Introduction: After posting
Michael Hudson’s article “America Escalates its
“Democratic” Oil War in the Near East” on the blog, I decided to ask
Michael to reply to a few follow-up questions. Michael very kindly agreed.
Please see our exchange below.
The Saker: Trump has been accused of
not thinking forward, of not having a long-term strategy regarding the
consequences of assassinating General Soleimani. Does the United States in fact
have a strategy in the Near East, or is it only ad hoc?
Michael Hudson: Of course American
strategists will deny that the recent actions do not reflect a deliberate
strategy, because their long-term strategy is so aggressive and exploitative
that it would even strike the American public as being immoral and offensive if
they came right out and said it.
President Trump is just the
taxicab driver, taking the passengers he has accepted – Pompeo, Bolton and the
Iran-derangement syndrome neocons – wherever they tell him they want to be
driven. They want to pull a heist, and he’s being used as the getaway driver
(fully accepting his role). Their plan is to hold onto the main source of their
international revenue: Saudi Arabia and the surrounding Near Eastern oil-export
surpluses and money. They see the US losing its ability to exploit Russia and
China, and look to keep Europe under its control by monopolizing key sectors so
that it has the power to use sanctions to squeeze countries that resist turning
over control of their economies and natural rentier monopolies to US buyers. In
short, US strategists would like to do to Europe and the Near East just what
they did to Russia under Yeltsin: turn over public infrastructure, natural
resources and the banking system to U.S. owners, relying on US dollar credit to
fund their domestic government spending and private investment.
This is basically a resource
grab. Soleimani was in the same position as Chile’s Allende, Libya’s Qaddafi,
Iraq’s Saddam. The motto is that of Stalin: “No person, no problem.”
The Saker: Your answer raises a
question about Israel: In your recent article you only mention Israel twice,
and these are only passing comments. Furthermore, you also clearly say the US
Oil lobby as much more crucial than the Israel Lobby, so here is my follow-up
question to you: On what basis have you come to this conclusion and how
powerful do you believe the Israel Lobby to be compared to, say, the Oil lobby
or the US Military-Industrial Complex? To what degree do their interests
coincide and to what degree to they differ?
Michael Hudson: I wrote my article to explain
the most basic concerns of U.S. international diplomacy: the balance of
payments (dollarizing the global economy, basing foreign central bank savings
on loans to the U.S. Treasury to finance the military spending mainly
responsible for the international and domestic budget deficit), oil (and the
enormous revenue produced by the international oil trade), and recruitment of
foreign fighters (given the impossibility of drafting domestic U.S. soldiers in
sufficient numbers). From the time these concerns became critical to today,
Israel was viewed as a U.S. military base and supporter, but the U.S. policy
was formulated independently of Israel.
I remember one day in 1973 or
’74 I was traveling with my Hudson Institute colleague Uzi Arad (later a head
of Mossad and advisor to Netanyahu) to Asia, stopping off in San Francisco. At
a quasi-party, a U.S. general came up to Uzi and clapped him on the shoulder
and said, “You’re our landed aircraft carrier in the Near East,” and expressed
his friendship.
Uzi was rather embarrassed. But
that’s how the U.S. military thought of Israel back then. By that time the
three planks of U.S. foreign policy strategy that I outlined were already
firmly in place.
Of course Netanyahu has
applauded U.S. moves to break up Syria, and Trump’s assassination choice. But
the move is a U.S. move, and it’s the U.S. that is acting on behalf of the
dollar standard, oil power and mobilizing Saudi Arabia’s Wahabi army.
Israel fits into the
U.S.-structured global diplomacy much like Turkey does. They and other
countries act opportunistically within the context set by U.S. diplomacy to
pursue their own policies. Obviously Israel wants to secure the Golan Heights;
hence its opposition to Syria, and also its fight with Lebanon; hence, its
opposition to Iran as the backer of Assad and Hezbollah. This dovetails with US
policy.
But when it comes to the global
and U.S. domestic response, it’s the United States that is the determining
active force. And its concern rests above all with protecting its cash cow of
Saudi Arabia, as well as working with the Saudi jihadis to destabilize
governments whose foreign policy is independent of U.S. direction – from Syria
to Russia (Wahabis in Chechnya) to China (Wahabis in the western Uighur
region). The Saudis provide the underpinning for U.S. dollarization (by
recycling their oil revenues into U.S. financial investments and arms
purchases), and also by providing and organizing the ISIS terrorists and
coordinating their destruction with U.S. objectives. Both the Oil lobby and the
Military-Industrial Complex obtain huge economic benefits from the Saudis.
Therefore, to focus one-sidedly
on Israel is a distraction away from what the US-centered international order
really is all about.
The Saker: In your recent article you
wrote: “The
assassination was intended to escalate America’s presence in Iraq to keep
control the region’s oil reserves.” Others believe that the goal was precisely the opposite, to get
a pretext to remove the US forces from both Iraq and Syria. What are your
grounds to believe that your hypothesis is the most likely one?
Michael Hudson: Why would killing Soleimani
help remove the U.S. presence? He was
the leader of the fight against ISIS, especially in Syria. US policy was to
continue using ISIS to permanently destabilize Syria and Iraq so as to prevent
a Shi’ite crescent reaching from Iran to Lebanon – which incidentally would
serve as part of China’s Belt and Road initiative. So it killed Soleimani to
prevent the peace negotiation. He was killed because he had been invited by
Iraq’s government to help mediate a rapprochement between Iran and Saudi
Arabia. That was what the United States feared most of all, because it
effectively would prevent its control of the region and Trump’s drive to seize
Iraqi and Syrian oil.
So using the usual Orwellian
doublethink, Soleimani was accused of being a terrorist, and assassinated under
the U.S. 2002 military Authorization Bill giving the President to move without
Congressional approval against Al Qaeda. Trump used it to protect Al Qaeda’s terrorist ISIS
offshoots.
Given my three planks of U.S.
diplomacy described above, the United States must remain in the Near East to
hold onto Saudi Arabia and try to make Iraq and Syria client states equally
subservient to U.S. balance-of-payments and oil policy.
Certainly the Saudis must
realize that as the buttress of U.S. aggression and terrorism in the Near East,
their country (and oil reserves) are the most obvious target to speed the
parting guest. I suspect that this is why they are seeking a rapprochement with
Iran. And I think it is destined to come about, at least to provide breathing
room and remove the threat. The Iranian missiles to Iraq were a demonstration
of how easy it would be to aim them at Saudi oil fields. What then would be Aramco’s stock
market valuation?
The Saker: In your article you
wrote: “The
major deficit in the U.S. balance of payments has long been military spending
abroad. The entire payments deficit, beginning with the Korean War in 1950-51
and extending through the Vietnam War of the 1960s, was responsible for forcing
the dollar off gold in 1971. The problem facing America’s military strategists
was how to continue supporting the 800 U.S. military bases around the world and
allied troop support without losing America’s financial leverage.” I want to ask a basic, really
primitive question in this regard: how cares about the balance of payments as
long as 1) the US continues to print money 2) most of the world will still want
dollars. Does that not give the US an essentially “infinite” budget? What is
the flaw in this logic?
Michael Hudson: The U.S. Treasury can create
dollars to spend at home, and the Fed can increase the banking system’s ability
to create dollar credit and pay debts denominated in US dollars. But they cannot
create foreign currency to pay other countries, unless they willingly accept
dollars ad infinitum – and that entails bearing the costs of financing the U.S.
balance-of-payments deficit, getting only IOUs in exchange for real resources
that they sell to U.S. buyers.
This is the situation that
arose half a century ago. The United States could print dollars in 1971, but it
could not print gold.
In the 1920s, Germany’s
Reichsbank could print deutsche marks – trillions of them. When it came to pay
Germany’s foreign reparations debt, all it could do was to throw these D-marks
onto the foreign exchange market. That crashed the currency’s exchange rate,
forcing up the price of imports proportionally and causing the German
hyperinflation.
The question is, how many
surplus dollars do foreign governments want to hold. Supporting the dollar
standard ends up supporting U.S. foreign diplomacy and military policy. For the
first time since World War II, the most rapidly growing parts of the world are
seeking to de-dollarize their economies by reducing reliance on U.S. exports,
U.S. investment, and U.S. bank loans. This move is creating an alternative to
the dollar, likely to replace it with groups of other currencies and assets in
national financial reserves.
The Saker: In the same article you
also write: “So
maintaining the dollar as the world’s reserve currency became a mainstay of
U.S. military spending.” We often hear people say that the dollar is about to tank and
that as soon as that happens, then the US economy (and, according to some, the
EU economy too) will collapse. In the intelligence community there is something
called tracking the “indicators and warnings”. My question to you is: what are
the economic “indicators and warnings” of a possible (probable?) collapse of
the US dollar followed by a collapse of the financial markets most tied to the
Dollar? What shall people like myself (I am an economic ignoramus) keep an eye
on and look for?
Michael Hudson: What is most likely is a slow decline, largely from
debt deflation and cutbacks in social spending, in the Eurozone and US
economies. Of course, the decline will force the more highly debt-leveraged
companies to miss their bond payments and drive them into insolvency. That is
the fate of Thatcherized economies. But it will be long and painfully drawn
out, largely because there is little left-wing socialist alternative to
neoliberalism at present.
Trump’s protectionist policies
and sanctions are forcing other countries to become self-reliant and
independent of US suppliers, from farm crops to airplanes and military arms,
against the US threat of a cutoff or sanctions against repairs, spare parts and
servicing. Sanctioning Russian agriculture has helped it become a major crop
exporter, and to become much more independent in vegetables, dairy and cheese
products. The US has little to offer industrially, especially given the fact
that its IT communications are stuffed with US spyware.
Europe therefore is facing
increasing pressure from its business sector to choose the non-US economic
alliance that is growing more rapidly and offers a more profitable investment
market and more secure trade supplier. Countries will turn as much as possible
(diplomatically as well as financially and economically) to non-US suppliers
because the United States is not reliable, and because it is being shrunk by
the neoliberal policies supported by Trump and the Democrats alike. A byproduct
probably will be a continued move toward gold as an alternative do the dollar
in settling balance-of-payments deficits.
The Saker: Finally, my last
question: which country out there do you see as the most capable foe of the
current US-imposed international political and economic world order? whom do
you believe that US Deep State and the Neocons fear most? China? Russia? Iran?
some other country? How would you compare them and on the basis of what
criteria?
Michael Hudson: The leading country breaking up
US hegemony obviously is the United States itself. That is Trump’s major
contribution. He is uniting the world in a move toward multi-centrism much more
than any ostensibly anti-American could have done. And he is doing it all in
the name of American patriotism and nationalism – the ultimate Orwellian
rhetorical wrapping!
Trump has driven Russia and
China together with the other members of the Shanghai Cooperation Organization
(SCO), including Iran as observer. His demand that NATO join in US oil grabs
and its supportive terrorism in the Near East and military confrontation with
Russia in Ukraine and elsewhere probably will lead to European “Ami go home”
demonstrations against NATO and America’s threat of World War III.
No single country can counter
the U.S. unipolar world order. It takes a critical mass of countries. This
already is taking place among the countries that you list above. They are
simply acting in their own common interest, using their own mutual currencies
for trade and investment. The effect is an alternative multilateral currency
and trading area.
The United States is now
turning on the screws demanding that other countries sacrifice their growth in
order to finance the U.S. unipolar empire. In effect, foreign countries are
beginning to respond to the United States what the ten tribes of Israel said
when they withdrew from the southern kingdom of Judah, whose king Rehoboam
refused to lighten his demands (1 Kings 12). They echoed the cry of Sheba son
of Bikri a generation earlier: “Look after your own house, O David!” The
message is: What do other countries have to gain by remaining in the US
unipolar neoliberalized world, as compared to using their own wealth to build
up their own economies? It’s an age-old problem.
The dollar will still play a
role in US trade and investment, but it will be as just another currency, held
at arms length until it finally gives up its domineering attempt to strip other
countries’ wealth for itself. However, its demise may not be a pretty sight.
The Saker: I thank you very much for
your time and answers!
