By Jim Miles
As the slaughter in Gaza continues, the western nations remain comfortably at ease with their wealth and privilege. Unfortunately I have to make the same accusation towards the various Arab and Muslim governments in the Middle East and abroad. The “street” demands action, if only minimally so, for a cease fire; many want action beyond that, of different kinds. Unfortunately it appears that the governments of the countries where the street demands action do not want to take action of any kind, with several possible reasons for that lack.
In western countries, protests will not sway governments as they are far too entrenched in the western mythology of their own societal supremacy which includes the need to safeguard the “only democratic government” in the Middle East. They are interlinked by religion, finances, and military exchanges. All too comfortable in their imperial superiority, the leaders of the western nations will do nothing but express the right of Israel to defend itself even as the death toll climbs over 10 000 civilians.
The Arab/Muslim states do not have the same viewpoint but other than mouthing platitudes and so far ineffective mild threats, nothing else – at least not visible on the surface – is being done to assist their kin in Gaza and the West Bank.
Obviously they do not want to disturb their status quo: that being their own relative ease and comfort in a region where ease and comfort have not come easily for most. To take action of whatever kind, but in particular military action, will certainly weaken if not destroy the leaders safety and security, but more importantly, their power and wealth.
The countries of the Middle East are for the most part subject to the military and financial power of the United States empire, subject to the power of the U.S. petrodollar and continually threatened – and knowledgeable from current events – by U.S. military covert and direct military interventions in order to maintain passive and quisling governments to control the supply and price of oil.
While Gaza is pummelled continuously, the Arab states appear to be doing little. Apart from Hezbollah engaging across the border between Lebanon and northern Israel and the Houthis firing off a few ineffective drones, very little is being done to assist the Palestinians of Gaza. A regional war against Israel would draw in – willingly – the U.S. forces stationed in the region, always eager for a fight, leading to more and more serious confrontations that would lead to a world destroying nuclear war.
There are non-military solutions that, while slower to cause a reaction than any direct military action, would be stronger means of destroying the power of the empire. Two actions can be taken along non-military lines: material – put an oil embargo into effect; and financial – selling off U.S. treasuries and stopping financial transactions using the U.S. petrodollar, destroying its power as the global reserve currency. The two are related as an oil embargo would also have an impact on the price of oil, creating massive inflation, greatly weakening the US$.
Embargo and the makings of the petrodollar
In the 1973 Yom Kippur war a partial oil embargo began nine days into the war and in two weeks a full embargo was put into place from Saudi Arabia. The consequences were sudden and far reaching. The price of oil rose significantly, pushing a Vietnam war induced inflation rate even higher, the end results being a shortage of oil products (gasoline in particular) for the consumer and a generalized downturn in the overall economy. Nixon had removed the U.S. from the gold standard in 1971 and the US$ value floated along with the value of other currencies.
One of the bigger consequences of the resulting financial problems and geopolitical maneuverings was the creation of the petrodollar. Saudi Arabia agreed in 1974 to sell oil using only the US$ in exchange for military security and economic assistance. The latter two were intertwined as the military assistance came largely in the form of Saudi Arabia investing in U.S. financial products as well as buying huge amounts of U.S. military products.
From that decision, the petrodollar retained the US$’s position as the global reserve currency. All countries needed oil derived products and therefore needed the US$ held in its reserves. Along with that, and preceding it, the World Bank and the International Monetary Fund (both controlled by the U.S.) had made unreasonable loans to second and third world countries. When these countries found themselves unable to pay off their debts, the IMF imposed “structural adjustment programs” (SAPs) that effectively tied the debtor country to the IMF financial system, partly through onerous loan repayment schedules and the demands of the SAPs that altered the countries economies into perpetual serfs for the financial empire.
Oil embargo and the end of empire?
An embargo today would have serious consequences for the petrodollar and its global reserve status, but as the tentacles of U.S. financial manipulations cover the world it would also have serious consequences for the rest of the world. The bottom line however would be a huge peace dividend (providing the U.S. did not literally go nuclear over it) and a global economy reestablishing itself along more independently sovereign lines.
The U.S. is currently hugely indebted and its inflation rate, officially at about 3.5 percent, is running about ten or eleven percent as calculated under the 1970s’ rulebook. An embargo would have the same initial worldwide effect, with the price of oil rising sharply, and as it quadrupled in 1973, a quadrupling now would price oil at about $300 per barrel. U.S. debt would increase enormously along with the inflation rate placing the value of the US$ into near worthlessness as it would have to print more and more money to support its spiraling debt costs.
The results for Israel, intent on its destruction of Palestine and Gaza, armed with its own arsenal of nuclear weapons, are truly unpredictable. Now clearly demonstrating their total disdain for human life and their fanatical Zionist fundamentalism, resorting to their nuclear arsenal is for them a strong possibility. They could also count on U.S. intervention regionally with all the complications that brings. They are a rabid wild card, using military tactics to eliminate a perceived usurper of their now god-forsaken land.
Financial embargo and the end of empire?
Outside that very real possibility, the US$ would not disappear, but as it became less and less valuable due to inflation, and other countries under the influence of China and Russia would further their attempts to interact financially outside of the US$ system.
A related embargo of a kind could rise from the financial side of the geopolitical equation. As most countries have the US$ and U.S. treasuries (bonds = debt) in their reserves, a selling off of the reserves – as has been done by Russia and as is preceding slowly by China and inconspicuously by a few other countries – would greatly reduce the value of the US$ as an investment, the dollars would flow home – more inflation.
Russia clearly demonstrates the value of not being tied into the U.S. financial system. While it cannot avoid it in international settings, it holds very small US$ reserves and thus sanctions and financial closures – i.e. being shut out of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) – have little effect on it. Along with China, they are trading with other countries outside of the US$ system, using their own payment systems and their own currencies, now including oil sales from Saudi Arabia to China…which in turn ties it back into the oil embargo.
Lament for the global economy – will peace be given a chance?
The global economy as measured by GDP would probably suffer enormously but the hardest hit would be the western countries still living with the riches of empire, past and present. Most economic statistics, if examined carefully, are pretty much worthless anyway, manipulated as they are by various formulas used to rig them in favor of the government in power.
If all the countries tied into IMF debt simply annulled or defaulted on the loans unilaterally, the debt structure would collapse. Poorer countries would be able to return to a sovereign economy, producing what they need for their own people, trading what they can offer at a fair global price for fair profits, and invest in their own civic infrastructure without interference from some special covert CIA team or pure military intervention.
There would be a huge dividend, a peace dividend, allowing the world to restructure itself away from U.S. domination. As indicated above, Israel is the unknown in all this, acting in an unpredictable frenzied manner in order to assert its particular brand of fanatical theism.
Unfortunately the governments of the global “south” are holding themselves hostage to the IMF loans and U.S. financial manipulations. Much of the billions of dollars in IMF aid money goes to those in control, the elites of any particular country, either through straight up graft and corruption, or through money spent on their own businesses, or money sent to a safe haven somewhere outside their home country – just in case.
Much of that money is also used to pay off the interest debt of previous loans – a vicious spiral into poverty. Personal power and greed create maximum hesitation on these leaders to actually do something to upset their private wealth trough.
A ceasefire – maybe even peace – is possible, if the Arab and Muslim leaders of the world would get over their fears of losing their own power – to their own people – and act in concert against the aggressions of Israel against the Palestinians. If not, this could either be another in the long cycle of Israeli attacks on Palestinians, or worst case, the final ethnic cleansing/genocide of Palestinians.
Jim Miles is a Canadian educator
9 November 2023