15. Bank Fraud before 2008 Was Punished
16. Crime and Corruption in 2008 with No Penalties
17. Petrodollar System a Disaster for 3rd World
18. Huge US Military Build-up
19. Energy Wars: Unocal Pipelines through Afghanistan
20. Energy Wars: Pipelines through Syria
21. Energy Wars: Iraq Challenges the Petrodollar System
22. Energy Wars: Petrodollars and Libya
23. The Financial Battle Between the US Empire and Russia and China: Can there be an Alternative to the Dollar as a Reserve Currency?
THE PETRODOLLAR SYSTEM: APPENDIX
A1. Multinational Oil Companies and OPEC Agree to Fix World Oil Prices and Oil
A2. Who Are the Winners in this New System of Petrodollars?
A3. “Australian” Banks Are a Foreign-Owned Monopoly
15. BANK FRAUD BEFORE 2008 WAS PUNISHED
Even in the recent past bankers have been jailed in the US as a result of a series of failures by banks. In the 1980s and 1990s about one third of the 3,234 Savings & Loans Associations in the US failed. Government agencies closed 747 failed institutions nationwide. In 1996, the General Accounting Office estimated the total cost to be $160 billion, including $132.1 billion taken from taxpayers.(41) As a result more than 1,000 bankers were convicted of criminal offenses by the Justice Department.(42)
There were at least two reasons for this high volume of convictions. First, there were numerous criminal referrals from regulators to government prosecutors. Second, there was a much tougher framework of banking laws. William Black, who led the Savings and Loans litigation for the government, explained that these two crucial elements have been missing in the wake of the 2008 crisis. There have been no criminal referrals by regulators to the government prosecutors, and since the Clinton administration, there has been a much deregulation of the banking industry. Black insisted that “deregulation was bound to produce widespread fraud.”(43)
Today two reasons are given for the absence of convictions after the 2008 Global Financial Crisis (GFC). One is the difficulty in identifying one or more persons for decisions taken throughout a firm.(44) According to an article in The Economist:
“Although the bosses may create or perpetuate a culture in which those lower down the ranks feel entitled or expected to abandon morality, there is seldom a chain of e-mails or other direct instructions that actually advocates wrongdoing.”(45)
A second reason, also from The Economist, is that to have a healthy capitalist system, people need to take risks, even the risks of going bankrupt. “In capitalist societies where risk-taking is seen as a necessary part of business, it is not actually illegal to run a bank, or any other company, into the ground.”(46) It is hard to believe that anyone could publicly give this as a reason for the lack of prosecutions. Why? Because the governments in both the US and the UK, bastions of capitalism, put billions of taxpayers money into preventing the giant banks from going bankrupt, and forced other governments to do the same. How is this support for “a healthy capitalist system”?
Not only was there almost certainly illegal activity behind the global financial crisis of 2008, but the idea of preventing bankruptcy breaks the iron law of capitalism, the survival of the fittest. Capitalist competition removes the weak through bankruptcy, leaving only the strong to survive. As explained above in 1.4 and 1.5, we do not really live within a traditional capitalist framework. In a truly capitalist system, there should be no monopoly control of the sort exercised by the major US banks and oil companies. Too big to fail has nothing to do with capitalism. Too big to fail means that the banks control the government and they can force it to save them from the fate faced by 99% of the other capitalist enterprises.
16. CRIME AND CORRUPTION IN 2008 WITH NO PENALTIES
An article in the Guardian explains that in fact there has been a complete lack of will on the part of government prosecutors in the US to investigate the actions of the big banks. In other cases the government can authorize wiretaps, National Security Letters, an aggressive form of subpoena that can get almost any electronic record. There are also special prosecutors and grand juries like the one used to pursue Julian Assange.(47) When we see what tools are available to the US government, it is a barefaced lie to say that there is no trail of evidence that could lead to the conviction of the senior officers of these banks. If you start at the bottom and encourage these small fish to give evidence on those above them, you can get the big fish.
“A reasonable list of prosecutable crimes committed during the bubble, the crisis, and the aftermath period by financial services firms includes: securities fraud, accounting fraud, honest services violations, bribery, perjury and making false statements to US government investigators, Sarbanes-Oxley violations (false accounting), Rico (Racketeer Influenced and Criminal Organisations Act) offences, federal aid disclosure regulations offences and personal conduct offences (drug use, tax evasion etc). There is also evidence from civil lawsuits that senior executives were directly involved in selling securities whose prospectuses allegedly contained lies and omissions.”(48)
Officials who could be charged for 2008 crisis including Ben Bernanke and Henry Paulson.
We might wonder when Wall Street knew about the bubble which took most of us by surprise in 2008. It seems that in 2004 a man named Howie Hubler at Morgan Stanley first started to bet against the worst securities with the approval of his management. The only way to make money betting against a bubble is when it unravels. “We therefore know that many on Wall Street realised there was a huge bubble by late 2006, because that's when they started massively betting on its collapse.”(49) People must realize that Goldman Sachs made billions of dollars by betting against the very same investment products, mortgage-backed bonds that it had been making billions selling only a year before.
“Almost all the prospectuses and sales material on mortgage-backed bonds sold from 2005 until 2007 were a compound of falsehoods. And as the bubble peaked and started to collapse, executives repeatedly lied about their companies' financial condition. In some cases, they also concealed other material information, such as the extent to which executives were selling or hedging their own stock holdings because they knew their firms were about to collapse.”(50)
The hedge funds also took part in the feeding frenzy as the bubble of subprime mortgage-backed bonds began to burst. “Major hedge funds including Magnetar, Tricadia, Harbinger Capital, George Soros, and John Paulson made billions of dollars each by betting against mortgage securities as the bubble ended, and all of them worked closely with Wall Street in order to do so.”(51) There can be little doubt that too big to jail means that the banks and their cousins in the hedge funds control the US government. There is absolutely no reason for the failure to begin prosecutions other than the reluctance of the Federal authorities to do so.
17. PETRODOLLAR SYSTEM A DISASTER FOR 3RD WORLD
The increase in the oil price in the 1970s was a complete disaster for the 3rd world. Prices for the exports fell, money had to be diverted from industrial and agricultural development to pay for oil. Many were forced to take loans which they later defaulted on, opening them up to austerity demands. The recent disaster in Greece is just the first West European country to face bank forced privatization and austerity.
Less-developed countries in the "Free World" suffered in several ways during and after the Energy Crisis in the early 1970s. Under the Petrodollar system, for any country to buy oil, they needed US dollars. There are two ways countries can get requires dollars. One way is for countries to export goods and services for dollars. However the prices they got for the export of their raw materials fell sharply in the global recession of 1974–75, itself caused by the massive increase in the cost of crude oil. This meant that had to divert precious funds from industrial and agricultural development into simply reducing this balance-of-payments deficit.(52)
“If their exports did not cover the cost of imported oil, then the had to get a loan from banks who hold enough dollar denominated assets, like the IMF or other big Western banks. These loans became a disaster for most countries because during the 1980’s the IMF became a policeman for enforcing the investor-focused policies of Washington and Wall Street banks. IMF rules or conditions embodied in the so-called Washington Consensus rules are designed to be a supranational instrument of US economic policies.”(53)
In desperate need for oil these countries took out loans from Western banks, and many defaulted when the US Federal Reserve raised interest rates. The IMF who promoted these loans then went on to prescribe the austerity measures described in detail above.(54)
18. HUGE US MILITARY BUILDUP
Petrodollars allow the US to pour billions of dollars into military equipment and super-computers, construct and maintain more than 700 bases around the world, pay wages of soldiers, mercenaries, spies, intelligence analysts and agents, and bribe officials.
As explained above, the Petrodollar system puts the US in a unique and powerful position no other country can duplicate. The system increases global demand for U.S. dollars. In turn this gives the United States the ability to print or create money, in financial jargon called "expanding its money supply" or "quantitative easing", without risking the usual consequences of inflation or devaluation. It also increases the price of assets denominated in US dollars, such as real estate.
Further it allows the US to spend incredible amounts of money on weapons and military operations around the world. For example, in 2011 the total US military budget was officially stated to be $664 billion, while the Stockholm International Peace Research Institute put the figure at $711 billion. These figures are greater than the Gross Domestic Product of 168 of the 188 countries for which data is collected. The expenditure on the military in the US is about the same as the GDP of Sweden or Saudi Arabia, while it is around half of Australia's GDP of $1,442 billion.
19: ENERGY WARS: UNOCAL PIPELINES THROUGH AFGHANISTAN
There are usually many different reasons why countries go to war, and few of us ever can know the full inside story. This applies to what might be called the Energy Wars, the most prominent being in Afghanistan, Iraq, Libya and Syria. These Energy Wars can be divided into two types. In Afghanistan and Syria the primary motivation for overthrowing the incumbent governments was that certain international oil and gas companies wanted to build pipelines through their territory which the current governments did not agree to. By contrast, the destruction of the governments in Iraq and Libya arise from the fact that they both were planning to challenge the Petrodollar system itself by selling oil a currency other than the US dollar. Let us begin with the Pipeline Wars.
Afghanistan became important after the collapse of the USSR. One of these new independent countries created out of the old USSR was Turkmenistan. This and other countries around the Caspian Sea are all rich in oil and gas. When the USSR existed, oil and gas went through pipelines to other parts of the USSR or exported to Europe. After independence each country could sell its own oil and gas to new markets. However there was a problem for Western companies who wanted to buy gas and oil from Turkmenistan. It is landlocked, and the two obvious land routes go through Iran and Russia. For Western companies to export oil and gas from Turkmenistan they could not use these avenues, and needed to build pipelines through Afghanistan and Pakistan.
From the 1990s on two pipelines through Afghanistan, one for gas and one for oil, were considered. The oil pipe would go from Turkmenistan to the port of Gwadar in Pakistan. The gas pipe would go to Multan in the middle of Pakistan, with an extension is planned Mumbai, India. In the map below, the yellow-red dotted line marks the location of the oil pipeline, and the grey-red dotted line marks the gas pipeline. The blue-yellow dotted line is the Iran-Pakistan-India (IPI) pipeline which the US has worked hard to stop. Apart from trying to stop Iran exporting oil and gas to anyone, this particular pipeline is the nightmare of US oil and gas companies and the US petrodollar system. Why? Because the country just to the east of India is China. Thus the IPI pipeline could be extended to provide an overland route for Iran to export oil and gas to China. Does this explain why the US has done all it can with CIA agents and drones to destabilize Pakistan? Can you think of anything else?? Further, if such a pipeline existed, nothing could stop China paying for its energy in some currency other than US dollars, a serious threat to the Petrodollar system.
There were two companies working to get the contract from Turkmenistan, the seller, and Pakistan, the buyer: BRIDAS from Argentina and UNOCAL from the US. (In 2005, UNOCAL merged its entire petroleum business with Chevron Corporation.) In 1995, both groups claimed to have signed deals with the seller and the buyer, but Afghan authorities had not signed with anyone. In December 1998 UNOCAL withdrew from the pipeline consortium. In January, 1999, Turkmenistan's foreign minister visited Pakistan, saying the pipeline project was still alive. In February 2001, BRIDAS had talks with leaders in Turkmenistan, Pakistan and Russia. In March, Turkmenistan's Foreign Minister met with Taliban leader Mullah Omar in Kandahar to discuss the pipeline. Apparently the president of BRIDAS spent eight months visiting tribes along the pipeline route and reportedly had secured their cooperation for the venture.(55) In April 2001, Pakistan, Turkmenistan, and the Taliban signed an agreement to revive the pipeline project. In May, a Taliban delegation signed an agreement with Turkmenistan to buy gas and electricity.
On 7 October 2001 the US and the UK began their invasion of Afghanistan, called Operation Enduring Freedom. After the US conquest of the capital of Afghanistan, UNOCAL's advisor Hamid Karzai was appointed Chairman of the interim administration of Afghanistan. On June 16, 2002, even before there was an elected president, Karzai would sign an official agreement with Turkmenistan and Pakistan for a gas pipeline through Afghanistan.(56) As explained by Bruce Gagnon: “The whole reason the U.S. is in Afghanistan and Pakistan today is to deny those pipelines from being routed through Russia, China, or Iran.”(57)
20. ENERGY WARS: EXXON-MOBIL PIPELINE THROUGH SYRIA
While Syria has significant reserves of oil, the main interest behind the proxy war fought by the US, the UK, Saudi Arabia, Qatar and Turkey against Syria is a pipeline you have probably never heard of. In 2009 the Assad government was asked to sign a proposed agreement with Qatar that would run the Arab Gas Pipeline from its North gas field through Saudi Arabia, Jordan, Syria and on to Turkey, with a view to supply European markets. The clear intention was to transport gas to the EU as competition with and/or replacement for gas from Russia and Iran. The Assad government refused. According to former French foreign minister Roland Dumas, Britain started to plan covert action in Syria that same year.
Qatar’s Proposed Arab Gas Pipeline
To make matters worse, the Assad government signed two deals with Iraq and Iran for oil and gas pipelines through Syria:
"In late 2010, his government signed a memorandum of understanding with Iraq for the construction of two oil and one gas pipeline to carry gas and oil from Iraq’s Akkas and Kirkuk fields, respectively, to the Syrian port of Banias on the Mediterranean Sea. In July 2011 Iranian officials announced a $10 billion gas pipeline deal between Syria, Iraq and Iran that would transport gas from Iran’s South Pars gas field, the world’s biggest, through Iraq to Syria."(58a)
The Iran-Iraq-Syria gas pipeline plan was a “direct slap in the face” to Qatar, the Saudis and Turkey. The following map shows the whole length of the Qatar-Turkey gas pipeline (purple) that Syria rejected, as well as the Iran-Iraq-Syria gas pipeline (red and named Islamic Pipeline on map) which is Syria's alternative "slap in the face" to Qatar.(58b)
There are other reasons why some countries want to remove the current government in Syria. According to the International Business Times:
"Syria controls one of the largest conventional hydrocarbon resources in the eastern Mediterranean.
"Syria possessed 2.5 billion barrels of crude oil as of January 2013, which makes it the largest proved reserve of crude oil in the eastern Mediterranean according to the Oil & Gas Journal estimate.
"Syria also has oil shale resources with estimated reserves that range as high as 50 billion tons, according to a Syrian government source in 2010."(59)
Syria’s energy reserves have been known for some time, but it is the preference for an Iranian gas pipeline over the one from Qatar, which is in effect owned by Exxon-Mobil, which tipped the balance against the Assad government.(60) It also explains why Qatar, the Saudis and Turkey, with US support, are the ones involved in the proxy war against Syria. They are the countries who would benefit most from the Arab Gas Pipeline. The central question is: Which company will be able to ship gas to Europe through Syria: Exxon-Mobil or the National Iranian Gas Company?
In the same way the Taliban was overthrown in Afghanistan after they signed a contract with BRIDAS from Argentina instead of UNOCAL for a gas pipeline through their territory, Syria’s Assad is being attacked by the West and Western backed states like Qatar and Saudi Arabia because the Assad government has its own plans for pipelines through its territory. This is why the US Empire wants to break the power of states like Syria and Iraq, so their oil and gas companies can do what they want, as in the old days when these countries were League of Nations "mandates" after World War I.
21. ENERGY WARS: IRAQ CHALLENGES THE PETRODOLLAR SYSTEM
It is easy to see that by nationalizing Iraq's oil industry and becoming friends with the USSR, the US would not be happy with the regime of Saddam Hussein. But in 2003 the USSR did not exist any more, and the oil industry had been nationalized 30 years earlier. So what happened? Several writers, including F. William Engdahl, author of The Century of War: Anglo-American Oil Politics and the New World Order and William R. Clark, author of Petrodollar Warfare, explain the US attack as necessary to protect the Petrodollar system itself. Clark and Engdahl believe the U.S.-led invasion was inspired predominantly by Iraq’s public defiance of the petrodollar system. In 2000, Saddam hit the main pillar of US hegemony, the dollar. He started to sell his oil in euros, instead of dollars.(61)
Since the world is not formally under the judicial sovereignty of the US, it must use either political or military power to force other countries to accept the US dollar as the only legitimate way to buy or sell oil.
According to Clark:
“On September 24, 2000, Saddam Hussein allegedly emerged from a meeting of his government and proclaimed that Iraq would soon transition its oil export transactions to the euro currency. Not long after this meeting, Saddam Hussein began preparing to make the switch from pricing his country’s oil exports in greenbacks to euros. As renegade and newsworthy this action was on the part of Iraq, it was sparsely reported in the corporate-controlled media. (...)
“By 2002, Saddam had fully converted to a petroeuro – in essence, dumping the dollar. On March 19, 2003, George W. Bush announced the commencement of a full scale invasion of Iraq."(62)
What looks like proof of this account can be found in an article by Carol Hoyas and Kevin Morrison from the London-based Financial Times. On the 5th of June, 2003, they wrote a piece entitled: "Iraq returns to international oil market". Here’s an excerpt of the story:
“Iraq on Thursday stepped back into the international oil market for the first time since the war, offering 10m barrels of oil from its storage tanks for sale to the highest bidder. For some international companies, it will be the first time in more than a year that they will do business directly with Iraq… The tender, for which bids are due by June 10, switches the transaction back to dollars – the international currency of oil sales – despite the greenback’s recent fall in value. Saddam Hussein in 2000 insisted Iraq’s oil be sold for euros, a political move, but one that improved Iraq’s recent earnings thanks to the rise in the value of the euro against the dollar.”(63a)
The reason this account of the invasion of Iraq is not more widely know is that until now few people have understood the importance to the US of the Petrodollar system itself. There were clearly a number of positive results for the US which have come from the invasion, but this is by far the most important.
One of the less well known results of Iraq invasion. Some might think taking Iraq's gold is no different from piracy.(63b)
22. ENERGY WARS: LIBYA CHALLENGES THE PETRODOLLAR SYSTEM
Like Saddam Hussein, Muammar Gaddafi had a plan to quit selling Libyan oil in U.S. dollars. He was going to insist that payment be made in a newly created gold-backed “dinar” which would be an African-wide currency to compete with the US “fiat” currency, the dollar. Libya had massive amounts of gold, estimated at 145 tons, and was pushing other African and Middle Eastern governments to follow suit. Gerald Pereira, an executive board member of the former Tripoli-based World Mathaba explained that “Gaddafi's creation of the African Investment Bank in Sirte (Libya) and the African Monetary Fund to be based in Cameroon will supplant the IMF and undermine Western economic hegemony in Africa.”(64)
John Perkins, author of Confessions of an Economic Hit Man explains the seriousness of Gaddafi's plan:
“The US, the other G-8 countries, the World Bank, International Monetary Fund, Bank for International Settlements, and multinational corporations do not look kindly on leaders who threaten their dominance over world currency markets.”(65a)
French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. The “Insiders” were apparently panicking over Gaddafi’s plan. Here is a passage from an article by Alex Newman entitled "Gaddafi’s Gold-money Plan Would Have Devastated Dollar" which appeared on the 11th of November 2011 in "The New American":
“’Any move such as that would certainly not be welcomed by the power elite today, who are responsible for controlling the world's central banks,' noted financial analyst Anthony Wile, editor of the free market-oriented Daily Bell, in an interview with RT. 'So yes, that would certainly be something that would cause his immediate dismissal and the need for other reasons to be brought forward [for] removing him from power.’”(65b)
According to Wile, Gaddafi’s plan would have strengthened the whole continent of Africa in the eyes of economists backing sound money — not to mention investors. But it would have been especially devastating for the U.S. economy, the American dollar, and particularly the elite in charge of the system. “The central banking Ponzi scheme requires an ever-increasing base of demand and the immediate silencing of those who would threaten its existence,” Wile noted in a piece entitled “Gaddafi Planned Gold Dinar, Now Under Attack” earlier this year. “Perhaps that is what the hurry [was] in removing Gaddafi in particular and those who might have been sympathetic to his monetary idea.”(66a)
So, just like Saddam Hussein, the neo-colonial barbarity of the NATO backed "revolution" was a simple consequence of Gaddafi's decision to attempt to replace the fiat currency of the US dollar with a gold backed currency that would have made Africa a "golden opportunity" for investors outside the US dominated central banking system. And what happened to Libya's 145 tons of gold? For a country which rejected the gold standard decades ago, why does the US still want to get its hands on all the gold it can?
23. THE FINANCIAL BATTLE BETWEEN THE US EMPIRE AND RUSSIA AND CHINA: CAN THERE BE AN ALTERNATIVE TO THE DOLLAR AS A RESERVE CURRENCY?
We have seen that now the West has a form of capitalism in which major sectors of the economy are monopolies without real competition. Russia and China are now generally recognized as having changed from socialism to capitalism, and they also have a fair share of monopolies as well. There seems little difference between them. So why is there a conflict between the US Empire and these other capitalist countries?
One must realize that this question is naïve in the extreme. Two hundred years of European history as taught us that capitalist countries always fight each other for territory, markets, resources etc. Just because two countries are both capitalist is no reason to think they are inclined to live in harmony with each other. In fact the reason there have been no major wars between the old capitalist rivals like the US, the UK, Germany, France, Japan and Italy is that they are now all under the control of the US. Since Russia and China are now capitalist countries, history tells us that there will be strong tendencies for there to be a military confrontation between them and the US Empire.
What Hudson and other analysts make clear is that there is a new, financial area of conflict in addition to the usual military stand-off between the US Empire and Russia and China. This takes the form of a plan by China, Russia and the other BRICS countries, India, Brazil and South Africa, to develop an alternative to the US dollar as a means to carry out international trade. This strategy is a clever challenge to the financial control exerted by the US.
Rather than take on the US in open military confrontation, which would almost certainly lead to an all-out nuclear war, China and Russia have decided to fight the US by attacking its chief financial weapon, the US dollar as the only reserve currency. It would seem they are planning to undermine the US without the need to engage in large scale military confrontation. This is of course a dangerous strategy, as Saddam Hussein and Muammar Gaddafi discovered. However Russia and China cannot be overthrown militarily in the same way without serious if not catastrophic results for the US itself. So the US overthrew the government of the Ukraine to challenge Russia at its borders, and funds Islamic militants to create conflict inside Russia itself. It tries to pull countries like Burma and Thailand away from China and supports Islamic militants in China as well.
Given the terrible consequences caused by the Petrodollar system for the rest of the world, the end of this suffocating debt and the self-serving policies dished out by the US banks can only be a good thing for the rest of the world, including the majority of the people in the US itself. Some might say that there is no right or wrong side here. What makes Russia and China "better" than the US Empire?
There are two answers to this question. First, neither Russia nor China have a capacity to project their military power far beyond their borders, even if they wanted to. The US has 10 nuclear powered super carriers and over 700 military bases around the world. Russia and China have virtually no foreign bases and only one aircraft carrier each. There is only one superpower in the world, the US. Russia and China can do a good job of defending themselves from US attack, but they can pose no military threat to the rest of the world now or in the near future.
Second, as explained in section 10 on Privatization, the "development policy" of the IMF and the World Bank is to force 3rd world countries to privatize any infrastructure they want, for water, electricity, telecommunications, health care, etc. This is not how the West developed its infrastructure. But the Western banks now insist that these underdeveloped countries "develop" only in the way which primarily benefits Western investors. As Hudson explains, "the U.S. promotion of neoliberalism and austerity is a major reason propelling China, Russia and other nations out of the U.S. diplomatic and banking orbit."(67b) Since neither Russia nor China have anything like the military or diplomatic power of the US, they are not in a position to dictate policies to other countries. Without the US superpower, the world would become "multi-polar", with a number of regionally powerful countries like Russia, Germany, China, Japan, Indonesia, India, South Africa, and Brazil. Under such a system, all countries would be better off than they are now. And, like it or not, the US Empire cannot last forever. There Is No Alternative, as Margaret Thatcher said. When the US Empire disappears, we are just going to have to make the best of it we can.
THE PETRODOLLAR SYSTEM: APPENDIX
A1. Multinational Oil Companies and OPEC Agree to Fix World Oil Prices and Oil
A2. Who Are the Winners in this New System of Petrodollars?
A3. “Australian” Banks Are a Foreign-Owned Monopoly
A1. MULTINATIONAL OIL COMPANIES AND OPEC AGREE TO FIX WORLD OIL PRICES AND OIL PRICES INCREASED BY 400% AND A WORLD MONOPOLY IS CREATED
About the same time the dollar changed to a fiat currency there were three agreements in 1971 and 1972 between the OPEC countries and the major Western oil companies which eventually resulted a 400% increase in the price for crude oil by 1975. This dramatic change is now known as the Energy Crisis. At the time this sudden price increase was blamed on the OPEC countries themselves, but authors such as Michael Tanzer suggest that the oil companies were not displeased. Their profits went up and the blame could be put on the countries in OPEC.(67) Further Tanzer reveals that in 1971 the US Justice Department removed the long-standing US antitrust rules for the major oil companies so they could negotiate together against the OPEC countries.(68) Thus the agreements of 1971-1972, which now form the basis of the power of the US Empire, were actually organized by the two principle beneficiaries, the oil majors and the US government.
The effect of this ruling by the US was to officially sanction the oil companies forming a monopoly when dealing with OPEC. There had been laws against monopolies, cartels or "trusts" in the US since the early 1900s, but from this point on the laws were not to be applied to the oil companies. It also meant the oil companies could work as a monopoly when dealing with consumers of oil. In effect this continued the agreement negotiated in Achnacarry, Scotland in 1928 between Standard Oil of New Jersey, Royal Dutch Shell and British Petroleum to fix market shares to the level they were in 1928. It eliminated price competition because the majors set the price for the whole world on a higher cost area such as the Texas Gulf.(69) Thus oil from low cost areas like Saudi Arabia would be sold at an inflated price fixed by all companies. At the moment Brent crude from the North Sea is the benchmark for two thirds of the worlds internationally traded crude oil supplies. North Sea oil and other high cost sources can compete with oil from cheaper sources because Brent crude is the benchmark.
A2. WHO ARE THE WINNERS IN THIS NEW SYSTEM OF PETRODOLLARS?
The obvious winners in this new system are the major oil companies, the major US banks, and the US government .
"One consequence of the directed recycling of these petrodollars into London and New York was the emergence of American banks as the giants of world banking, paralleling the emergence of their clients, the Seven Sisters oil multinationals, as the giants of world industry. The Anglo-American oil and banking combination so overwhelmed the scale of ordinary enterprise that their power and influence seemed invincible."(70)
It is important to name the winners as they are quite well-known. The Seven Sisters referred to by Engdahl is the name given to the oil giants in the 60's.
The seven major oil companies in the world today are:
Chevron (Standard Oil of California+Texaco+Gulf) (US)
Royal Dutch Shell (British/Dutch - from Royal Dutch+Shell)
Esso/Exxon (Standard Oil of New Jersey+Mobil+Standard Oil Company of New York)
Saudi Aramco (Saudi Arabia)
Total SA (France)
The major US banks are:
Bank of America
The top four UK banks are:
Lloyds Banking Group
Royal Bank of Scotland Group
A.3 “AUSTRALIAN” BANKS ARE A FOREIGN-OWNED MONOPOLY
The major US and UK banks might be seen as "foreign" banks, but this hides the real story of banking in Australia. The big four Australian banks are ANZ, Commonwealth, NAB and Westpac. However, the same four "foreign" banks turn out to be the top four shareholders in each of the four Australian banks: HSBC, JP Morgan, National Nominees, and Citicorp. Furthermore, HSBC, JP Morgan, National Nominees and Citicorp all frequently show up together among the top 5 or top 10 shareholders in many Australian publicly-traded companies. It would be naive to think that these "foreign" banks which are the largest in the world have no influence over the "Australian" companies they have invested in. For example, the top 20 registered shareholders hold 52.42% of Westpac’s ordinary shares—and that’s a controlling stake.(71)
And do these banks compete with each other? According to a 2012 report by the International Monetary Fund, the big four control 88% of residential mortgages and 80% of deposits. How can anyone deny these banks work as an internationally controlled monopoly which has never been challenged by any government? Can anyone imagine that the people who run these banks in New York or London are worried about a challenge from the Australian Competition and Consumer Commission?
William R. Clark, (2005) Petrodollar Warfare: Oil, Iraq and the Future of the Dollar, New Society Publishers (http://www.petrodollarwarfare.com/)
Jerome R. Corsi. "Putin: 'The petrodollar must die'. On mission to reduce global role of U.S. currency", Whistleblower/WND Weekly, Aug 15, 2014 (http://www.wnd.com/2014/08/putin-the-petrodollar-must-die/)
Tyler Durden. “Why It Really All Comes Down To The Death Of The Petrodollar (http://www.zerohedge.com/news/2015-08-22/why-it-really-all-comes-down-death-petrodollar)
F.W. Engdahl, (2004) A Century of War: Anglo-American Oil Politics and the New World Order, London: Pluto
Mahdi Darius Nazemroaya. (2012-01-31) “Currency Warfare: What are the Real Targets of the E.U. Oil Embargo against Iran?” (https://wikispooks.com/wiki/Document:What_are_the_Real_Targets_of_the_E.U._Oil_Embargo_against_Iran%3F)
Jonathan Nitzan and Shimshon Bichler, (2009) Capital as Power. A Study of Order and Creorder. RIPE Series in Global Political Economy. London and New York. Routledge.
Guido Giacomo Preparata. “Of money, heresy, and surrender - Part I: The ways of our system, an outline, from Bretton Woods to the financial slump of 2008” (https://wikispooks.com/w/images/8/89/Of_Money_Part_1.pdf)
Jerry Robinson. "Preparing for the Collapse of the Petrodollar System"
Peter Dale Scott. (2011) “The Libyan War, American Power and the Decline of the Petrodollar System” (Document:The_Libyan_War,_American_Power_and_the_Decline_of_the_Petrodollar_System)
David E. Spiro(1999), The hidden hand of American hegemony : petrodollar recycling and international markets. Ithaca, NY : Cornell University Press.
52. Engdahl, F.W., A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto, 2004, ISBN 0-7453-2309-X, p.162ff.
61. http://www.raisethehammer.org/ index.asp?id=252 , see: Dollar Hegemony.
68. Michael Tanzer, The Energy Crisis, New York, Monthly Review Press, 1974, p. 125.
69. Ibid, p. 123.70. Ibid, p. 26
70. Engdahl, F.W., A Century of War: Anglo-American Oil Politics and the New World Order. London: Pluto, 2004, ISBN 0-7453-2309-X, p.162ff.