- Two weeks ago George Bush was sent on a mission to the
Middle East to deliver a horse's head. We all remember the disturbing scene
in Francis Ford Coppola's "The Godfather" where Lucca Brassi
goes to Hollywood to convince a recalcitrant movie producer to use Don
Corleone's nephew in his next film. The "Big shot" producer is
finally persuaded to hire the young actor after he wakes up in bed next
to the severed head of his prize thoroughbred. I expect that Bush made
a similar "offer they could not refuse" to the various leaders
of the Gulf States when he met with them earlier this month.
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- The media tried to portray Bush's trip to the Middle
East as a "peace mission", but that just a smokescreen. In fact,
three days after Bush left Jerusalem, Israel stepped-up its military operations
in the occupied territories and resumed its merciless blockade of food,
water, medicine and energy to the 1.5 million people of Gaza. Clearly,
Bush had green-lighted the operations or Israel's aggression would have
been seen as a slap in the face of the President of the United States.
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- So, what was the real purpose of Bush's trip? After all,
he has no interest in peace or in honoring his commitment to resolve the
Israeli-Palestinian crisis. So, why would he choose to visit the Middle
East just as his second term as president is winding down and there is
no chance of success?
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- Sometimes personal visits are important; especially when
the nature of the information is so sensitive that the message has to be
made face to face. In this case, Bush went to the trouble of traveling
half-way around the world to tell the Saudis and their friends in the Gulf
States that they were going to continue linking their oil to the dollar
or they were going to "sleep with the fishes". For the last two
months, various sheiks and finance ministers have been moaning and groaning
about the falling dollar---threatening to break from the so-called "dollar-peg"
and covert to a basket of currencies. Bush's trip appears to have rekindled
the spirit of brotherly cooperation. The grumbling has ceased and everyone
is back "on board". The regional leaders now seem considerably
less bothered by the fact that inflation is gobbling up their economies
and driving labor, food, energy and housing through the roof. Reuters summed
it up like this:
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- "After a flurry of public disagreements over currency
reform last year, Gulf central bankers are trying to close ranks, talking
up the pegs as a source of stability and playing down the dollar's weakness
as a temporary phenomenon."
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- Looks like Bush smoothed things over.
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- In the last two weeks, the Gulf leaders have watched
nervously while the Federal Reserve has slashed rates by a whopping 125
basis points. The cuts are steadily eroding the $1 trillion of capital
the sheiks have invested in US Treasuries and securities.
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- "Inflation is at 16-year highs in Saudi Arabia and
Oman, a 19-year peak in the United Arab Emirates. Gulf policymakers are
intervening directly in loans, property and commodity markets to offset
rate cut." (Reuters)
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- Property values have skyrocketed. Commercial property
in the UAE has doubled since the beginning of 2007. The inflation-bomb
has forced other Gulf states to provide food subsidies for their people
and a "70% wage rise for some Emirati federal government employees."
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- Disgruntled migrant workers rioted in Dubai recently,
demanding to be fairly compensated for the sharp increase in prices. The
Saudi riyal has climbed to a 21-year peak.
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- Currency traders expect another 8% rise in the dirham
and riyal by April and they are predicting that interest rates will compel
Central bankers throughout Gulf states to covert to either the euro or
a basket of regional currencies. So far, however, the loyal Saudi princes
have continued their support for the dollar.
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- Defending Dollar Hegemony
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- So, how important is it that oil continue to be denominated
in dollars? Would the United States wage war to defend the dollar's status
as the world's "reserve currency"?
-
- The answer to this question could come as early as this
week, since the long-awaited Iranian Oil Bourse is scheduled to open between
February 1-11. According to Iran's Finance Minister Davoud Danesh-Jafari,
"All preparations have been made to launch the bourse; it will open
during the 10-day Dawn (the ceremonies marking the victory of the 1979
Islamic Revolution in Iran) The bourse is considered a direct threat to
the continued global dominance of the dollar because it will require that
Iranian "oil, petrochemicals and gas" be traded in "non-dollar
currencies". (Press TV, Iran)
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- The petrodollar system is no different than the gold
standard. Today's currency is simply underwritten by the one vital source
of energy upon which every industrialized society depends---oil. If the
dollar is de-linked from oil; it will no longer serve as the de-facto international
currency and the US will be forced to reduce its massive trade deficits,
rebuild its manufacturing capacity, and become an export nation again.
The only alternative is to create a network of client regimes who repress
the collective aspirations of their people so they can faithfully follow
directives from Washington.
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- As to whether the Bush administration would start a war
to defend dollar hegemony; that's a question that should be asked of Saddam
Hussein. Iraq was invaded just six months after Saddam converted to the
euro. The message is clear; the Empire will defend its currency.
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- Similarly, Iran switched from the dollar in 2007 and
has insisted that Japan pay its enormous energy bills in yen. The "conversion"
has infuriated the Bush administration and made Iran the target of US belligerence
ever since. In fact, even though 16 US Intelligence agencies issued a report
(NIE) saying that Iran was not developing nuclear weapons; and even though
the UN's nuclear watchdog, the IAEA, found that Iran was in compliance
with its obligations under the Nuclear Nonproliferation (NPT) Treaty; a
preemptive US-led attack on Iran still appears likely.
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- And, although the western media now minimizes the prospects
of another war in the region; Israel is taking the precautions that suggest
that the idea is not so far-fetched. "Israel calls for shelter rooms
to be set up in a bid to prepare the public for yet another war, this time,
one of raining missiles." (Press TV, Iran)
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- "The next war will see a massive use of ballistic
weapons against the whole of Israeli territory," claimed retired general
Udi Shani. (Global Research\http://globalresearch.ca/index.php?context=va&aid=7982)
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- Russia also sees a growing probability of hostilities
breaking out in the Gulf and has responded by sending a naval task force
into the Mediterranean Sea and the North Atlantic.
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- According to an article on the Global Research site:
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- "The flagship of Russia's Black Sea Fleet, the Moskva
guided missile cruiser, joined up with Russian naval warships in the Mediterranean
on January 18 to participate in the current maneuvers....The current operation
is the first large-scale Russian Navy exercise in the Atlantic in 15 years.
All combat ships and aircraft involved carry full combat ammunition loads.
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- (Global Research, \http://globalresearch.ca/index.php?context=va&aid=7983)
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- France is also planning military maneuvers in the Straits
of Hormuz. Operation "Gulf Shield 01," will take place off the
coast of Iran and will employ thousands of personnel in combined arms operations
that will include simulated attacks on oil platforms."
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- Exercises are scheduled to take place from Feb. 23 to
March 5, and will involve 1,500 French, 2,500 Emirate, and 1,300 Qatari
personnel operating on land, at sea and in the air, the ministry said..."Around
a half-dozen warships, 40 aircraft and dozens of armored vehicles will
be in the war games", Fusalba said. \
- http://www.defensenews.com/story.php?F=3346953&C=mideast
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- Additionally, within the last week, three of the main
underwater cables which carry Internet traffic have been cut off in the
Persian Gulf and three-quarters of the international communications between
Europe and the Middle East have been lost. Large parts of the Middle East
have been plunged into darkness.
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- Is this merely a coincidence or is something else going
on just below the surface?
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- Ian Brockwell, of the American Chronicle said:
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- "On the assumption that the cables cut were no accident,
we must ask ourselves who would do such a thing and why. Clearly Iran,
who were most affected, would gain nothing from such an action and are
perhaps the target of those responsible?...Maybe this is a prelude to an
attack, or perhaps a test run for a future one?
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- Communication has always been an important factor in
military action, and cutting these cables might affect Iran´s ability
to defend itself." (American Chronicle, http://www.americanchronicle.com/articles/51085)
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- Despite the lack of media coverage, tensions are mounting
in the Gulf and the probability of a US-led attack on Iran is still quite
high. Bush is convinced that if he doesn't confront Iran, then no one will.
He also believes that if he doesn't militarily defend the dollar, then
America's days as "the world's only superpower" will soon be
over. So, the real question is whether Bush will realize that America is
already hopelessly bogged-down in two "unwinnable" conflicts
or if he will "go with his gut" once again and lead us into a
ruinous region-wide conflagration.
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