The US-Iran ‘crisis’ – it’s the oil stupid By William Bowles

17 January 2006

In essence, petrodollar hegemony is eroding, which will ultimately force the U.S. to significantly change its current tax, debt, trade, and energy policies, all of which are severely unbalanced. World oil production is reportedly “flat out,” and yet the neoconservatives are apparently willing to undertake huge strategic and tactical risks in the Persian Gulf. Why? Quite simply – their stated goal is U.S. global domination – at any cost. – Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse by William Clark

Anybody who doesn’t think control of energy sources is at the root of USUK actions in Iraq and elsewhere is suffering a serious (but hopefully treatable) delusional disease of denial. Even the most cursory exploration of the 20th century reveals the centrality of oil to pretty well every event of any significance, and in no small part goes a long way toward explaining why the corporate/state media won’t go near the subject with a length of oil-drilling pipe—except to deride the idea.

I got an email from a reader who, like me, is trying to make sense of the situation re Iran. Could it really be that—if it happens, that is, using Israel as a proxy—a strike is planned on Iran in March 2006 as Michel Chossudovsky contends? (See Nuclear War against Iran by Michel Chossudovsky.)

There is no doubt that the US has plans on the drawing board for such an eventuality, whether it’s Israel doing the striking or by direct US action. The real question to ask is what would the US have to gain at this point in time through such an action?

I think the best way to approach the situation is to look first and foremost at the economics of the current situation, for when all’s said and done, money talks and bullshit walks.

Secondly, ever since the 1970s, the leading capitalist powers have been in a crisis of the over-accumulation of capital which, since the fall of the Soviet Union has led to the re-emergence of a real struggle between the major Western blocs, the US on one side and the EU on the other (a struggle that was temporarily suspended during the period of the Cold War).

Some analysts contend that what we are witnessing is a return to ‘classical’ intra-capitalist rivalries such as those that led up to World Wars 1 and 2. This is imperialism revived given that there are now no serious military counterweights, i.e. the Soviet Union (see ‘The New Imperialism’ by David Harvey. A struggle further complicated by the entry of China as a third competitor in the race to capture global markets.

Thirdly is the role of the petro-dollar in propping up a decrepit US economy and moves by Iran to setup its own oil bourse in March. We should remember that in 2002, Iraq switched from selling its oil for dollars to euros, a move that the US simply couldn’t accept. That control of the oil itself was also part of the reasoning is course the other facet of the equation.

It is not yet clear if a U.S. military expedition will occur in a desperate attempt to maintain petrodollar supremacy. Regardless of the recent National Intelligence Estimate that down-graded Iran’s potential nuclear weapons program, it appears increasingly likely the Bush administration may use the spectre of nuclear weapon proliferation as a pretext for an intervention, similar to the fears invoked in the previous WMD campaign regarding Iraq. – Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse by William Clark

Why is this so important? To understand the centrality of the petro-dollar to US economic hegemony (backed up of course with overwhelming military force), we have to understand how important the petro-dollar is to US economic power.

By forcing the world to buy and sell oil in dollars, means that all the countries of the world subsidise the US economy as the US has a monopoly on printing dollars. The oil-producing countries have to trade in dollars and any country wanting to buy oil must first acquire dollars which can only be obtained by trading with the US, that is, buying US products and services.

This means that trillions of dollars are traded daily on the major currency exchanges, based in Washington, DC and in London. The surplus generated through these exchanges and sales of US financial instruments subsidises an otherwise bankrupt US economy. Hence a switch to the euro is a direct threat to US economic power.

Over the past four years the value of the euro has appreciated by 13% against the dollar making it a preferred currency to sell oil with, hence Iraq’s switch to the euro in 2002 and the upcoming establishment of an Iranian oil bourse based on euros which presents a direct threat to the power of the US dollar. Add to this threats by Venezuela to trade its oil in euros and in spite of the US’s military supremacy, the US economy is in serous trouble if Iran and Venezuela go ahead with the switch. Already, countries such as Russia are mixing oil sales using a ‘basket’ of currencies.

Is the US prepared to risk a global conflagration, let alone economic meltdown to maintain its supremacy? This is the (devalued) $64 question.

One of the questions asked of me is why have the leading economic powers of the EU decided to throw in their lot with the US over Iran, when any attack on Iran will impact adversely on their economies? Could it be that they don’t really believe that that US or its proxy, Israel will attack Iran?

Possibly all the noise being made is in order for the Russians or maybe the Chinese to do some behind-the-scenes arm-twisting, so that Iran makes all the right noises about suspending its uranium enrichment programme?

But it doesn’t alter the overall equation re the dollar/euro issue. If, as some argue, we have a return to ‘old-style’ intra-imperialist rivalries and a return to ‘old-style’ general war to resolve the issue, then perhaps an attack on Iran is on the cards as an attempt by the US to take out its major economic rivals, the EU and by default, China, by destroying or hopefully taking over their major sources of energy. But although attacking Iran would really screw up oil flows to the EU and China it would also have reverberations all the way back to the US, so what’s the gain, this is after all what one needs to look at.

The fourth issue is the role of Israel, a subject that like oil, the Western media will not deal with unless of course it’s to justify its role as an occupying force, all in the name of ‘security’.

For almost 100 years, Palestine has played a pivotal role in imperialist planning, firstly because of its geographical location, initially as the gateway to Britain’s colonial empire and then as oil replaced coal as the fuel driving the engine of capitalism and Britain’s power faded, the US replaced the UK as the power behind Israel’s position as its proxy power in the region. The question for us revolves around the degree to which Israel operates as an independent entity, and all the evidence points to the fact that Israel is an integral component of US strategic planning as I think Chossudovsky’s article makes quite clear.

Since late 2004, Israel has been stockpiling US made conventional and nuclear weapons systems in anticipation of an attack on Iran. This stockpiling which is financed by US military aid was largely completed in June 2005. Israel has taken delivery from the US of several thousand “smart air launched weapons” including some 500 ‘bunker-buster bombs, which can also be used to deliver tactical nuclear bombs … Moreover, reported in late 2003, Israeli Dolphin-class submarines equipped with US Harpoon missiles armed with nuclear warheads are now aimed at Iran. (See Gordon Thomas … Coinciding with Putin’s visit to Israel, the US Defence Security Cooperation Agency (Department of Defense) announced the sale of an additional 100 bunker-buster bombs produced by Lockheed Martin to Israel. This decision was viewed by the US media as “a warning to Iran about its nuclear ambitions.” – Nuclear War against Iran by Michel Chossudovsky

Not exactly an assortment of weapons that can be used to bolster Israel’s ‘security’, for these are obviously all offensive weapons of the most horrendous kind.

So, let us assume that rather than the US doing it, they use Israel and rely on using the threat of a US attack as a ‘deterrent’ to any Iranian military response to an Israeli attack. A very real possibility, but still it’s an awfully big risk to take. And as both the US and UK military brass are shitting themselves over the possibility, and let’s face it, even Tony Blair and the other leaders of the EU are dead set against a military strike (at this time), preferring to rely on possible UN sanctions, itself an unlikely proposition, but at least it gives the leaders of the EU and of Russia some breathing space to try and persuade the Iranians to tow the line on the issue of nukes.

(Frankly, if the Iranian government has any sense, it’ll agree to halting its uranium enrichment programme, for this would take the wind out of the sails of any US plans to attack. Principles are all well and good but in this situation, pragmatism makes more sense.)

The question comes down to which faction of the US ruling class will prevail, the so-called neo-cons or the ‘pragmatists’? One must not rule out the possibility that under the threat of unleashing Israel on Iran, Russia and possibly China will do some Iranian ‘arm-twisting’, and this may well be why the EU has gone along with the US over the fictional issue of Iran’s ‘nuclear ambitions’ to acquire nuclear weapons, which are according to even the US, at least 10 years from realisation and possibly much longer.

There is no doubt that the Iranian nuclear programme is a pretext, the problem for the US is that as a pretext it severely limits the US’s room for manoeuvre, either it will have to back down and negotiate or find itself on a one-way street to military confrontation with Iran. Those who argue that this is what the US intends to do anyway, will no doubt cite the example of Iraq, that regardless of what Iraq did and said, the invasion was a done deal. If this is so, then we’re all headed for hell in a hand-basket.

US strategic thinking on the subject is important, especially its plans for the battlefield use of nuclear weapons, or so-called tactical nuclear weapons. Given that the US is the only country to openly state that it is prepared to use them in the ‘war on terror’, could the mere threat of their use impel Iran to capitulate? Michel Chossudovsky’s essay is quite clear on the issue:

American air strikes on Iran would vastly exceed the scope of the 1981 Israeli attack on the Osiraq nuclear center in Iraq, and would more resemble the opening days of the 2003 air campaign against Iraq. Using the full force of operational B-2 stealth bombers, staging from Diego Garcia or flying direct from the United States, possibly supplemented by F-117 stealth fighters staging from al Udeid in Qatar or some other location in theater, the two-dozen suspect nuclear sites would be targeted.

Military planners could tailor their target list to reflect the preferences of the Administration by having limited air strikes that would target only the most crucial facilities … or the United States could opt for a far more comprehensive set of strikes against a comprehensive range of WMD related targets, as well as conventional and unconventional forces that might be used to counterattack against US forces in Iraq

Is this a risk the US is prepared to take? My own feeling is that the prophets of doom are wrong, not because in the long run, they will, but because the timing is all wrong. Attacking Iran in order to forestall the opening of the Iranian oil bourse seems like taking a sledgehammer to crack a nut.

The problem of course is that common sense dictated that invading Iraq could only lead to disaster, yet the US went ahead and did it anyway, so what’s to say the same insane thinking won’t prevail over Iran? I have no answer to this question even if recent experience would tend to lead to the conclusion that the mad dogs will, out of desperation, do exactly that.

This leads me onto the next question namely, is there anything we can do to stop it? If the Iraq experience is anything to go on, I would say no, we are after all, dealing with a ruthless ruling class that completely ignored world opinion and which thinks nothing of destroying entire countries. But invading Iran is not the same thing as Iraq which had been bombed and sanctioned into submission for twelve years before the US administered the coup de grace. At this point one can only hope that ‘pragmatism’ will win out on the Beltway.

And, as Chossudovsky’s essay points out, currently there is a complete conspiracy of silence on the issue of the use of nuclear weapons on the so-called battlefield, an issue that the anti-war movement seems completely oblivious to but it is clear from everything we know that the US envisage the use of nuclear weapons, even selling the idea that they are ‘safe’ to use. Israel has been armed to the teeth with a frightening array of these weapons, it seems inconceivable that they don’t plan to use them at some point, the question is when and under what circumstances.

Update: Friday, January 20, 2006 13:51

For another interpretation, see The west has picked a fight with Iran that it cannot win Simon Jenkins about which I have the following comments to make in addition to Moshe Machover’s observations found at the end of Jenkin’s article:

It seems to me that the US has got itself into an impossible situation, either it goes ahead and nukes the place or it backs down, not really an option for a macho-imperialist culture. So what’s a wannabe empire to do? It seems to me that there are three possible outcomes:

As I said above, Israel does the dirty work and the US step in to ‘defend’ Israel in the event of a possible Iranian counter-strike.

Or, after a lot of jossling and more threats, the project is shelved until a more ‘propitious’ moment?

Or, the US is trying to drag the EU into a quagmire which would be aimed at the US coming out the economic winner (assuming anything is left that is). But this still doesn’t explain the EU’s involvement (except for the obvious support of the UK, toady, archaic state that it is, still desperately trying to spread its whoring legs across the Atlantic). The last time any country in the EU tried to take on the US in this kind of game was 1990-91 with Germany backing the Serbs in the former Yugoslavia, a game it lost and which led in no small measure to the break-up of Yugoslavia.

All in all, it reveals an imperialism incapable of being imperial in any real sense of the word. Overwhelming military power is all well and good, but only if you can use it and not risk some serious ‘blow-back’. There are of course, the doomsayers who contend that things are so desperate for the leading capitalist states that they are prepared to risk conflagration. Are we in such a situation?


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