerated anti-Shah protests to rev up hysteria against him. At the same time,
it gave Khomeini an open platform to speak and prevented the Shah from replying.

Things came to a head in January, 1979 when he fled the country, and Khomeini 
returned to Tehran and proclaimed a theocratic state. Chaos was unleashed, and 
by May the new regime cancelled plans for further nuclear reactor development. 
At the same time, Iran's oil exports were cut off, and the Saudis inexplicably 
cut their own in January. Spot prices skyrocketed, and a second oil shock ensued
that was as deviously conceived as the first one. Then it got worse. In October,
newly appointed Fed Chairman Paul Volker unleashed a new scheme that turned 
calamity into catastrophe by design.

It was a radical new monetary policy on the pretext of "squeezing inflation out 
of the system." In fact, it was made-in-Washington fraud to preserve dollar 
hegemony, make it the world's most sought currency, and crush industrial growth 
to let political and financial power prop up dollar strength. Volker succeeded 
by raising interest rates from 10% to 16% and finally 20% in weeks. World policy
makers were stunned, economies plunged into the deepest recession since the 
1930s, and the dollar began an extraordinary five year ascent.

The combined effect of oil and Volker shocks took "the bloom off the nuclear 
rose" and ended its threat to Anglo-American oil supremacy. And if more was 
needed it came on March 28, 1979 in the middle of Pennsylvania at a place called
Three Mile Island. Conveniently, at the same time The China Syndrome was 
released that fictionalized the ongoing event. The combined effect was public 
hysteria, and later investigation revealed critical valves had illegally been 
closed. In addition, FEMA controlled all news to create panic. The scheme 
worked, and Anglo-American supremacy was reasserted over the industrial and 
financial world. Nothing is stable forever, however, and within a decade new 
rumblings would be felt.

Imposing the New World Order

The combined effects of two oil shocks and resulting inflation created a new US 
"landed aristocracy" while the vast majority of Americans saw their living 
standards sink. It was the same type scheme Margaret Thatcher imposed on Britain
when she declared "there is no alternative." Preaching free market hokum, she 
claimed deficit spending was the culprit, not two oil shocks causing 18% UK 
inflation. Her remedy - kill the patient to save it by cutting the money supply 
and government spending while sharply hiking interest rates to 17% in weeks, 
thereby causing depression she called the "Thatcher revolution." Engdahl had 
another view saying: "Never in modern history had an industrialized nation 
undergone such (a counterproductive) shock" in so short a time, except in 
wartime emergency. Thatcher crushed the economy by design the way Volker did in 
America.

At the time, Britain's problem wasn't government ownership. It was lack of 
investment in public infrastructure, in educating a skilled work force, and in 
enough scientific research and development. Government isn't the problem. 
Misguided policy is, and Thatcher and Volker excelled at it with one mutual aim 
- benefit their banks and Big Oil interests by cutting taxes and spending, 
reducing social services, privatizing and deregulating business, and breaking 
the back of organized labor in their brave new world order.

President Carter knew nothing about finance and economics and was duped into 
signing an "extraordinary piece of legislation" - the Depository Institutions 
Deregulation Monetary Control Act of 1980. It let the Fed impose reserve 
requirements on banks and be able to choke off credit to them. It also phased 
out interest rate ceilings banks could charge customers. Reagan continued the 
policies and was bamboozled by Chicago School ideologues like Milton Friedman. 
Engdahl called his radical monetarism "one of the most cruel economic frauds 
ever perpetrated." It was that and more because of all the human wreckage it 
caused.

It led to the Third World debt crisis and its horrific fallout. It willfully 
immiserated millions of people, and events came to a head in the summer of 1982 
with debtor states struggling to repay. Their burden was too onerous, and Reagan
and Thatcher planned an example of what happens when nonpayment is an option. 
The Malvinas (or Falkland) archipelago was the targeted choice. It's off 
Argentina's coast but was hardly a reason for war. The issue wasn't Argentina's 
sovereignty. It was to enforce the principle that Third World debts must be paid
by a "new form of 19th century gunboat diplomacy." Two-thirds of Britain's fleet
was dispatched, a shooting war ensued, and Argentina became a test case.

Reagan backed Thatcher, and it soured relations with Latin American states like 
Mexico that also became a target. President Jose Lopez Portillo favored a 
modernization and industrialization policy and planned to use his oil revenue to
implement it. The prospect of a strong Mexico was intolerable, Washington had 
other ideas, and a scheme was hatched to sabotage the plan by demanding rigid 
repayment of Mexican debt at exorbitant rates.

It began with an orchestrated run on the peso in the fall of 1981. Claims of an 
impending devaluation followed, and stories were planted of impending capital 
flight. An unavoidable austerity program followed, and the Portillo government 
cracked under pressure. It devalued the peso 30%, Mexican industry was 
devastated, many businesses were bankrupted, industrial production was cut and 
so were living standards for the majority of the people under conditions of 
orchestrated chaos.

Mexico effectively became insolvent at a time the US was in deep recession. 
Nonetheless, the Reagan administration hatched a plan to solve the debt crisis 
and save New York banks. Ignoring the root cause of the crisis, Secretary of 
State George Schultz offered IMF medicine combined with stimulating US consumer 
purchases as a way to increase Third World exports.

It would be "the most costly recovery in world history (and what followed) was 
almost beyond belief." Lopez Portillo failed to rally Latin American support, 
and his term expired two months later. US officials then blackmailed Brazil and 
Argentina to back down, and debtor countries had to accept IMF terms that became
"the most concerted organized looting operation in modern history," far 
exceeding the worst of Versailles.

New York and London banks profited hugely the way they do today. First, they 
"socialize(d) their debt crisis" by getting unprecedented international 
repayment support. Working through governments and the IMF, they spun off their 
debt to taxpayers, privatized gains for themselves, and pummeled debtor 
countries by structural adjustment looting.

That was Step One. Next came Step Two - restructuring debtor nations' repayment 
schedules that included onerous interest on top of oppressive principal. It 
caused mounting debt no matter how much was paid in an unending looting daisy 
chain still in play today and bigger than ever.

Back in the 1980s, here are the numbers. Between 1980 and 1986, 109 debtor 
countries were charged $326 billion in interest. They paid an additional $332 
billion in principal for a total of $658 billion on original debt of $430 
billion. In spite of it, in 1986 they still owed $882 billion, an impossible 
debt trap, and Engdahl attributed it to "the wonders of compound interest and 
floating rates" with a little gunboat diplomacy thrown in. Only one way out was 
possible - surrender economic sovereignty and valued raw materials, or else. 
Capital flight in the tens of billions followed, and it became a profit-making 
bonanza for major US banks.

In the 1980s, Americans also suffered. Reaganomics victimized them by 
structuring big gains for banks, oil and defense giants while ignoring the 
greater good and long-term economic health. The plan was nonsensical and built 
around the largest post-war tax cut until the combined three George Bush ones 
(with another coming) may have topped it. They did in nominal dollars, but 
Reagan's was much bigger as a percent of GDP in an economy half today's size.

Reagan and Bush had the same scheme in mind. Some call it "supply-side 
economics," others a "voodoo" variety on the idea that tax cuts release "stifled
creative energies," stimulate higher economic growth and produce greater 
government revenue. The Reagan one signaled "anything goes." Besides generous 
benefits for the rich and business, it encouraged speculative real estate 
investment, especially for commercial ventures. It also removed restrictions on 
corporate takeovers.

A year later, interest rates headed down, stock and bond prices shot up, a 
speculative bonanza was unleashed, and here's the bottom line. Reaganomics 
failed to encourage productive investment, except for selected defense 
contractors. Money instead poured into equities and debt instruments, high-risk 
real estate, junk bond-financed leveraged buyouts, and tax-sheltered oil well 
and other development.

At the same time, infrastructure needs were ignored, organized labor was 
targeted, government became the problem, and deregulation the solution to get it
off our backs. Throughout the 1980s and since: organized labor ranks declined, 
high-paying manufacturing jobs were lost, working American living standards 
declined, and an astonishing generational shift began - the annual wealth 
transfer of over $1 trillion from 90 million working class households to 
for-profit corporations and the richest 1% of the population to create an 
unprecedented wealth disparity. It continues unabated and is destroying the 
bedrock middle class without which democracy can't survive and is already on 
life support and sinking.

Simultaneously, by the mid-1980s, the US went from being the world's largest 
creditor to a net debtor nation for the first time since 1914. Budget deficits 
as well skyrocketed along with the national debt, and the true economic 
condition was revealed. "It was sick." Today, it's much sicker and depends on 
"the kindness of strangers" the way it did in the roaring twenties until the 
1929 market crash smashed it.

At the end of the 1980s, a lesser version of it occurred from the savings and 
loan industry (S & Ls) collapse. During the decade, almost $1 trillion went into
speculative real estate, and for the first time banks were allowed to 
participate. S & Ls took full advantage in an anything goes, deregulated 
environment. The 1982 Garn-St. Germain Act let them invest in anything they 
wished with government-backed $100,000 per account insurance. It allowed 
reckless speculation, massive fraud, and was an ideal way for organized crime 
and CIA to launder billions in drugs-related funds.

The 1980s ended the Reagan era when George HW Bush became President in 1989. It 
coincided with the fall of the Berlin Wall in November and breakup of the Soviet
Union in 1991. Around the same time, it was decided to target the Middle East 
and its vast oil reserves to counter the fear of a united Germany and 
economically expanding continental Europe that could threaten US dominance. 
Saddam would be the victim and an easy target after being weakened by the 1980 -
1988 Iran-Iraq war and a $65 billion debt to foreign creditors.

The scheme was to lure him into a trap (with Kuwait as bait) to provide a 
pretext for US military intervention. The rest is history:

-- Iraq invaded Kuwait on August 2, 1990;

-- four days later Operation Desert Shield was launched; harsh economic 
sanctions were imposed and a large US troop deployment began;

-- Operation Desert Storm began on January 17, 1991 and ended six weeks later on
February 28;

-- Next came 12 years of the most comprehensive genocidal sanctions ever imposed
on a country that included a crippling embargo; hundreds of thousands died and 
millions suffered;

-- Operation Iraqi Freedom was launched on March 19, 2003 and is still ongoing 
nearly five years later; the "cradle of civilization" was erased, a free market 
paradise created, and the death, human misery and displacement toll is 
incalculable for an impossible to win guerilla war.

From the Evil Empire to the Axis of Evil

In his 1991 State of the Union address, GHW Bush proclaimed a New World Order, 
quickly dropped the term but pursued the policy. The younger Bush does as well 
with focus shifted from the "Evil Empire" to the "Axis of Evil." It was a vague 
construct that conveniently encompassed the Eurasian continent and its oil 
riches. To ensure US dominance, they had to be controlled, especially against 
key Japanese, European Union (EU) and emerging Chinese rivals.

A threefold scheme was hatched to do it:

-- target Russia, eastern Europe and all parts of the world to ensure IMF rules 
and US dollar hegemony are maintained;

-- control every country with significant energy or other vital raw material 
resources; and

-- maintain unchallengeable military supremacy to deter opposition to US-imposed
rules.

The catch word was "globalization." It denies global justice, globalizes US 
dominance, and consolidates it by political, economic and military enforcement. 
At the start of the 1990s, however, Japan had become the world's economic and 
banking leader and had to be confronted. A reckless speculation decade left 
American banks in deep crisis. Japan operated differently, prospered and 
challenged US supremacy. Its influence was recognized and had to be undercut.

Treasury Secretary James Baker laid the trap through the 1985 Plaza accord and 
the Baker-Miyazawa month later agreement. He got Tokyo to exercise monetary and 
fiscal measures to expand domestic demand and reduce Japan's external surplus. 
At the same time, the Bank of Japan cut interest rates to 2.5% in 1987 and held 
that level until May, 1989. The plan was for lower rates to stimulate US goods 
purchases. Instead, cheap money went into Japanese stocks and real estate and 
led to colossal twin bubbles still deflating today.

The yen was also affected. Within months, it shot up 40% against the dollar, and
overnight Japan became the world's largest banking center, surpassing London and
New York. As the country's twin bubbles inflated, Japan became home to the 
world's 10 largest banks, an astonishing achievement for a country its size or 
any country. Things were so extreme at the bubble's peak that the value of Tokyo
real estate, in dollars, exceeded all of it in the US, and the nominal value of 
Japanese stocks amounted to 42% of the world's total - but not for long.

Tokyo equities peaked in December, 1989. Three months later, the Nikkei dropped 
23% or over $1 trillion in value, and it was just the beginning. From its 38,915
peak, Japanese stocks plunged to 7831 in April, 2003 with no assurance that's a 
bottom. Why and how could this happen? Japanese officials speculated on the 
reason.

In 1990, Japan proposed financing the former Soviet Union's reconstruction and 
drew strong US opposition. In addition, Japan's MITI model was suggested for 
former communist countries with Washington dead set against it for two reasons: 
it might exclude US companies, and it would rely on state economic guidance that
impressively fueled Japanese and Asian Tiger growth. It had to be stopped as 
America had other ideas for the post-Cold War era.

Pressure was applied with threats of drastic US troop cuts that would endanger 
Japan's security. The message was abandon economic plans or provide your own 
defense. At the same time, Japan's twin bubbles kept deflating, months later the
Nikkei had lost $5 trillion in value, the country was badly hurt, and its 
challenge to America was dropped.

That was Phase One. Phase Two confronted Asian Tiger countries because (like 
Japan) their economic model bested the US and threatened it. It was a major 
embarrassment to IMF rules that exploit developing states for America's gain. In
the 1980s, East Asia boomed with 7 - 8% annual growth rates compared to half 
that in the US. Their market economy followed state guidance and planning and it
worked. They were also debt-free and unhampered by IMF restrictions. In 
addition, their model enhanced social security and productivity, promoted 
universal education and set limits on foreign investment and imports. Washington
had other ideas.

In 1993, demands were made to deregulate, open financial markets, and allow free
capital flows. Easing followed and trouble began. From 1994 to 1997, hot money 
flooded in and created speculative real estate, stock and other asset bubbles. 
Hedge funds (including George Soros' billions allied with major international 
banks) forcefully acted. They attacked the weakest regional economy and its 
currency - Thailand and its baht. The aim? Force devaluation, and it worked. 
Thailand capitulated, floated its currency and turned to the IMF for help it 
never before needed.

Next came the Philippines, Indonesia and South Korea as their "populations sank 
into economic chaos and (mass) poverty." Prosperous Asian Tigers were humbled, 
they were forced into IMF debt bondage, and Russia got the same medicine plus a 
bonus. A sole superpower remained under US dollar supremacy, and US military 
bases encircled its former adversary, were closing in, and targeted an emerging 
China as well.

Russian shock therapy was especially tragic. Washington wanted to 
deindustrialize the country to permanently destroy the old Soviet economic 
structure. Boris Yeltsin complied, and IMF wreckage was the scheme. A 
corporatist state replaced a communist one, and its apparatchiks were winners 
along with a handful of mutual fund managers who made dizzying returns from 
newly privatized Russian companies. In addition, 17 nouveau billionaires (called
"the oligarchs") emerged overnight, strip mined the country's wealth, and 
shipped it overseas to safe havens.

Russia's people were devastated and still suffer. Unemployment is epidemic, well
over half the population is impoverished, 80% of farmers were bankrupted, and 
70,000 state factories were shuttered. And it got worse. Social services ended, 
diseases like HIV/AIDS became rampant, suicides rose, violent crime jumped 
fourfold, and the population now declines by about 700,000 a year with free 
market medicine already having killed over 10% of it. Outside a select elite, 
the former superpower was humbled, reduced to Third World status, and it created
potential for Big Oil to exploit Russia's energy riches that were given away for
kopecks on the ruble.

Seven oligarchs grabbed off half the country's natural resources. Their hard 
currency profits were dollarized, but by summer 1998 things got out of hand. 
With the economy in trouble, the IMF extended an emergency $23 billion loan to 
support the ruble and protect speculative western investments, but it came too 
late. On August 15, Russia did the unthinkable. It defaulted and, for a time, 
shock the dollarized world. The largest of all hedge funds (LTCM) bet on the 
country and leveraged up manyfold. A financial disaster loomed, the Fed 
intervened, Russia's default was quietly forgiven, and dollarization resumed.

Earlier, the Balkans got shock therapy and became a target for dismemberment 
with a simple idea in mind - destroy its mixed socialist economy that was 
independent of the West and couldn't be tolerated. Europe's soft underbelly also
lies between central Asia's oil and the route over which Washington wants it 
transported. It had to be brought to heel, and a US-led NATO was the way. 
Softening up began by the late 1980s, continued into the new decade, and George 
Soros was at it again. IMF medicine was employed, living standards plunged, and 
economic chaos resulted. Breakup began, each region was on its own, and a lot of
pushing came from the West.

Croatia and Slovania seceded first in 1991. That lit the fuse that exploded in a
series of Balkan wars. Slobadan Milosevic became the fall guy, was targeted for 
removal, conflict lasted the decade, and it culminated with US-NATO's merciless 
79 day 1999 Serbia bombing that caused an estimated $40 billion of destruction 
to the country's economy and infrastructure. The US moved in and set up shop in 
one of its largest military bases in the world - Camp Bondsteel near Gnjilane in
southeast Kosovo. It's a Serbian province that was split off and occupied by 
design. The West's divide and conquer strategy is in play, Kosovo heads for 
independence, and the mother country's objections don't matter.

At war's end, US Eurasian control was enhanced but not guaranteed as the contest
for Caspian riches is still in play with Russia, China and others vying for 
them.

A New Millennium for Oil Geopolitics

A new president accompanied the new millennium with a changed Washington focus -
oil is at its core, controlling it is key, and Dick Cheney's first job as 
vice-president was working with the (James) Baker Institute to draft the April 
2001 National Energy Policy Report. It projected a growing dependency on foreign
oil, highlighted Iraq's "de-stabilizing influence," and recommended "restat(ing)
goals with respect to Iraq policy." It also linked the Pentagon with future 
energy policy plans.

Core report recommendations signalled how with a crystal clear message:

-- securing foreign sources is key;

-- less than cooperative governments in volatile parts of the world control some
of the largest sources; and

-- Cheney highlighted concern at a private 1999 London Institute of Petroleum 
meeting saying: "by 2010 we will need on the order of an additional fifty 
million barrels a day."

He didn't flinch saying where we'd get it: "the Middle East, with two-thirds of 
the world's oil and the lowest cost, is still where the prize ultimately 
lies...." and Iraq is the potential crown jewel with the largest of all untapped
low-hanging fruit. Immediately on entering the White House, Cheney & Co. swung 
into action. They focused on Iraq like a laser, targeted Saddam Hussein, and 
removing him from office became top goal.

Washington teems with schemes and intrigue, but a neoconservative think tank was
particularly diabolical. Established in 1997, it was called the Project for the 
New American Century (PNAC), its goal was unchallengeable US dominance, and a 
policy paper was drafted to achieve it. It appeared in 2000 and was called 
"Rebuilding America's Defenses: Strategies, Forces and Resources for a New 
Century." It stated that "America should seek to preserve and extend its 
position of global leadership by maintaining the preeminence of US military 
forces." It further called for "American hegemony" and "full-spectrum 
dominance," and believed achieving it would be long-term "absent some 
catastrophic and catalyzing event - like a new Pearl Harbor."

A rogues gallery of PNAC members joined the Bush administration in 2001, key 
among them Dick Cheney, Donald Rumsfeld and Paul Wolfowitz, and topping their 
goals was removing Saddam Hussein. September 11 obliged, the "war on terror" was
born, "terrorism" replaced communism as the new enemy, its core was in the 
oil-rich Middle East, and its headquarters was in Iraq. Removing the Taliban was
just a warm-up for the main event ahead. It was conceived before bin Laden was 
"Enemy Number One" and overnight Al-Queda became western civilization's greatest
threat.

On October 7, 2001 (four weeks after 9/11), America went to war. Target One was 
Afghanistan, controlling Central Asian oil was the goal, transporting it through
Afghanistan was the plan, and the Taliban had to go because they rejected 
one-way Washington (double) deal making. They fled Kabul five weeks later, 
Northern Alliance warlords took over, a puppet president was installed, war 
ended (for a time), and the focus shifted to Iraq.

Prepping the public began, Saddam became another Hitler, his WMDs threatened 
western civilization, so he had to go. "Shock and awe" began on March 19, 2003, 
and Baghdad fell three weeks later. Saddam was removed, fighting "officially" 
ended in May, and to almost no one's surprise, no WMDs were found because 
they're weren't any, and that was known by the mid-1990s or earlier.

Paul Wolfowitz attended an unreported Singapore security conference in June. He 
was asked why America chose WMDs as a causis belli when none existed. He 
answered it was "the only thing we could agree on." He was also asked why Iraq 
was targeted, not North Korea and its nuclear threat, and he explained: "The 
country swims on a sea of oil" so there was no other choice with world supply 
running out.

That conclusion came out of an alarming September 9, 2001 Oil Depletion Analysis
Centre energy policy memo to Tony Blair. It highlighted "hydrocarbon 
difficulties," declining output, and importance of Iraq as the one remaining 
untapped oil-rich country. Securing it was key because credible geological 
reports argued that easy cheap oil was dramatically declining while global 
demand was rising, especially in emerging China and India. For almost a century,
world economic growth needed cheap, plentiful oil. No good substitute exists so 
controlling what's left is essential.

Further, if "peak oil" has been reached, as many believe, its cost will explode,
and one analyst predicted: "Beyond 2005, the energy required to find and extract
a barrel of oil will exceed the energy contained in the barrel." Further, he 
estimated most major oil sources are near or at peak, for every new barrel 
discovered, four are being used, and the only cheap untapped supply left is in 
the Middle East where around two-thirds of proved reserves remain. Five regional
countries are key - Saudi Arabia, Kuwait, Iran, the Gulf Emirates (notably 
Qatar) and Iraq above all with estimates that its potential may be 432 billion 
barrels or around two-thirds more than Saudi Arabia's proved reserves.

If true, Iraq's importance is vital, its real estate is the world's most 
valuable, and controlling it unchallenged means "Washington (holds) the trump 
cards over all potential economic rivals," friends and foes. Even more grandiose
would be to control every major and potential worldwide oil source and transport
route to achieve unimaginable omnipotence. It would be a global-scale chokehold 
to decide who gets supply, who doesn't, how much and at what price. It would 
thereby assure who controls world economic development and remains Number One.

Unchallengeable military power is key and the reason the Bush administration 
repositioned its global presence through a web of new bases. They've been 
strategically placed where Cold War geopolitics didn't permit. Unsurprisingly, 
they target Eurasia and its importance Zbigniew Brzezinski highlighted in his 
1997 book, "The Grand Chessboard." He referred to the region as the "center of 
world power extending from Germany and Poland in the East through Russia and 
China to the Pacific and including the Middle East and Indian subcontinent." 
Dominating it assures the US access to and control of its vast energy reserves, 
so that becomes Goal One.

But it doesn't exclude broader aims, including Africa that will supply around 
one-fourth of future US oil supply, according to some analysts. It explains the 
Pentagon's AFRICOM presence that's expected to be fully operational by late 
summer and be responsible for the entire continent and its valued resources that
include more than energy.

Swing over to Latin America and its energy potential. Countries like Venezuela, 
Colombia, Ecuador, Bolivia, Brazil and Mexico are very much in US plans with the
Bolivarian Republic far and away most important. According to Hugo Chavez and 
some US estimates, the country has more potential reserves than Saudi Arabia 
when its heavy oil is included. It explains SOUTHCOM'S mission and command over 
30 regional countries with a growing presence in a number of them and ongoing 
operations (some covert) throughout Latin America.

Engdahl ends his book discussing oil's importance to US "full spectrum 
dominance." Controlling it directly or indirectly through client regimes means 
holding "a true weapon of mass destruction (and) potential blackmail over the 
rest of the world. Who would dare challenge the dollar" as the world's reserve 
currency? And if IMF rules keep restraining developing countries' growth, their 
oil demand will be curbed, so all the more for America and its key Global North 
allies at a time when most world oil sources have peaked. More than ever then, 
controlling world energy reserves is crucial to maintaining economic growth.

The 1970s oil shocks were warning shots. Today, threatened shortfalls are real 
and worsening. We call controlling world supply promoting democracy, others see 
the subterfuge, and some critics feel our imperial arrogance defines our 
weakness. Today, America is unrivaled in global power, and Engdahl quoted the 
late Edward Said after Iraq's invasion saying: "Every single empire (says) it is
not like all the others, that (it's special), that it has a mission to 
enlighten, civilize, bring order and democracy (and only use) force as a last 
resort." It remains to be seen what's ahead in "the New American Century," but 
the evidence so far isn't encouraging, and that's putting it mildly.

Stephen Lendman lives in Chicago and can be reached at 
•••@••.•••.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global 
Research News Hour on RepublicBroadcasting.org Mondays from 11AM to 1PM US 
Central time.
-- 

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newslog archives: 
http://cyberjournal.org/show_archives/?lists=newslog

How We the People can change the world
http://www.governourselves.org/

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

The Phoenix Project
http://www.wakingthephoenix.org/

The Post-Bush Regime: A Prognosis
http://globalresearch.ca/index.php?context=va&aid=7693

Community Democracy Framework: 
http://cyberjournal.org/DemocracyFramework.html

cyberjournal: http://cyberjournal.org

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