BY
Odilim Basil Enwegbara Of "The Punch"
From the outset, Washington recognised the immense strategic role oil plays in powering global economy. As a major source of energy, any nation that has monopoly over its supply and pricing definitely has monopoly over the global economy itself. Desirable to see European hands totally off global oil, Washington had sponsored the World War I.
Since the replacement of Pax Britannica by Pax Americana meant also dollar’s replacement of pound sterling’s hegemony, Washington even before the end of WWII, knew that the power of gold as the store of value, should be replaced with oil as the engine that drives global economy for the very fact that the world could do without gold but never ever without oil. Being the case, Washington already knew that the future holder of dollar’s value and its reserve currency dominion should be oil and that’s why its monopoly was inevitable.
Unable to destroy European economic power the power it had over global oil, sponsoring WWII, that left Britain and Germany destroying each other’s economy finally handed America the world’s oil monopoly. That’s why without waiting for the end of WWII, Washington was already in a serious courtship with Saudi Arabia, the holder and number oil producer in the world.
That Saudi Arabia became the world’s largest oil producer was only because of the Rockefeller-Rothschild oil cartel funding and sponsoring the Bolshevik Revolution of 1917 destroyed the vast Soviet Russia oil fields, which made it, until 1917, the world’s largest oil producer.
Little wonder, to formalise this oil monopoly and the eventual manipulation of its supply and pricing, President Franklin D. Roosevelt, a puppet of the Rockefeller oil empire, on February 14, 1945, secretly met with his Saudi Monarch, King Abdul Aziz (Ibn Saud). Aboard naval cruiser destroyer, USS Murphy, sailing in the Suez Canal, the two leaders struck a US-Saudi oil alliance, a kind of marriage that guaranteed the US an absolute control over Saudi’s vast oil reserves, with the Saudi, in return, fully guaranteed the US military protection.
With Saudi oil now in the hands of Washington, European powers were forced behind Pax Americana, in what was designed to be a Soviet-US Cold War. Mandating the Saudis to create the Organisation of Petroleum Exporting Countries in September 1960 so that other Arab oil players and Non-Allied oil producers in Africa, Asia, and Latin America should be under Saudi supervision, birth was given to a powerful global oil cartel indirectly supervised by Washington. Controlling OPEC oil cartel, made it extremely difficult for members having any strategic partnership with either European nations or with the Soviets.
By the late 1960s, cracks began to emerge in America’s economy, caused mostly by chronic deficits in its balance of trade which was caused as a result of surplus dollars accumulated by now recovered war-torn economies of Germany, France, and Japan. Insistence in converting their foreign dollar earnings into gold, threatened the de facto of dollar as reserve currency to the extent that redeeming gold was feared to lead to dollar’s collapse.
So, preventing that from happening made dollar’s devaluation inevitable. But the fact that devaluation could trigger a run on the dollar, with nations seeking to exit the dollar currency by the rush to exchange their dollar accumulation for gold, something taking the dollar off the gold became the only way to save the dollar and avert the imminent bankruptcy of the US economy.
So, on August 15, 1971 President Richard Nixon surprised the world when, unannounced, he terminated dollar’s gold convertibility, leading to replacing gold-dollar standard with nonconvertible floating dollar reserve currency. But since there’s no way the dollar could float without any thing providing it measurable value, Washington now saw the need for petro-dollar to replace gold-dollar, which meant that the value of the dollar has become dependent on the global price of oil.
Therefore, should oil price increase, so should the value of dollars increase; and should oil price go down, so should the dollar go down. In other words, any sharp and sudden increase in the world’s oil price should equally mean a corresponding sharp and sudden increase in the demand for dollars by nations purchasing oil to meet their needs.
The discovering that Nixon’s dollar floating had hardly saved the dollar from its unprecedented inflationary pressure caused by the high cost of the US-Vietnam War, to prevent the dollar’s collapse, high oil price was badly needed as the only way to force nations to scramble for more dollars in their efforts to meet their daily oil purchases. To save the dollar from an imminent collapse, plotting a global oil crisis became the only option.
The May 1973 meeting in Saltsjoebaden, Sweden, where Bilderberg members gathered was not actually to decide the need to raise oil price to as high as 400 per cent, since that decision had already been taken by Wall Street and Washington power elite led by Secretary of State Henry Kissinger, who never believed they needed Europeans to be part of the decision on the fate of the dollar. Actually, the gathering was simply to plot how to recycle petrodollar, once the coup to manipulate OPEC’s oil revenues to rise 400 per cent was achieved.
Since Arab nations held the world’s oil power, triggering the shock — it was agreed — would require precipitating an Arab-Israel conflict in a way that should force Arab oil producers to cut oil supply. Soon, that was what happened, when using backdoor diplomatic channels, Washington and London secretly orchestrated the October 6, 1973 “Yom Kippur War”, with Egyptian and Syrian invasion of Israel.
Withholding key oil supply by the Organisation of Arab Petroleum Exporting Countries flowed with oil embargo to the US and Europe acting along OPEC raised its oil price. The result was a hunt for the dollar by oil importing nations. And with this scramble for the paper called dollars, so did the US waste no time in printing as many dollars as it could print. By December 1973 when the war was over, the oil price increased by 400 per cent had become a harvest for Washington and London, while an angry world blamed OAPEC and OPEC.
Now with the strength of the dollar rested on 400 per cent rise in oil price, recycling petrodollar turned Wall Street and City of London as new centres for hot money, OPEC’s huge oil revenue deposits badly needed by dollar starved oil importing nations, mostly developing counties. Soon, they turned IMF into a global policeman of the Anglo-American neo-colonial economic looting.
Soon the same oil shock that benefited the Soviets became what was used to bring down the vast Soviet Empire, which Washington did by reversing the oil shock in a way that led to the sudden collapse of global oil price. In other words, downward manipulation of global oil prices crippled Soviet economy that had since developed appetite for petrodollar, which Washington now stopped flowing.
This time, without involving Bilderberg, in March 1985, came a White House meeting, involving President Reason, Vice-President George Bush, Secretary of State George Shultz, Treasury Secretary Jim Baker, Defense Secretary Caspar Weinberger, Attorney General Ed Meese, and CIA Director William Casey, where it was agreed that the new US ‘’…policy should be…to discourage OPEC and other producers from artificially propping up prices…’’ And in a highly classified internal telegram sent by Schulz to the US ambassador in London, the request was to ‘’… produce quickly a study of the impact of a precipitous drop of oil.’’
By September, Washington put immense pressure on the Saudis to raise their production become immense by flooding the market with Saudi’s cheap oil in a way to possibly decrease oil price by 400 percent so as to cripple the Soviet oil dependent economy. In the words of Assistant Secretary of State Morton Abramowitz, ‘’the Soviet Union would suffer a net unfavorable impact in the near term since it relies heavily on oil exports for hard currency earnings.’’
Forced into acceptance during his George Bush’s visit to Riyadh in April 1986, where is he told King Faisal ‘’…market forces could best set oil prices and production levels,’’ code name for Fahd running ‘’reverse oil shock.’’ Soon, the OPEC oil price collapsed from $26 per barrel in the winter of 1985 to as low as $10 per barrel by late spring 1986.
To ensure that the world was truly saturated with oil, leading western oil majors — Exxon, Mobil, Shell, and BP — joined hands in flooding the global oil market sometime selling below the cost of production. And as if the damage wasn’t enough, Iran and Iraq too had to pump oil since they had to finance their protracted war, a war carefully orchestrated by Washington. Moscow too trapped in a costly Afghan win-or-die war, had keeping pumping oil to meet the high dollar cost of the war.
So, the suddenness with which oil price plunged, gave Moscow not enough time to prepare for it the shortage of petrodollar, which as a result caused unprecedented cracks on its economic foundations. With the Soviet economy bleeding helplessly, it became a matter of time before the eventual collapse could happen. Starved of petrodollar came chain reactions accompanying it economic, social and political turmoil, which ended with Soviet collapse and disintegration.
While next week concluding part will discuss how the US manipulated oil price upward in an effort to undermine China’s rise, seen as an unacceptable threat to Pax Americana, it is important also for the reader to judge for himself, why should Okonjo-Iweala continue to parade the expensive misinformation by arguing that oil prices are volatile rather manipulated.
It is important that we know this or else her poor understanding of global oil realpolitik continues to impose high cost on the economy, as her insistence on low oil benchmarking has demonstrated, as well as her answer to one of the 50 questions the House Committee on Finance handed to her, where she accused the committee of lacking the understanding of how volatile the oil price is.
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