Thursday, February 26, 2009

Secret American Empire - Ch.29

A Bankrupt United States of America

Petroleum distinguished itself as history's all-time most valuable resource during the first half of the twentieth century. It became the driving force behind modernization. Procuring reliable supplies formed the cornerstone of foreign policies. Japan's petroleum obsession was a major factor in the decision to attack Perl Harbor. World War II elevated oil to even higher status. It fueled tanks, airplanes, and ships; a combatant country without oil was doomed.

Oil also evolved into the single most powerful tool of the corporatocracy.

After peace was declared, US oil company executives formulated a plan that would change the course of history. They decided that it was in their best interests (and therefore the country's!) to convince the president and congress to save US reserves for future wars and other emergencies. Why drain domestic oil fields when those of other continents could be exploited? In collaboration with UK and European companies, they persuaded governments to grant them tax breaks and other incentives they claimed were required to ensure domination of global petroleum supplies.

This decision – which has been endorsed by every president and congress since – led to policies that have redefined national borders, created kingdoms, and brought down governments. Like gold, oil turned into a symbol of power and the basis for valuing currencies; unlike gold, it is essential to modern technologies – to the plastics, chemical, and computer businesses.

At first, it appeared that the oil executives' plan would heap wealth on Third World oil-producing countries. However, following in gold's footsteps, oil became an albatross. Petroleum-rich countries were similar to prospectors in the boomtowns of the Old West; as soon as they filed claims, they became targets of scoundrels and robber barons.

At roughly the same time that oil was emerging as the key to the modern age, the Soviet Union surfaced as Public Enemy #1. Historians recognize that empire builders require external threats; the USSR conveniently played this role for the United States. Moscow's nuclear arsenal gave credence to the corporatocracy's claims that the Cold War demanded novel approaches to international diplomacy.

It is not surprising that the first real Cold War showdown over oil occurred in that part of the world containing the most oil, the Middle East. Demanding that his people share in petroleum profits from their lands, the democratically elected and highly popular Iranian prime minister Mohammed Mossadegh (TIME magazine's man of the year in 1951) nationalized a British petroleum company's assets. An outraged England sought the help of her World War II ally, the United States. Both countries feared that military intervention would provoke the Soviets into pulling the nuclear trigger. Instead of the marines, Washington dispatched CIA agent Kermit Roosevelt Jr. (Theodore's grandson). With a few million dollars, Roosevelt organized violent demonstrations that eventually overthrew Mossadegh; the CIA replaced this democratically elected leader with Mohammed Reza Pahlavi (the “Shah”), a despotic friend of Big Oil.

As discussed in Confessions, Roosevelt's success generated a whole new profession, the one I followed, that of EHMs. The lessons of Iran were clear: An empire could be built without the risks of war and at far less expense. The CIA's tactics could be applied wherever resources existed that the corporatocracy wanted. There was only one problem. Kermit Roosevelt was a CIA employee. Had he been caught, the consequences would have been dire. The decision was made to replace government operatives with agents from the private sector. One of the companies enlisted was mine, MAIN.

Very soon we EHMs discovered that we did not need to wait for countries to nationalize oil fields as an excuse to manipulate their politics. We turned the World Bank, the IMF, and other “multinational” institutions into colonizing tools. We negotiated lucrative deals for US corporations, established “free” trade agreements that blatantly served our exporters at the expense of those in the Third World, and burdened other countries with unmanageable debts. In effect, we created surrogate governments that appeared to represent their people but in reality were our servants. Some of the earliest examples: Iran, Jordan, Saudi Arabia, Kuwait, Egypt, and Israel.

In tandem with EHM efforts to dominate global politics, the corporatocracy launched campaigns to increase oil consumption. Like drug dealers, public relations experts fanned across the planet, encouraging people to buy goods sold by corporatocracy organizations – often petroleum-based and produced in Third World sweatshops, under appalling conditions.

During the decades after the Iranian coup, economists frequently cited examples of rapid economic growth as proof that poverty was declining. However, as we saw in Asia, the statistics deceived. In addition to ignoring social and environmental degradation, the statistics failed to address long-term problems.

A good example of these “unintended consequences” is provided by events resulting from Roosevelt's Iranian adventure. The coup may have brought an oil-friendly dictator to power, but it also institutionalized anti-American movements in the Middle East. Iranians never forgave the United States for overthrowing their popular, democratically elected prime minister. Nor have people in neighboring countries. Scholars of political history wonder what might have happened had Washington supported Mossadegh and encouraged him to apply oil revenues toward helping Iran's people pull themselves out of poverty. Many conclude that this would have encouraged other countries to pursue democratic approaches and might have prevented the terrible violence that has plagued the region ever since. Instead, the United States served notice that it was not a country to be trusted, not the defender of democracy we portrayed ourselves to be, and that our aim was not to help the Third World. We simply wanted to control resources.

The United States experienced severe problems at home during this same period. The process of expanding the corporatocracy's power base plunged our nation deep into debt. Increasingly, the factories that produced our products, as well as the oil fields, were located in other countries. Foreign creditors demanded payments in gold. The Nixon administration responded in 1971 by revoking the gold standard.

Now Washington was confronted with a new dilemma. If our creditors turned to other currencies, the corporatocracy could be forced to pay their loans off at the value they had held relative to gold when those debts were incurred. This would be calamitous, because corporatocracy coffers no longer contained funds sufficient to buy down the debt. The lone sentinel barring the bankruptcy door was the US Mint, with its capacity to print dollars and dictate their value. It was imperative that the world continue accepting dollars as the standard currency.

In the Prologue of this book I summarized the solution as revolving around Saudi Arabia. That is the short version. The longer story includes two other unwitting allies who came to Washington's rescue – both of them in the Middle East.

- pages 165-168, The Secret History of the American Empire, by John Perkins

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