[OPE-L:6042] petrodollarism, not oilism: reply to Fred

[Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>]

> Date: Thu, 4 Oct 2001 16:14:20 -0400 (EDT)
> From: "Fred B. Moseley" <fmoseley@xxxxxxxxxxxxx>
> Hi Rakesh (finally a chance to reply briefly),
>
> I don't understand why US troops are necessary to ensure that
> petrodollars flow into US banks and securities, rather than
> elsewhere.  Would you please explain this point further?

The absolute and differential rent in the form of petrodollars is enormous in
the Gulf; that's why US troops are stationed there. Even though the Gulf states
are rentier states--that is, they tend not to collect taxes but disburse
revenue--they have small populations which frees up those petrodollars for
recycling.  The price the US exacts for protecting the unpopular families that
were given countries is the channeling of petrodllars in a way that suits US
interests, e.g., purchase of US arms, support of US stock market, pricing of
oil in dollars.

But I agree with you that this is not only about petro-dollars. America's gulf
allies have historically broken with higher cost OPEC members to flood the
market with oil when the US stock market has needed relief. The Gulf and the
Saudi swing state in particular are an important lever to control


>
> US troops were sent to the Middle East in the Gulf War and never left
> completely.  The Gulf War was about OIL - specifically the oil in Kuwait
> that Iraq tried to grab.  The troops were sent to protect Kuwaiti oil from
> Iraq, not to guarantee the recycling of petrodollars.  That recycling had
> been worked out long ago by US State and Treasury officials, as Spiro
> describes, without the use of troops.

But as Eqbal Ahmad pointed out: since Saddam has been decimated, no external
threat justifies the present occupation of Saudi Arabia. What that occupation
ensures is the robbery of the Arab people by the House of Saud on the behalf of
American capitalism. This happens at four levels

(1)  the  US interest is not in securing the supply of oil  but rather in
ensuring  that US companies are given the concessions on very good terms; that
is, the american companies don't have to compete with european and independent
oil firms. This doesn't ensure the flow of oil per se but rather the flow of
oil on good terms to american companies which then reap super profits. This
constitutes the first level of robbery.

The second level of robbery is how the  petrodollars are expended and recycled-
-today's WSJ makes reference to this.

The third level of robbery is keeping oil priced in dollars (how this is
robbery I will try to explain later).

Fourth level of robbery is making output decisions at
times of depressed demand and falling profitability that benefit American
capitalism while ruining the more high cost OPEC producers just so the royal
family doesn't suffer any losses on Wall Street.

Now let's go back to Iraq's invasion of Kuwait.


It's not that Iraq would have stopped exporting that oil from Kuwait, which was
carved out from Iraq in the early 60s, right. It's that the US would have lost
priviliged access for its big oil companies and control of the differential
rent collected by the Kuwaiti state, and lastly it would have a lost a loyal
OPEC member that protected American and Western capitalist interests at the
expense of the populous OPEC countries. That is, it is true that if Saddam had
retained control, the Western world would have lost an important tool in
massively turning the terms of trade against raw materials exporters in times
of depressed demand and profitability crisis.

After all, do remember that even Saudi Arabia had warned Kuwait with its small
population not to violate its quota, but Kuwait had kept on pumping out oil in
excess of its allotment. This had brought Iraq with its large and beleaguered
population to the brink of financial ruin, especially given the debt situation
it had incurred in the war with Iran on behalf of all the Arab dictatorships.

Without US allies in the region, the US and the Western world may not get the
oil as cheap as otherwise; or more likely the energy companies would not make
the same superprofits. But the flow of oil would continue, so I think it is
highly misleading to say that the US is just there to ensure the flow of oil.


>
> I am not arguing that the recycling of petrodollars is not important to US
> hegemony.  I am just arguing that it does not require US troops, which is
> the source of so much conflict in the Middle East.

Well, Spiro does show that the US govt was not confident that the petrodollars
would be recycled in its interest and that it took state action to ensure that
the recycling happened outside of the market and international financial
institutions.


>
> Also, I am not justifying US military presence in the Middle East.  I am
> just saying why the troops were sent there and why they remain.

And I think your explanation is not right.

 Instead,
> I would raise a more fundamental question: how can we reduce our
> dependence on Mideast oil, so that the need for a US military presence
> would be reduced?

well do note that US since 98 has imported from Venezuela, I believe, than
Saudi Arabia.

>Such a reduction of dependence on Mideast oil would
> seem to require both a change of our life-styles and also a change in our
> economic system.  But these fundamental changes may be what is necessary
> to avoid continual wars and terrorism and destruction (and also to avoid
> environmental degradation).

Our economic system due to its tendency towards a falling profit rate requires
the industrial countries to set up a division of labor that suits themselves at
the expense of the raw material exporters and gives rise to rivalrous
imperialist attempts to secure sources of extra surplus that can then be
injected into their crisis ridden systems--grossmann was quite right about
this.  The problem is not physical dependence on oil; the problem is the
maximum search for surplus value that will give rise to continual wars and
terrorism and destruction until capitalism is overthrow. As Paul Mattick Sr
even conceded, Lenin's economics was better and closer to Marx's than the rest
of the second international thinkers.

>
> A good new book on the oil basis of the US military presence in the
> Middle East is *Resource Wars* by Michael Klare.
thanks for the site

 (By the way, Rakesh,
> Klare teaches at Hampshire College, where Egbal Ahmed used to teach.  You
> are certainly right that we miss him dearly, especially now).

Klare is a most important American resource; I regret not already having read
his book
only met eqbal once, had him invited to speak at UC Berkeley during the Gulf
war. If we ever meet in person again, I'll tell you the stories of the
harrassment to which I and Prof Peter Sahlins (Marshall's son) were subject--we
had organized the protests. It really freaked me out for years.

Comradely, Rakesh