- F. William Engdahl is a leading researcher, economist
and analyst of the New World Order who's written on issues of energy, politics
and economics for over 30 years. He contributes regularly to publications
like Japan's Nihon Keizai Shimbun, Foresight magazine, Grant's Investor.com,
European Banker and Business Banker International. He's also a frequent
speaker at geopolitical, economic and energy related international conferences
and is a distinguished Research Associate of the Centre for Research on
Globalization where he's a regular contributor.
- Engdahl wrote two important books. This writer reviewed
his latest one in three parts called "Seeds of Destruction: The Hidden
Agenda of Genetic Manipulation." It's the diabolical story of how
Washington and four Anglo-American agribusiness giants plan world domination
by patenting animal and vegetable life forms. They aim to control food
worldwide, make it all genetically engineered, and use it as a weapon to
reward friends and punish enemies.
- The book is a sequel to Engdahl's first one and subject
of this review - "A Century of War: Anglo-American Oil Politics and
the New World Order." It's breathtaking in scope and content, and
a shocking and essential history of geopolitics and strategic importance
of oil. The book is reviewed in-depth so readers will know the type future
Henry Kissinger had in mind in 1970 when he said: "Control oil and
you control nations; control food and you control people." Engdahl
recounts the story in his two masterful books, both critically essential
- The story line in his first one began late in the 19th
century when oil's advantage was first realized, and First Lord of the
Admiralty Winston Churchill told Parliament in 1919:
- "We must become the owners, or at any rate the controllers
at the source, of at least a proportion of the supply (of oil) which we
require....and obtain our oil supply, so far as possible, from sources
under British control, or British influence."
- After defeating Napoleon in 1815, Britain was supreme
until America emerged predominant during WW II. Engdahl explains how: through
two pillars and one commodity - unchallengeable military power and the
dollar as the world's reserve currency combined with the quest to control
global oil and other energy resources.
- Engdahl calls his book "no ordinary history of oil"
because what he recounts is suppressed in the mainstream and what passes
for education in America. It settles for mediocrity, ignorance, and a barely
literate public by design. As a result, people don't know that US manipulators
arranged "the greatest confidence game the world had ever seen"
- a "special hegemony" to:
- -- print limitless dollar paper certificates to buy every
- -- accumulate endless trade deficits;
- -- "inflate (the) currency beyond imagination;"
-- have the government pay interest on its own money; and
- -- create an unprecedented public and private debt to
enrich an elite few at the expense of the greater good.
- So far it's worked because people haven't caught on,
other nations need our markets, fear our might, and countries like China,
Japan and petrodollar recyclers remain lenders of last resort. Combined,
it let America rule the world, control its energy, and crush all upstart
competition. Washington had a good role model, and that's where the story
- The Three Pillars of the British Empire
- Geopolitical history for the last 100 years was shaped
around the quest for what Big Oil acolyte Daniel Yergin called "The
Prize: The Epic Quest for Oil, Money and Power" with two countries
at its epicenter - first Britain and now America with its UK junior partner
that built its rule on three essential pillars:
- -- controlling the seas and setting the terms of trade;
- -- dominating world banking and manipulating the world's
largest gold supply; and
- -- controlling world raw materials with oil the key one
at the turn of the century; with these working, it devised an "informal
empire" to loot world wealth and maintain a balance of power on the
- Britain's "genius" was being able to shift
alliances without letting sentiment interfere with its interests. Post-Waterloo,
it operated "on an extremely sophisticated marriage between top (London)
bankers and financiers, government cabinet ministers," key industrialists
and espionage chiefs. By keeping everything secret, it "wielded immense
power over credulous and unsuspecting foreign economies." By the late
19th century, however, things began to change, and a new strategy was needed.
Key to it was oil geopolitics as a vital naval supremacy ingredient.
- The Lines are Drawn: Germany and the Geopolitics of the
- The importance of oil and emergence of continental economies
(especially in Germany) provided the backdrop to WW I. By the late 19th
century, British bankers and political elites were alarmed that German
industrial and technological development began surpassing its own that
was in decline. Included was a modern German merchant and naval fleet and
an ambitious railway project linking Berlin with Baghdad, then part of
the Ottoman empire. At stake was British hegemony, and preserving it led
- Prior to its outbreak, coal was king, German output was
impressive and so was its growth:
- -- its steel production increased 1000% in 20 years,
leaving Britain far behind by 1900;
- -- its state-backed rail infrastructure doubled in track
kilometers from 1870 to 1913;
- -- with the advent of centralized electric power generation
and long-distance transmission, its electrical industry exploded to dominate
half the world's trade by 1913;
- -- impressive research built the country's chemical industry
and made Germany the world leader in analine dye production, pharmaceuticals
and chemical fertilizers;
- -- German agriculture thrived; it made "astonishing"
gains from the introduction of "scientific agriculture chemistry"
and produced an 80% grain harvest increase from 1887 to 1914;
- -- population growth was dramatic - 75% to 67 million
between 1870 and 1914;
- -- Germany's merchant fleet rocketed to second place
in the world behind Britain and at a pace to overtake it;
- -- steel and engineering advances were achieved; and
consider another British concern:
- -- early in the century, British Dreadnought battleship
leadership was surpassed; Germany's super model was superior and that spelled
trouble for UK sea power supremacy; by 1910, "dramatic remedies"
were needed; Germany's economic emergence had to be confronted, its growing
naval strength as well, and for the first time oil was a factor.
- A Global Fight for Control of Petroleum Begins
- By 1882, British Admiral Lord Fisher saw oil's potential
as qualitatively superior to coal. It required one-quarter the tonnage,
one-third the engine weight, and expanded a fleet's "radius of action"
fourfold. It was first used in 1885 after Gottlieb Daimler developed the
internal combustion engine. Another 20 years passed, however, before its
importance was realized, and that created a problem. Britain had no oil
and needed a supply.
- Up to then, its Middle East presence was limited, but
that changed after oil was discovered in Masjed Soleiman, Persia (now Iran)
in 1908. It secured Britain an "extraordinarily significant exclusive
right (to potential) vast untapped petroleum deposits" for the country's
newly formed Anglo-Persian Oil Company (APOC).
- Earlier in 1899, German industrialists and bankers got
Ottoman approval for a Berlin-Baghdad railway. The aim - to establish strong
economic ties to Turkey and develop new markets in the East. Once extended
to Kuwait, it would be the fastest, cheapest rail link to the Indian subcontinent,
and that spelled trouble for Britain. It would challenge UK supremacy and
had to be confronted.
- The project was costly and needed help to complete, so
Germany turned to Britain. London, for its part however, used "every
device known to delay and obstruct progress. The game lasted" until
war began in 1914 and after Britain secured an exclusive oil development
"lease in perpetuity" in what today is Iraq and Kuwait. Yet competition
remained because Germany got the Ottoman emperor to grant its Baghdad Railway
Company full rights to all oil and minerals on a parallel 20 kilometers
of land on either side of the rail line. By 1912, oil's importance was
apparent, and geologists discovered it between Mosul and Baghdad.
- WW I stalled efforts for a German-owned oil company,
independent of Rockefeller interests. At a time, the US produced over 63%
of world supply, Russia's Baku 19% and Mexico 5%. Britain's new APOC was
barely a player when First Lord of the Admiralty Winston Churchill convinced
the government to buy a majority interest in what today is British Petroleum
(BP). "From that point, oil was at the core of British strategic interests,"
and the game was this - secure its own supplies, deny them to key rivals
like Germany, and do it if necessary by war.
- That became London's scheme early in the century when
Britain, France and Russia allied in a Triple Entente against Germany and
the Austro-Hungarian powers. By 1907, it was solidified, effectively encircled
Germany, and it laid the foundation for the coming showdown with Kaiser
Wilhelm II. From then until 1914, preparations were made for the "final
elimination of the German threat." Included was a "series of
continuous crises and regional (Balkans) wars (in) the 'soft underbelly'
of Central Europe." Three months after the alliance, Austria's heir
to the throne was assassinated in Sarajavo, and it "detonated the
- Oil Becomes the Weapon, the Near East the Battleground
- WW I was no different from other wars. Imperial, territorial
and economic rivalries were at its root. It lasted from July 28, 1914 to
November 11, 1918 and at a time Britain was effectively bankrupt, had big
plans along with other combatants, plus a "secret weapon" that
later emerged: the special relationship of "His Majesty's Treasury"
with The House of Morgan.
- The conflict matched the Allied powers of Britain, France,
Russia, Belgium, Serbia, Greece, Romania, Montenegro, Italy, Portugal,
Japan and for its last seven months the US against the Central Powers of
Germany, Austria-Hungary, Bulgaria and Ottoman Turkey. The timeline was
- -- on June 28, Archduke Ferdinand and his wife were assassinated;
- -- on July 28, Austria declared war on Serbia;
- -- on August 1, Germany declared war on Russia;
- -- on August 3, Germany declared war on France and invaded
Belgium on August 4; and
- -- on August 4, Britain declared war on Germany, and
the world was at war. Four years later, its toll was horrific, and four
empires were destroyed - Ottoman Turkey, Austria-Hungary, Germany and Russia.
Later on, so would Britain's, but in 1914 schemes and intrigue drove the
winners to reallocate the spoils, especially where it was thought large
oil deposits lay.
- Well before 1914, Britain's geostrategy was threefold:
- -- create and preserve an unchallengeable global empire;
- -- defeat its main rival Germany; and -- secure and control
the most strategically important resource - oil that was crucial to winning
- At its end, Britain's Foreign Secretary Lord Curzon commented:
"The Allies were carried to victory on a flood of oil." Germany
ran short and lost because it couldn't mount a decisive offensive in 1918.
In 1915, however, Britain gambled and lost. It failed to defeat Turkey
in the Battle of Gallipoli, and the stakes involved were high - to secure
Russia's rich Baku oil fields at a time they supplied almost a fifth of
world production. It was early in the war, Britain ultimately prevailed,
and in no small measure by preemptively occupying Baku in August, 1918
to deny Germany its vital resources.
- Throughout the war, oil's importance was key and the
reason for the Allies' secret 1916 Sykes-Picot agreement. It spelled "betrayal
and Britain's intent to....control....the undeveloped petroleum reserves
of the Arabian Gulf after the war." Britain was devious. While France
and Germany clashed along the Western Front, London moved 1.4 million troops
to the Gulf and eastern Mediterranean on the pretext of bolstering Russia.
After 1918, a million forces remained on what became a "British Lake"
by 1919 with access to the region's oil. Its potential was later learned,
France was cheated out of its share, Saudi Arabia's value was unknown,
and turned out to be a major British blunder that didn't elude America
in the 1930s.
- Partitioning the Ottoman Empire proceeded post-war and
included an "extraordinary new element." Now known as the Balfour
Declaration, it was a classified British policy statement supporting a
Jewish homeland in Palestine at a time Jews comprised 1% of the population.
It came on November 2, 1917, a year of conflict remained, and it was the
basis for the post-1919 British mandate over Palestine that gave London
"strategic possibilities of enormous importance." British elites
and its principal think tank (the Royal Institute for International Affairs
or Chatham House) supported a "Jewish-dominated Palestine, beholden
to England for its survival (and) surrounded by a balkanized group of squabbling
- The scheme was to link England's colonial possessions
from South Africa's gold and diamond mines, north to Egypt and the Suez
canal, through Mesopotamia (Iraq and Kuwait), Persia (Iran) and East into
India and what today is Pakistan and Bangladesh. Controlling this territory
became crucial. It meant dominating the world's most strategically valuable
resources before their vast potential was realized.
- Combined and Conflicting Goals: The United States Rivals
- Britain was the world's major post-WW I power, its territorial
winner, and borrowed Wall Street money secured the victory, but with a
problem. The country was deeply in debt, mired in depression, and the US
now loomed as the world's economic power. In the 1920s, a rivalry ensued
pitting America against Britain's three imperial pillars: control of world
sea lanes, its banking and finance, and its strategic raw materials. At
stake was whether London or Washington would be the world's new capital,
with no assured winner at the time. Later, it was very clear that WW II's
seeds were planted in a place called Versailles and a 1919 treaty in its
- Its terms were outrageous and onerous. They made unimaginable
demands, and therein lay the problem. In May 1921, Germany got an ultimatum
with six days to accept or the industrial Ruhr Valley would be militarily
occupied. Even worse, the country lost its colonial possessions and all
their raw material resources. In the end, all combatants were losers. Their
combined debt overwhelmed world finance and monetary policy from 1919 to
the 1929 Wall Street crash. The entire pyramid was built on punitive war
debts with Morgan and other major New York banks uncompromising on the
terms. They was so burdensome that yearly payments exceeded America's annual
1920s foreign trade. In addition, paying it took precedence over rebuilding
and modernizing war-torn European economies.
- At the same time, oil's importance grew as Britain exploited
the spoils at France and America's expense. In March 1921, Winston Churchill
was UK secretary of state for colonial affairs, the British Colonial Office
Middle East Department was established, and Mesopotamia was renamed Iraq
and became a British colony. Anglo-Persian Oil officials got administrative
control, American companies gained no British Middle East concessions,
and a fierce battle raged over the region's oil throughout the 1920s. Then
it moved to Latin America.
- In the 19th century, US Senator Henry Cabot Lodge stated
"commerce follows the flag" and by it meant economic progress
requires expansion. In 1912, it got Mexico targeted after oil was discovered
in Tampico in 1910. Woodrow Wilson sent in troops to seize control from
Britain and the UK-connected Mexican Eagle Oil Company that had concessions
for half the country's oil at the time. As war in Europe loomed, Britain
backed off, and America secured Tampico's enormous potential.
- Britain, nonetheless, pressed on, and by the early 1920s
controlled "a formidable arsenal of apparently private companies"
that, in fact, let His Majesty's government "dominate and ultimately
control all" major world oil-containing regions. Four companies were
empowered that were also an "integral part of British secret intelligence
- -- Royal Dutch Shell that rivaled Rockefeller's Standard
Oil, even in America through California Oil Fields and Oklahoma-based Roxana
- -- the Anglo-Persian Oil Company that became the Anglo-Iranian
Oil Company and is now British Petroleum;
- -- the little-known d'Arcy Exploitation Company; it was
tied to the Foreign Office and British intelligence, and its agents showed
up wherever there was oil development potential; and
- -- the nominally Canadian company called British Controlled
Oilfields (BCO); it was secretly government- owned as were Shell and the
- In 1912, British companies controlled about 12% of world
oil production. By 1925, it was most of it, America noticed, but in 1922,
London and Washington united against a common threat and called a truce
to their post-Versailles conflict.
- The Anglo-Americans Close Ranks
- In April 1922, Germany and Russia stunned the West by
their bilateral Rapello Treaty. Under it, Russia waived its war reparations
claims in return for Germany's industrial technology. The news shocked
the continent, especially as it emerged from a British-organized Genoa
meeting with other strategic aims in mind.
- While secretly financing an anti-Soviet counterrevolution,
London approached Russia regarding Baku's oil fields, hoping to arrange
lucrative deals for Royal Dutch Shell and other UK oil companies. Rockefeller's
Standard Oil also eyed them, but was disadvantaged by Britain's favored
position and its own unsavory reputation. Yet it proceeded through Harry
Sinclair of Sinclair Petroleum as a perceived independent middleman with
no Rockefeller taint.
- Moscow was interested because Sinclair had ties to President
Harding, and a deal meant US diplomatic recognition and an end to Russia's
international isolation post-1917. Sinclair agreed, Harding approved, but
events then intervened.
- It was scandal in Wyoming in a place called Teapot Dome.
It involved political influence and the awarding of no-bid oil leases to
Sinclair Oil (then called Mammoth Oil) and a whole lot more with illegal
payoffs and no-interest loans as part of the deal. Harding, though not
directly involved, was implicated, a year later he was dead ("under
strange circumstances"), Coolidge became President, dropped the Baku
project, and ended plans to recognize Russia. At the time, it was thought
British intelligence was involved, blocked the bid to give UK oil companies
an edge, but Germany's deal with Russia intervened.
- It was Germany's second option at a time its onerous
debt made dealing with Britain preferable. Efforts failed because London
was hard-line, stuck to its punitive repayment process, and imposed stiff
tariffs to make things worse with Germany already on its knees.
- The looting ruined the country's economy and forced the
Reichsbank to print enormous amounts of money to survive. Inevitable inflation
followed and by 1923 was catastrophic. In January, the mark dropped to
18,000 to the dollar. By July, it was at 353,000, by August 4,620,000,
and by November an astonishing 4,200,000,000,000. It was effectively worthless
in the greatest ever (before or since) inflation that destroyed the country's
savings and made further calamitous events inevitable.
- The misery was compounded when Germany lost its assets.
Britain took its colonies, and also seized was Alsace-Lorraine and Silesia
with its rich mineral and agricultural resources. Gone was 75% of the country's
iron ore, 68% of zinc ore, 26% of coal as well as Alsatian textile industries
and potash mines. In addition, Germany's entire merchant fleet was taken,
a portion of its transport and fishing fleet plus locomotives, railroad
cars and trucks - all justified as war debts that were fixed at an impossible
to pay 132 billion gold marks at 6% annual interest, and with it an ultimatum.
Agree in six days or Allied troops would occupy the Ruhr. Unsurprisingly,
the Reichstag approved.
- It made dealing with Russia essential as Germany sought
practical ways to survive. It proved impossible, France objected to a minor
treaty obligation and occupied the Ruhr anyway. In the meantime, inflation
soared, German industrial activity was erased, Reichsbank and other German
bank assets were seized, and the currency became worthless.
- In 1923, a so-called Dawes Plan (named for US banker
Charles Dawes) was adopted. It was the Anglo-American banking community's
way to reassert fiscal control over Germany, assure reparations were paid,
and continue the state-sponsored looting. It continued until 1929 when
the debt pyramid collapsed, an ensuing banking crisis followed, capital
flowed out of the country, its economy crashed, the world headed into depression,
and radical political elements gained prominence.
- Reichbank president, Hjalmar Schacht, was a key figure.
He resigned his post to organize financial support for the man he and Bank
of England governor Montagu Norman wanted as chancellor. From 1926, Schacht
secretly backed the radical National Socialist German workers party, the
NSDAP Nazis. Britain also favored the "Hitler Project," support
for it went right to the top and included figures like Prime Minister Chamberlain
and the Prince of Wales (later King Edward VIII in 1936 until he abdication
later in the year).
- Throughout the period, Wall Street and Washington were
comfortable with the Nazis, and a key government official met Hitler in
1922. He came away saying he "was deeply impressed by his personality
and thought it likely he would play an important part in German politics."
- By this time, the Anglo-American power struggle was resolved.
So, too, the oil wars with the creation of an "enormously powerful
Anglo-American oil cartel," later called the "Seven Sisters."
British and American companies struck a deal. They ended competition, kept
existing market shares, and secretly set prices with governments of both
countries arranging a Red Line agreement. From then to now, Big Oil ruled
the energy world and devised how to deal with "outsiders."
- Later, the consequences from Baron Kurt von Schroeder's
January 4, 1932 meeting would have to be faced after he, Heinrich von Papen
and Hitler secretly arranged a Nazi takeover. A year later, another meeting
followed preparatory to acting. The Weimar government was weak, the scheme
was to topple it, and it made Hitler Reichschancellor on January 30, 1933.
On August 2, 1934 he seized absolute power as Fuhrer. British interests
backed him, Royal Dutch Shell financed him, and the Bank of England "moved
with indecent haste to reward" him with a vital line of credit. The
rest, as they say, is history, and from it would emerge a new world order.
- Oil and the New World Order of Bretton Woods
- In 1945, the world had changed. Post-WW I, Britain was
preeminent with an empire spanning one-fourth the globe. Thirty years later,
it was disintegrating and "in the throes of the largest upheaval of
perhaps any empire in history" (although it happened most prominently
to Rome, but it took longer). It wasn't from "beneficence" or
a matter of principle. It was unavoidable because the war took its toll.
It shattered Britain's financial power, its industry was decaying, its
housing stock was dilapidated, and its people exhausted. Britain was "utterly
dependent on America," so the baton passed to the only major power
left standing in a ravaged post-war world.
- A "special relationship" between them emerged
post-Versailles. Britain led it then, it hoped post-1945 to continue indirectly,
and a new element was added - the post-war CIA that worked with Britain
in the war as the OSS (Office of Strategic Services). The relationship
continued as the two countries have mutual interests and jointly share
intelligence, except that Britain now is junior in a US-dominated world.
- Post-war, Anglo-American oil interests had enormous power.
It was assured by the 1944 Bretton Woods system that was built around three
dominant pillars - the IMF, World Bank and managed "free trade"
from GATT. Clauses were built into each to ensure Anglo and especially
American dominance over monetary and trade issues. Both countries have
voting control, and the arrangement created a "gold exchange system."
Under it, each member country's currency was pegged to the dollar that,
in turn, was set at a fixed $35 an ounce gold price. It suited Big Oil
fine as America by then had the bulk of world gold reserves.
- They also benefitted from the Marshall Plan as more than
10% of it went for American oil, and five US companies supplied over half
of western Europe's supply at a dear price (that was pennies on the dollar
compared to today). They profited enormously, nonetheless, as oil became
the key commodity fueling world growth that without which would halt.
- Partnered with Big Oil and its trade were Wall Street
and New York international banks. They profited hugely from its capital
inflows, and it ensured their advantage that was built into the Bretton
Woods system. They also had cartel power by having consolidated to hold
disproportionate control over world finance.
- Britain, as well, had its post-war priorities in the
wake of its lost empire. Its leadership regrouped around the power and
profits of oil and other strategic raw materials with US help. It made
Iran a target, Britain humiliated its nationalist elements, occupied the
country, and demanded concessions for its government-linked Royal Dutch
Shell. Finally in December, 1944, nationalist leader Mohammed Mossadegh
introduced a bill to bar foreign country oil negotiations. A bitter fight
ensued, by 1948 foreign troops were withdrawn, but the country remained
under UK control through its Anglo-Iranian Oil Company at a time Iran's
southern region had the world's richest known reserves.
- In late 1947, the Iranian government demanded an increase
in its oil revenue share (meager at the time) and cited Venezuela where
Standard Oil had a 50 - 50 arrangement. London wasn't pleased, talks dragged
on, and the strategy was to stall and delay. In late 1949, Mossadegh headed
a parliamentary commission, a 50 - 50 split was demanded, Britain refused,
and by 1951 Mossadegh was Prime Minister. Around the same time, Iran's
parliament nationalized the Anglo-Iranian Oil Company and paid fair compensation
for it. Britain, nonetheless, was outraged and reacted.
- Full economic sanctions and an oil embargo followed.
In addition, Iranian assets in British banks were frozen, and major Anglo-American
oil companies supported London. Iran's economy was devastated. Its oil
revenues plummeted from $400 million in 1950 to less than $2 million from
July 1951 to August 1953 when Mossadegh was ousted by a CIA-British SIS
coup. Shah Reza Pahlevi returned to power, sanctions were lifted, and America
and Britain regained their client state until 1979 when the same Anglo-American
interests turned on the Shah and deposed him. More on that below.
- An Italian company defied the sanctions at the time -
Azienda Generale Italiana Petroli (AGIP). Its founder and head was Enrico
Mattei, a man to be reckoned with. He sought indigenous energy resources
for Italy that Anglo-American oil interests wouldn't co-opt. It was no
simple task, yet he got a new law passed that established a central semi-autonomous
state energy company called Ente Nazionale Idrocarburi (ENI). AGIP became
- As its leader in 1957, he negotiated an unprecedented
deal with Iran - 75% of profits to the National Iranian Oil Company and
25% to ENI. Washington, London and Big Oil weren't pleased. If unchecked,
this type arrangement would upset their entire world oil order benefitting
them at the expense of host countries. Mattei had to be stopped, and the
US and Britain pressured the Shah to opt out - to no avail.
- Mattei became a major irritant. He challenged Big Oil
with low gasoline prices. He also offered deals with former colonies on
more favorable terms than the majors, including the prospect of local refineries
so supplier countries could be more than just raw material sources.
- Finally, in October 1960 he went too far and enraged
Washington and London. He negotiated a deal with Moscow they opposed. In
1958, he contracted to buy one million annual tons of Soviet crude. He
then signed an exchange agreement for 2.4 million tons for five years but
not to be paid in cash. Instead it would be in large-diameter oil pipe
that Russia badly needed to construct a huge pipeline network bringing
Volga-Urals oil to Czechoslovakia, Poland and Hungary - 15 million tons
annually when completed. The deal helped both sides with Mattei getting
Russian oil at below market price and the Soviets getting a pipe works
plant completed for them in September, 1962.
- A month later, Mattei was dead. His private plane crashed
on takeoff killing him and two others on board. To this day, deliberate
sabotage was suspected, and why not. Mattei was at the peak of his powers,
he'd already signed deals with Iran, Russia, Morocco, Sudan, Tanzania,
Ghana, India and Argentina and upset the established order. He also planned
to meet President Kennedy who, at the time, was pressing Big Oil to reach
accommodation with him. A year later, Kennedy was also dead, and the finger
pointed to "US intelligence, through a complex web of organized crime
- A Sterling Crisis and the Adenauer-De Gaulle Threat
- In 1957, western European countries headed by France,
West Germany and Italy signed the Treaty of Rome. It established the European
Economic Community (EEC) that came into force on January 1, 1959. Germany
was recovering from the war, and Charles De Gaulle regained power in France
with vigorous restructuring plans - to rebuild the country's infrastructure,
expand its devastated industrial and agricultural economy, and restore
- It was already under way in continental Europe, the result
of unprecedented EEC trade-driven growth. De Gaulle and Germany's Konrad
Adenauer led the effort with the French President exerting a strong independent
voice. The two leaders bonded, and the Treaty Between and French Republic
and Federal Republic of Germany was concluded on January 22, 1963. It assured
close cooperation and coordination of economic and industrial policy. Washington
and London were alarmed at the prospect of an independent alliance that
included Italy under Aldo Moro.
- An Anglo-American alliance was hatched to counter it.
It targeted Europe and took the form of pushing the EEC to open to US imports
and be firmly part of a Washington-London-dominated NATO. Britain also
demanded inclusion in the six nation Common Market. De Gaulle strongly
opposed it, but was denied when Atlanticist Ludwig Erhard became Germany's
Chancellor in April 1963. He favored admitting Britain and agreed to support
London's 19th century "balance of power" strategy against continental
Europe. Though formally ratified, the Franco-German accord was lifeless,
and the culmination of Adenauer's work was lost - stolen by the America
and Britain at the last moment.
- Washington supported the EEC but not as an independent
alliance. It might have become that in 1957 at a time recession hit America
and lasted into the 1960s. It led to debate in the US with the New York
Council of Foreign Relations and Rockefeller Brothers Fund drafting options
at a time Henry Kissinger emerged. It was also when Big Oil and New York
banks (the East Coast establishment) were dominant and viewed the world
as their market. They also controlled the media and used it to promote
their interests over what was best for the nation and greater good.
- Rebuilding US infrastructure, investing in modern factories,
improving the national economy and developing a skilled labor force were
ignored. Instead, investment flowed abroad for greater returns. Cheating
on quality also became fashionable, and productive pride lost out to bottom
line priorities to please Wall Street.
- It came with a cost, however, and part of it was the
state's financial health. As dollars flowed abroad, US gold reserves plunged
enough to threaten the Bretton Woods system. The problem was a "fatal
flaw" in its design. Its rules established a "gold exchange standard"
requiring IMF countries to fix the value of their currencies to the US
dollar and indirectly to gold at $35 an ounce.
- By the 1960s, European growth outpaced the US, and domestic
investment sought to take advantage of double the returns it could get
domestically. It was the beginning of the Eurodollar market, and the start
of a decade of "ever worsening international monetary crises."
By the late 1970s, it became a cancer that "threatened to destroy
its entire host - the world monetary system." It also influenced the
Johnson administration to believe that a full-scale southeast Asian conflict
could stimulate a stagnant economy and show the world who was still boss.
- In the 1960s, New York bankers, Big Oil and the defense
establishment advocated war and a homeland garrison state to boost profits,
but consider the strategy. DOD Secretary Robert McNamara and Pentagon planners
obliged. They designed a protracted "no-win war from the outset"
to rev up spending and secure the defense component of the economy. Deficits
resulted, the dollar inflated, and Washington forced its trading partners
to accept war costs in the form of cheapened greenbacks.
- It led to European central banks accumulating large Eurodollars
reserves they then earned interest on from US treasuries. The net effect
was continental bankers funded US deficits the way they do now, along with
China and Japan. Engdahl quoted futurist Herman Kahn saying: "We've
pulled off the biggest ripoff in history (running) rings around the British
empire." Nonetheless, London planned a comeback with "expatriate
American dollars." More on that below.
- Lyndon Johnson waged war on two fronts, and failed at
both. Vietnam cost him his presidency while his War on Poverty and Great
Society barely made a difference but amassed huge European-financed deficits.
At the same time, industrial and scientific investment declined, financial
speculation grew, a service-oriented economy was favored, and America headed
down the same "road to ruin" Britain followed earlier.
- Few understood that Johnson's domestic policy had little
to do with alleviating poverty. It was a corporate scheme to exploit economic
decay, curb wage growth and back a 19th century colonial-style looting.
Inciting "race war" was part of the plan. Engdahl described it
as a domestic Vietnam pitting blacks against whites, unemployed against
employed, and high wage earners against lower paid ones in a "new
Great Society, while Wall Street bankers benefited from slashed union wages
and cuts in infrastructure investment." They, in turn, recycled their
profits into cheap Asian and South American labor markets for still greater
profits. It's the same scheme writ large today.
- By 1967, trouble was evident. The Bretton Woods system
was threatened as US external debt soared and the nation's gold reserves
plummeted to one-third their liability. At the same time, Britain's economy
was "a rotting mess and getting worse." Faith in the pound sterling
was eroding because the UK, like America, neglected its industrial base,
amassed large trade deficits, and was a net currency exporter. Something
had to give, and it was the pound.
- At this time, De Gaulle withdrew from the gold pool,
and "the entire Bretton Woods edifice (shook) at its weakest link,
the pound sterling." The crisis highlighted the core vulnerability
of the international monetary system, the US dollar. Things came to a head
on November 18, 1967. Britain devalued the pound by 14% for the first time
since 1949. It abated the sterling crisis, but the dollar one was just
beginning as international holders of the currency demanded gold in exchange.
- Crisis built in 1968, and Business Week magazine devoted
an astonishing nine articles and feature editorial to it in its March 23
issue headlined "Gold crisis jolts the West" on its front cover.
A publisher's memo also addressed it and quoted Virgil's Aeneid, Book III:
"Oh cursed lust for gold, to what dost thou not drive the hearts of
men!" It affected Charles De Gaulle as well. His independence made
him a target for removal that succeeded. It got him voted out of office
a year later. For Washington and London, however, it was a Pyrrhic victory.
- "A Century of War" will continue in Part II
of this review to complete the story to the present era under George Bush.
- Stephen Lendman can be reached at firstname.lastname@example.org.
Also visit his blog site at sjlendman.blogspot.com.