February 25, 2007 at 08:03:41

Pipelines and Imperial Missions

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By Kenneth Anderson (about the author) Page 2 of 2 page(s)

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It is through this contextual prism that we might now look back to the Ukraine presidential elections of 2004, casting against each other, as it did, the pro-western opposition leader Viktor Yushchenko and the then pro-Russian Prime Minister Viktor Yanukovich. After accusations of election rigging by Yushchenko, his supporters, and western observers -- something that appeared to be entirely true -- the US State Department became heavily involved in both demanding a rerun election and ensuring that the rerun be cleaner since polls indicated that Yushchenko should win under nominal conditions. The election was rerun and the results proved satisfactory to US interests. However, this was to be short lived. While the much publicized dispute between Russia and Ukraine over natural gas pricing indicated some serious friction between Moscow and Kiev, this may not have been as it seemed. On January 1, 2006, Gazprom actually cut natural gas exports to the Ukraine but the issue was quickly resolved, if not entirely satisfactorily. This episode was widely viewed by the west as an effort on the part of Moscow to "punish" the pro-western government of Yushchenko. Unsurprisingly, this was disputed by Gazprom. Nonetheless, Yushchenko grew unpopular, in part as a result of the gas dispute, and two months later his party lost heavily in parliamentary elections, as Yanukovich regained the office of Prime Minister. US interests in the Ukraine were loosing out to what was becoming, once again, a pro-Russian parliament. Washington appeared to have been out-maneuvered in yet another corner of the Central Asian board. Since that time and with Washington rhetoric against Tehran becoming increasingly threatening, Russia has only grown more aggressive with its activities throughout the region.

Certainly much of Russia's interest in realigning with the Ukraine arises from Moscow's ongoing concern over the expansionist policy of the NATO alliance, which began in earnest with the addition of a newly-united Germany in 1990. While the G.H.W. Bush administration would balk at calls for overt imperial action by the neoconservatives, they too were keen to seize opportunities presented by the collapse of the Soviet regime, as was the Clinton administration, albeit in a more "realist" fashion. 1999 witnessed Poland, the Czech Republic and Hungary move under the NATO umbrella, but NATO expansionism rapidly increased after 9/11 with the addition of seven more countries (Estonia, Latvia, Lithuania, Slovakia, Slovenia, Bulgaria and Romania). This has caused a great deal of ire in Moscow and a flash point is currently in the making now that the Bush administration has proposed missile defense installations in both the Czech Republic and Poland. And, in an attempt to counter the reemergent Russian influence over the north Black Sea region, the US Congress is supporting the addition of both the Ukraine and Georgia to the NATO alliance. While pro-western factions within the Ukraine do desire NATO membership, certain regions, such as Crimea, are threatening secession and it is expected that Moscow might even move in militarily under pretext. In other words, the region will not be surrendered lightly unto NATO.

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While a US-guided NATO presses further expansion to the Russian borders, the litany of activity on the part of both Iran and Russia will not be viewed favorably by the White House. And in what must surely be the more troubling aspect of this outburst of economic cooperation, the timing is of particular note. The big plans and widespread efforts at economic cooperation have clearly ramped up since the invasion of Iraq. No doubt, both Iran and now Russia see that forging close economic ties and petroleum dependence throughout Central and South Asia would serve as a protective shield to the publicly stated goals of the Bush administration. While Americans may generally be unaware of the actual agenda driving the military misadventures in the Middle East, rest assured, the Iranians and the Russians are not. This is perhaps the biggest reason why Putin is now acting swiftly while he publicly denounces US foreign policy.

We are witnessing an almost uncontained hyper-use of military force in international relations. One country, the United States, has overstepped its national borders in every way.

The media, for the most part, ignored the truth contained in the warning Putin delivered, preferring to echo establishment hacks who cannot respond to the actual matters raised but claim that Putin simply wants to re-establish the preeminence of Russia on the world stage. Which may not be entirely untrue, but it hardly addresses the reasons as to why that is a happening. But Putin put it quite plainly:

Arguing that the United States is ignoring international law in its use of military power, a clear reference to the Iraq invasion, Putin said the legal constraints that once protected smaller, weaker nations are no longer viable. "This is very dangerous," he said. "Nobody feels secure anymore."

Ironically, or perhaps not so, the strident neoconservative policy prescriptions of blunt force military attack and acquisition of the geopolitically crucial oil producers, Iraq and Iran, in order to prevent the emergence of global competitors has perforce resulted in regional powers responding by increasing the very influence US foreign policy sought to prevent. And other forces have begun working in opposition to Washington foreign policy as well.

Apart from the burgeoning economic ties Iran is establishing both with Russia and throughout Central and South Asia, there has been another economic development that is threatening American hegemony and that is the slumping value of the US dollar, which began to slide against the euro shortly after the new currency was introduced. Today, the euro has surpassed the dollar, not only in value, but in circulation. Much of the devaluation the dollar has experienced, oddly enough, has occurred since invasion of Iraq. Actually, it is not odd at all.

The US dollar is a fiat currency whose value depends entirely upon its use, i.e. its demand. Like any commodity, when demand for the dollar drops, the value of the dollar drops against other currencies used for transactions. In 1971, Saudi Arabia stipulated that all oil trading be done in US dollars -- just as US domestic oil production had peaked and the US moved away from the gold standard. This guaranteed that high demand for the dollar around the world would be assured. At the time, no one foresaw a potential competing transactional currency. This also ensured that the dollar would become a standard transactional instrument for a wide range of commodity trading, not just oil. However, recent threats to dollar hegemony began to emerge with the introduction of the euro. Initially, the viability of the euro as an international currency was dismissed by "experts" who could not envision a serious threat to the US dollar domination in the market place. This began to change when the US stock market took a severe down turn in March of 2000 and foreign investors moved assets out of US markets and into European markets. Then, in November of 2000, Saddam Hussein switched the Oil-for-food account -- trading some 2.5 million barrels of oil a day -- from dollars to euros.

Since the invasion of Iraq, the dollar has only continued its downward slide. Despite claims of the Bush administration, the US economy is not perceived as terribly strong. Record budget and trade deficits since Bush took office have only contributed to the loss in confidence that markets have expressed and the rampant budgetary mismanagement causes concern that those in charge of the White House have very little idea about how to actually run a government. While markets generally expect graft in any government, the Bush administration has overflowed the buffer. The ballooning military expenditures, rampant corruption and crony corporatism have shaken the confidence of those not directly profiting from this activity. Which is, as one might expect, a large part of the world. What might also be suspected is that the Bush administration really doesn't care about running government even remotely properly, so convinced are they that control of Middle East oil will be their solution to every problem.

Recently emerging powers have expressed great dismay about the military adventurism of the Bush administration and have probably realised that Bush intends to make good on the neoconservative agenda. Russia, China and certainly Iran are under no delusions about what the current threatening posture against Tehran really represents. Many other nations in the Middle East are also concerned about this and it is possibly one of the reason why these same countries have signaled that they will be "diversifying" future investments away from dollar denominated assets. As early as January of 2006, rumours were rampant about China moving away from the US dollar, with each prompting a plunge in the dollar's value. Then in November of 2006, the central bank of China confirmed that it would be "diversifying its foreign-exchange reserves." Everyone knew exactly what that meant and the dollar plunged 20% on the euro. China had to then restate its position and assuage immediate concerns by saying that this would only affect future investments, not current reserves. Nonetheless, the writing is now on the wall. Russia and many OPEC nations have also made similar announcements while, of course, Iran had announced that it's new oil bourse would trade primarily in euros and that it would cut use of US dollars in current oil trading.

Establishment figures in the market dismissed the Iranian oil bourse, doubting that it would affect the use of the dollar at all. Such pronouncements seem designed primarily to prevent runs on the dollar and certainly on dollar denominated assets, which almost everyone has. But the reality is far different when the larger picture emerges. Major holders of US debt have announced diversification away from the dollar. The dollar is dropping but not disastrously so. At least, not yet. There are two reasons why the dollar is being protected to the extent that it is and has not been plunged into the financial abyss completely. One, pure self-interest: holders of US dollar-denominated debt cannot afford to have their holdings devalue too greatly. And two, more self-interest: the US marketplace must be preserved. The US is, after all, the biggest market in the world and everyone wants in. However, this will not continue in perpetuity as the policies of the Bush administration and the behaviour of the country's own multinational corporations continue to draw wealth away from the consumer population of the country. Should the trend continue, the giant maw that is the US consumer market will shrivel considerably and then all bets are off as to what the value of the dollar might do.

What is immediately clear from this situation is that the United States right now is beholden to US creditors. Like White House military prescriptions, the tremendous deficit spending encouraged by the neoconservatives in the White House, a great deal of which has resulted from Bush's enormous tax cuts, has ironically created a condition in direct opposition to the neoconservative agenda: it has weakened US hegemony. Though it is not yet apparent, for the reasons stated above, the economy of the United States hangs in the balance and it is hanging there at the behest of the country's biggest creditors. And lately, the signs indicate that the creditors are not amused. Recent moves, such as China's, signal a growing sense of unease with overtly aggressive military actions of the United States. It is a signal the Bush administration, like every other sign and signal flashed in front of them, will quite likely ignore.

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The neoconservative agenda of overt military excursions throughout the world, predicated on massive military budgets, suffers two fatal flaws. And the agenda is suffering them now. They are the flaws of a plan produced by people of limited real world experience and who have lived entirely sheltered lives, apparently unexposed to anyone not exactly like themselves. The first flaw seems so obvious, yet it bears statement: resistance was never imagined. It seems hard to believe that anyone could propose a foreign policy based upon war and occupation without considering certain resistance developing. Resistance here is not meant as a local insurgency within the attacked and occupied country, but a larger global resistance to such a foreign policy. No, it seems the Project for the New American Century didn't think anyone would have much of a problem with this or, if they did consider it, were unable to conceive that anything could be done to stop it. Which brings us to the second flaw: the way to stop it.

Everyone recognizes that the US military is not going to be beaten. This is a given. But what the neoconservatives also never considered were the economics of the plans for "benevolent global hegemony" by the barrel of lots of expensive guns while the Bush administration simultaneously launched an ill-considered program of prodigious tax cuts. This has place the United States in a precarious position, beholden to the very nations the US sought to repress through a delusional and, ultimately, criminal agenda. Should the Bush administration actually launch an attack against Iran, the results will be devastating, not only for the Middle East and Central Asia, but for the United States itself. There is a great deal of internal resistance to this, of course, not the least of which is coming from the American military itself. But considering that the White House seems bent on ignoring the external signals that have already been put in place, it remains to be seen whether any of it will be enough to prevent such a catastrophic decision.

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An astronomer who has worked on a number of NASA projects, Ken lives in Baltimore, where he devotes his scientific training to observations and inferences about current affairs, politics and the media. He authors more...)

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