William R Clark Petrodollar Warfare Oil

Advance Praise for
Petrodollar Warfare
William R. Clark’s Petrodollar Warfare is an oracle of our times, exposing

the hidden geopolitical strategies of the power elite and the interlocking
agendas of big oil and the neoconservatives in power today. Clark is a
winner of two Project Censored awards for publishing important news
stories ignored by the corporate media in the US.
— Peter Phillips, Professor of Sociology, Sonoma State University,
and Director of Project Censored
Petrodollar Warfare by William R. Clark is an important contribution

to the question of what the Iraq war was and is all about. Clark links the
emerging Euro currency to Iraq’s pricing of its oil as one significant factor
leading to Washington’s decision to topple Saddam Hussein. It might be
open for argument whether a “petroeuro” as a replacement for the
“petrodollar” is likely or not, given the many divisions within the
European Union. But Clark’s thorough documentation of the
discussion, notably plans for an Iranian Oil Bourse to counter NYMEX
and the London IPE, provides a useful basis for further thinking about
one of the vital strategic issues of today. Clark also extensively treats the
issue of Peak Oil, or global depletion, as a major unspoken factor
in the US oil agenda. This book is definitely worth careful reading.
— F. William Engdahl, author of
A Century of War: Anglo-American Oil Politics and the New World Order’
If you think you understand the headlines, think again: current events can
only be understood when we follow the money. In Petrodollar Warfare,
William Clark guides us through the hidden history of the petrodollar era
and deftly uncovers the basis of current US strategy in the Middle East.
This sobering book not only elucidates our past and present, but shows
the way toward global monetary reform. As Clark makes clear, America’s
founding ideals can only be fulfilled if the people of the US are willing
to confront the twin demons of proto-fascism and kleptocracy.
— Richard Heinberg, author of
The Party’s Over: Oil , War and the Fate of Industrial Societies,
and Powerdown: Options and Actions for a Post-Carbon World
Not only does Petrodollar Warfare give you the big picture of the intertwined
world of war, oil, and money, but William Clark also provides ideas for change.
This book helps to fuel the grassroots engine for progress in America.
— Jim Hightower, author of Let’s Stop Beating Around the Bush
and Thieves in High Places: They’ve Stolen
Our Country and it’s Time to Take it Back
Back in 1997, when I wrote about M. King Hubbert and Peak Oil in the
first edition of The Last Hours of Ancient Sunlight, not many people were
aware that we were fast approaching a worldwide energy crisis. Now we’re
in the middle of two wars over it, as William Clark so brilliantly documents
in Petrodollar Warfare. Oil in euros, deceptions from the White House,
wars for profits and political power; it reads like a Ludlum novel.
Unfortunately, it may well be altogether too true.
— Thom Hartmann, author of The Last Hours of Ancient Sunlight
With Petrodollar Warfare, William Clark provides a badly needed,

carefully researched explanation of the deep and dark mechanisms
underlying international movements of money and military forces.
Clark tells the fascinating and distressing story of how America achieved
world dominance and looks with tough honesty and realism at what the
future might hold. If Petrodollar Warfare’s bold analysis can help more
Americans to understand the current pathology of their own extraodinary
country, then it will assist both the world and America to find a
better path into a less violent and energy-addicted future.
— Julian Darley, author of High Noon for Natural Gas: The New Energy
Crisis and coauthor of Relocalize Now! Getting Ready for Climate Change
and the End of Cheap Oil, and cofounder of the Post Carbon Institute
I first became aware of William Clark’s writings in the latter part of 2004.
I was amazed by his clarity and almost intuitive grasp of economic issues
as well as his ability to relate those to everyday life across several disciplines.
Watch what this man says. In Petrodollar Warfare, he may be telling us
things that we will need to hear for our own survival.
— Michael C. Ruppert, author of Crossing the Rubicon: The Decline of the
American Empire at the End of the Age of Oil
and publisher of From the Wilderness
NEW SOCIETY PUBLISHERS
Cataloging in Publication Data:
A catalog record for this publication is available from the National Library
of Canada.
Copyright © 2005 William R. Clark.

All rights reserved.
Cover design and composite illustration by Diane McIntosh.

Comstock Images / Alamy Image.
Printed in Canada. First printing June 2005.
Paperback ISBN: 0-86571-514-9.
Inquiries regarding requests to reprint all or part of Petrodollar Warfare

should be addressed to New Society Publishers at the address below.
To order directly from the publishers, please call toll-free (North America)
1-800-567-6772, or order online at www.newsociety.com
Any other inquiries can be directed by mail to:

New Society Publishers
P.O. Box 189, Gabriola Island,
BC V0R 1X0, Canada
1-800-567-6772
New Society Publishers’ mission is to publish books that contribute in funda-

mental ways to building an ecologically sustainable and just society, and to do
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NEW SOCIETY PUBLISHERS www.newsociety.com

This study is dedicated to the citizens of the United States,
our soldiers, and to the Iraqi people,
all of whom have suffered under grave injustice.
“We owe respect to the living; to the dead we owe only truth.”
— Voltaire, 1785
Contents
Acknowledgments...................................................................................XIII
Foreword by Jeff Wright .........................................................................XV
Introduction..............................................................................................1
CHAPTER 1: THE AMERICAN CENTURY: POST-WORLD WAR II PERIOD ....7

The American Century: Three Phases ...............................................17
Recycling Petrodollars ......................................................................21
Neoconservatives and the “Petroeuro” Challenge .............................23
Third Stage of the American Century: Petrodollar Warfare ...............26
US Dollar: Fiat Currency or Oil-Backed Currency? ..........................28
US Structural Imbalances: Twin Deficits...........................................36
Euro Challenges US Dollar Hegemony ............................................37
Eurasia versus the Anglo-American Alliance ......................................39
CHAPTER 2: US GEOSTRATEGY AND THE PERSIAN GULF: 1945-2005..43

Covert Hegemony to Neoconservative Domination..........................45
Cold War Geostrategy: Domestic Peak Oil in the
Former Soviet Union...................................................................47
World Oil Consumption 2000 to 2020.............................................49
Project for a New American Century (PNAC) Neoconservative
Policies: 1992-2002.....................................................................52
The New Great Game: Geopolitical Tensions over Diminishing
Hydrocarbon Reserves.................................................................58
West Africa: Expanding the War on Terror,
or War on Global Oil Control? ....................................................66
Oil and War in the 20th Century:
The Emerging Role of the US Military in the 21st Century..........68
CHAPTER 3: GLOBAL PEAK OIL:

THE MILLENNIUM’S GREATEST CHALLENGE ..........................................75
Global Peak Oil: The Greatest Story Never Told ..............................76
The Paradigm Shift: Energy Return on Energy Invested (EROEI)....79
Reported Oil Reserves versus Technical Analysis ...............................79
ANWR: False Panacea.......................................................................82
Glimpse of Alternative Energy Technologies .....................................83
Peak Oil and the War on Terror........................................................87
Post-Peak Oil World: Three Scenarios ..............................................91
CHAPTER 4: MANIFEST SUBTERFUGE: DISGUISING THE

MACROECONOMIC AND GEOSTRATEGIC RATIONALES FOR WAR ..............95
Buildup to Gulf War II:
Saddam Hussein and Weapons of Mass Destruction ....................97
Leo Strauss 1899–1973:
Philosophical Father of the Neoconservatives...............................99
Straussian Governance: Conspiracy Inside the Pentagon .................103
Straussian Necessity of an External Threat:
Mushroom Clouds to Inspire the Vulgar Many..........................106
US Government in the New Century: Political Fundamentalism
and Tragic Hubris ....................................................................109
March 19, 2003: An Oil Currency War to Enforce Dollar Hegemony
within OPEC.............................................................................115
Operation Ajax to Operation Iraqi Freedom:
50 Years of History Lessons Not Heeded ..................................123
The Iraq Conundrum: Tactical Victory but Strategic Failure...........126
No Exit Strategy and Imperial Overstretch ....................................130
CHAPTER 5: DOLLAR DILEMMA:

WHY PETRODOLLAR HEGEMONY IS UNSUSTAINABLE ...........................135
Prewar Momentum Toward a Petroeuro.........................................136
OPEC Statements Regarding a Petroeuro.......................................137
OPEC and US Dollar Devaluation..................................................139
International Blowback Against the Dollar? ....................................144
The Saudi Question: The Sword of Damocles.................................147
Iran’s Oil Bourse: Introducing a Euro-denominated Oil Marker .....150
America’s Achilles Heel: Lessons from the Suez Crisis of 1956 .......157
CHAPTER 6: SAVING THE AMERICAN EXPERIMENT ...............................161

US Media Consolidation: Threat to Our Republic .........................162
Campaign Finance Structure and Corporate Personhood:
Elements of Proto-Fascism .......................................................165
US Occupation of Iraq: The Unraveling of
Neoconservative Geostrategy.....................................................172
Osama bin Laden’s Offensive: Economics Not Religion..................176
Realistic Campaign against International Terrorism: INTERPOL
and the International Criminal Court (ICC) .............................179
Realigning US Foreign Policies: Rebuilding Good Will
Towards America ......................................................................182
Preserving Freedom at Home: Protecting the Charters of Freedom188
CHAPTER 7: ENVISIONING PROGRESSIVE GLOBAL

REFORM IN THE NEW CENTURY ...........................................................195
New Realities of the 21st Century: Emerging Tri-Polar World .........196
“Old” and “New” Europe as The United States of Europe.............198
The European Union: Second Pole of Power..................................200
China: Emerging Third Pole of Power............................................202
The Conundrum: Risk of Widespread US Economic Dislocation....204
The Global Imperative: International Energy Projects.....................208
Crafting a More Balanced Global Economy ...................................211
Global Monetary Reform................................................................216
Conclusion .....................................................................................216
Epilogue by Lieutenant Colonel Karen Kwiatkowski (Retired)...............223

Endnotes ...............................................................................................229
Further Resources on Oil and Natural Gas Depletion ............................257
Index.....................................................................................................259
About the Author..................................................................................267
Acknowledgments
I am grateful to Chris Plant of New Society Publishers who helped transform

my original online essay into a full-length book. In addition, I am deeply
thankful for the patience and persistence afforded to me by the staff at New
Society Publishers, especially the editors, who included Ingrid Witvoet and
Judith Brand. Likewise I am immensely gratified for the ingenious and pow-
erful cover artwork created by Diane McIntosh.
In no particular order I must thank many other individuals who helped
bring this project to fruition. I owe much gratitude to Dr. Peter Phillips of
Project Censored at the University of California at Sonoma, along with the
faculty and students who voted my original Internet essay as one of the most
important but “censored” news stories of 2003. Additionally, I commend F.
William Engdahl for recently updating his fascinating book, A Century of
War. Engdahl’s analysis of the American Century and division of the post-
World War II period into three distinct economic paradigms was used
liberally in the first chapter of this book.
I must also thank Richard Heinberg whose two books, The Party’s Over:
Oil, War and the Fate of Industrial Societies and Powerdown: Options and
Actions for A Post-Carbon World, offered a meticulous analysis of Peak Oil
and realistic appraisals of alternative energy technologies. Furthermore, my
appreciation of the challenges surrounding Peak Oil have been broadened by
the writings of Colin Campbell, founder of the Association for the Study of
Peak Oil and Gas(ASPO), and author of numerous books, including The
Truth about Oil and the Looming Energy Crisis, and The Essence of Oil and
Gas Depletion. Another resource who has deepened my appreciation of cur-
rent events is Michael Ruppert. The tireless research conducted by Ruppert
and the writers at From the Wilderness Publications regarding Peak Oil and
global political economy is always very thought provoking.
Most of all, I am sincerely thankful to the hundreds of readers from
around the world who contacted me throughout 2003–2005 with com-
ments, questions, critiques, and even a few graduate thesis’s based on my
research. Your quest for awareness and clear concern for humanity was the
principal motivating factor that encouraged me to write Petrodollar
Warfare. I offer this book as a humble gesture to those who continually
XIII
XIV PETRODOLLAR WARFARE
seek knowledge in a effort to gain a better understanding of our complex

world.
This volume is an effort to ultimately enhance the long-term national
security of the United States, as well as the world community. While this book
critiques numerous policies of the George W. Bush administration, especially
with regard to neoconservative doctrine and the resulting Iraq War, it is
important to realize that US politicians of all stripes have become excessively
shortsighted in their policy-making roles. More than 30 years of US political
administrations have placed the country in a situation with both severe eco-
nomic and energy challenges that must immediately be addressed with new
and alternative solutions. As the author, I bear sole responsibility for the con-
tents of this text.
— William R. Clark, March 2005

Foreword
By Jeff Wright
The Lost American Century?
T he world changed forever on September 11, 2001. It could have

changed for America in ways that would have assured she remained in the
ranks of the truly enlightened, liberated nations of Western civilization.
Instead, it seems, that promise has largely been squandered with a vengeance.
The world changed again on March 19, 2003, with the US-led invasion
of Iraq. It is almost assured, unless quick action is taken, that this century will
become one of fear, oppression, and economic decline for our nation. Our
leaders, of both the Republican and Democratic parties, have continued the
pattern of self-destructive behavior practiced with increasing disregard of our
original purpose and promise as a nation.
The 20th century has often been called “The American Century.” To be
sure, America has much to be proud of from the last century. Our efforts to
stabilize and advance the world in two world wars have no equal. Our develop-
ment of the majority of modern technology and infrastructure driving the
world to increasing wealth realization has no equal. And, until recently, our
system of distributing the wealth provided by that infrastructure has been the
most advanced model ever provided. We are about to throw it all away.
Our increasing tendency to push our model rigidly into other societies of
the world is in fact the sign of an authoritarian state. That is coupled with a
foreign policy that seeks to protect that state’s corporate interests through
manipulation and intimidation of other governments, directly or through surro-
gates, backed with both overt and covert projections of military power and
intelligence capability. This face of the American presence in the world is too
little talked about or analyzed by the citizens of the United States and espe-
cially the general media. Most of it is shielded from view through the system
of government security classification measures.
From the late 1940s to the 1980s, for good or ill, many of these force projec-
tions were driven by Cold War politics. Our ongoing shoving match with the
Soviet Union protected some countries but trampled many smaller countries
underfoot. In addition, the adventurism and empires of some of our closest
XV
XVI PETRODOLLAR WARFARE
allies have contributed, part and parcel, to our involvement in attempts to

control other parts of the globe where our interests are not vital. These are
facts, not judgments.
Even a cursory examination of the current situation is helpful as an example.
The boundaries of the current state of Iraq, and by definition the surround-
ing nations, were arbitrarily drawn by the British and the US at the end of
WW I. Further, throughout the region, many nations have been controlled
and manipulated by western and eastern European interests after WW II and
in the subsequent Cold War.
Why is Iran today run by Ayatollahs? Because the US and UK covertly
overthrew Iran’s fledgling democracy in 1953 and installed Mohammed Reza
Shah Pahlavi in power. The CIA also created and supported Osama bin Laden
and his organization in Afghanistan throughout the 1980s as “freedom fight-
ers.” The US is also currently supporting the overthrow of the democratically
elected government of Venezuela. We control and manipulate governments
throughout Central and South America directly against our supposed “values”
and in a way that is leading to their people’s ever-increasing hatred of our
country through our meddling in their internal affairs — including Argentina,
Colombia, Chile, Ecuador, Haiti, Nicaragua, Panama, Peru and Venezuela.
We have created these despots and dictators all over the world, thereby
creating today’s “anti-American” attitudes. In fact, any lengthy research will
reveal that our covert and overt operations over the decades have created most
of our current enemies. The CIA has coined a term for this outcome: “blow-
back.” Blowback is now coming at us from all directions. At some point the
American public must realize that we are not hated simply because we exist. I
would suggest that the reader do an Internet Google search on almost any coun-
try using such search criteria as Country X + CIA + weapons + military. You
will be shocked by the results.
The war coverage of Operation Iraqi Freedom was overwhelming. US
military planners termed the assault “shock and awe.” What the rest of the
world saw on their TVs was reported and perceived as nothing less than “sick
and awful.” We have destroyed a nation of 24 million people in what was pos-
sibly the most expensive “hit” in history. The US has now notified our allies,
enemies, and sometime adversaries that unilaterally, when we choose, we can
pick anyone apart that we deem necessary, and we can do it in a pre-emptive
fashion.
We are currently embroiled in the occupation of Iraq in an attempt to
clean up one of the many messes largely of our own making. We will fail. We
will fail by the evidence of our own eyes on 24-hour news channels. We have
entered into the Never-ending War. Look at what is happening in Iraq
through the billions of other eyes in the world. We have forfeited the “moral
high ground.”
Foreword XVII
In addition, on March 19, 2003, we finally and completely discarded the US

Constitution and adherence to the rule of international law. What mere “law”
can withstand the awesome power the government must adopt as “necessary”
to enforce internal and worldwide order as our government now views it?
We have entered into the endless degradation of our own rights and lib-
erties as a free people. Each escalating terrorist attack against us will engender
a new level of “security” to protect the hapless masses. Yet we will become less
secure. The early part of the 21st century will likely be recorded in history as
the closing stages of personal rights and liberties, the decline of US interna-
tional stature, and the end of the once-noble “American experiment.”
As a direct result of our government’s actions, our economy has been
placed in serious jeopardy — our apparent power is illusory. Since the late
1980s, we have been the world’s largest debtor nation. We fund our balance
of payments deficit, our governmental fiscal deficit, and our public debt
through more than $3 trillion of foreign purchase of that debt. That has been
enabled in the past only because the dollar has been the World Reserve
Currency, principally maintained by petrodollar recycling. The government,
corporations, and individuals now live off their credit cards.
The fact that governments around the world are briskly adding euros to
their central bank reserve funds is indicative of the lost faith — both in the
US dollar and in our fiscal policies regarding debt. Since 2002 the euro has
become a more stable currency than the dollar. Undeniably, before the Iraq
War the euro had begun making serious inroads in the dollar’s ability to
remain the World Reserve Currency, directly affecting our ability to continue
to fund our deficits and debt.
It is logical to suggest that one of the reasons Germany and France
opposed the war in Iraq was that they knew Saddam Hussein’s switch to the
euro as Iraq’s oil transaction currency enhanced the movement worldwide to
the euro as a major reserve currency. Although never effectively reported or
discussed in the US media, the Iraq War was waged in part to thwart this
momentum within OPEC, which portends dire consequences for the US
economy. This is particularly so later this decade as we enter a period of enor-
mous deficits and unfunded liabilities in public programs.
The Iraq War has also adversely affected our trading relations with other
nations, especially the European Union. This, coupled with a euro that con-
tinues to increase in strength and the conscious movement of economic
interests away from the US, will directly impact our domestic economy. Much
of our infrastructure is already in dire straits without the Never-ending War.
Manufacturing is declining and moving overseas at an incredible rate, and
there are significant signs that the consumer economy is “over bought” evi-
denced by the enormous $2 trillion of consumer debt. Americans can only
buy ahead or refinance so much before even the credit cards run out.
XVIII PETRODOLLAR WARFARE
All in all, the American people have let themselves be lead down the garden
path too far, too often by successive administrations. This, combined with
increasing levels of the subtle indoctrination that allows many in our society
to remain “fat, dumb, and happy,” contributes to the sheep syndrome we are
experiencing and is in fact exploited by our increasingly clever politicians.
Unfortunately much of the “anti-war” crowd is often misguided and
uninformed. Some of them incorrectly place blame on members of the US
military. The far left has often failed to understand the difference between a
tool and how it is used, whether the issue is gun ownership or the military.
That makes it very easy for the authoritarians and those opposed to the true
republican form of government to counter and misdirect the issues to their
advantage. This will only end when informed republicans enter the debate
and stop the rhetoric of the authoritarians.
Only severe “shock and awe” to the citizens of the United States will shake
the complacency and misguided support seen across the land for continuing
the policies of George W. Bush and previous administrations. From many indi-
cators it is about to happen. However, the only thing we may have left to fear
at this point is the reaction of our government to Americans’ desire to return
to the path laid out by the founders of this nation. Our leaders seem to have
decided they like the power more than a two-century-old model for freedom.
Many will argue that the view contained in this paper is cynically opposed
to the view that ultimately the government is good. A long list of quotes from
the founders that directly dispute that claim will probably be viewed as irrel-
evant. Even against the noted trend of the last 30 years or the documented
evidence of our government’s behavior on the dark side would fail to convince
as well. It is natural for the citizens of any dominant empire to believe that they
are doing what they are doing for all the “right” reasons, whether true or not.
The best proof is simply in more closely analyzing current and coming
events. Listen and watch closely for the signposts as indicated in this book.
Draw your own conclusions from actual evidence. But then, once the trend
is clear, do not fail to act. Or don’t act. However, if the reader comes to agree
with the viewpoint in this book, at minimum do not continue to give aid and
support to policies and decisions that are realized to be heavily flawed and
detrimental to our true national security interests. The “conventional wis-
dom” is hard to buck, and the truth hardest of all to swallow if realized later
rather than sooner.
We may have few opportunities to correct events in a way that’s much
more satisfactory to the real long-term survival and security of the United
States and the world. Even talking with your friends and neighbors about the
obvious nature of what is happening is extremely important.
Most Americans seem to live in a complacent paradise, ignorant of geog-
raphy, geopolitics, and the dangers that are brewing all around them. This will
Foreword XIX
prove to be highly injurious to our civilization. We are allowing our leadership

to make decisions affecting our grandchildren without true and open debate,
without following our fundamental laws, and without telling us what is really
known. Under these conditions it cannot reasonably be expected that
America will remain a free and prosperous nation for much longer.
America needs your support in whatever form it can be brought to bear,
for we have likely entered the most dangerous decade of our history. The
challenges analyzed in this text are not conservative/liberal or Republican/
Democrat issues, but rather American issues. This text offers what many people
think are better solutions to the problems we face, and what is in our best
long-term national security interest.
Some readers will disagree with this book. However, I hope it will not be
said that something contained in this text is anti-American. The author and
contributors to this book do not believe that the current or any past US
administration that contributed to these problems was anti-American. They
may be un-American in certain behaviors and policies, but they are certainly
not anti-American.
In Petrodollar Warfare, William Clark makes clear that our most important
task is to face these challenges, working together with the global community
to create a more sustainable and peaceful world in the new century.
Jeff Wright is a former Naval Security Group (NSG) Cryptologic Tech,

NAVSEEACT Technical Liaison/System Analyst, Area of Operations: Pacific
Rim and Far East (1976–1980) He currently is a Network and Software
Development Entrepreneur focused on Model Driven Architecture.
Introduction
Hegemony, \He*gem`o*ny\, noun \Greek hegemonia, fr. Hegemonia

leader, fr. Hegeisthai to lead] – preponderant influence or authority
especially of one nation over others
— Webster’s Ninth New Collegiate Dictionary, 1990
If a nation expects to be ignorant and free, in a state of civiliza-

tion, it expects what never was and never will be…The People
cannot be safe without information. When the press is free, and
every man is able to read, all is safe.
— Thomas Jefferson, US President 1801–1809
T homas Jefferson’s words foreshadowed the unfortunate state of affairs

facing the United States today. As a proud American whose family ances-
try traces back to the American Revolutionary period, I found this book
difficult to write. I have little doubt that Petrodollar Warfare will prove to be
controversial, perhaps unpopular within certain groups, and that some will
attempt to dismiss out of hand the facts presented and seek to relegate this
analysis to conspiracy theory rather than evaluate this research from an objec-
tive perspective. It is this head-in-the-sand position that maintains the status
quo and places the United States in great jeopardy.
Some readers will conclude that challenges surrounding US economic and
energy problems provided a legitimate rationale for applying unilateral mili-
tary force against Iraq. Indeed, many will also advocate similar US military
operations in the near future. Ultimately such beliefs reflect individual value
judgments, and as such, I doubt this book will sway readers who ascribe to
that particular moral framework. Of course other readers will subscribe to a
different ethical perspective regarding these issues.
Perhaps most critical to the survival of any functional democracy is that
the citizenry be sufficiently informed of real challenges facing their nation, so
they might rationally discuss and publicly debate such issues. Furthermore,
1
2 PETRODOLLAR WARFARE
the framers of the Constitution were acutely aware that the absence of an
informed citizenry will ultimately jeopardize the liberty of all citizens and
facilitate the dangerous concentration of centralized government power.
History has shown that society is prone to manipulation, oppression, and
tyranny without an open press.
Above all else, the founders were most concerned with building checks
and balances into our system of government and sought to contain the ten-
dency of political power to flow unheeded to the executive branch during
times of war. The almost complete lack of critical debate within the US media
and society in general regarding the recent Iraq War motivated this book.
After my original online essay was voted in 2003 as one of the most impor-
tant but censored news stories by Project Censored,1 I became fully cognizant
of how extensive the information flow is filtered by the US mass media.
Although regrettable, it is not surprising that in the past 15 years these
sources of broadcast news — TV, radio, and print — have been reduced to
only five major corporate conglomerates.
As Thomas Jefferson eloquently warned, liberty depends on the freedom of
the press, and that cannot be limited without being lost. It was the eternal inspi-
ration of Jefferson with which this book was written. My own sense of
patriotic duty compelled me to express dissent and inform others that our
current military-centric geostrategy will ultimately result in massive US eco-
nomic failure. Such an event will be compounded if our national energy
policies are not overhauled and restructured to both reduce consumption and
rapidly implement alternative energy technologies.
It is imperative that the US citizenry become cognizant that monetary
maneuvers away from the dollar by the international community indicate a
manifest intolerance of a unilateralist United States employing militant impe-
rialism that seeks to gain control over the world’s energy supply and denies
the self-determination of sovereign nations regarding their chosen oil export
currency. The 2003 Iraq War and its subsequent occupation has pushed the
US further along the precarious path of imperial overstretch and economic
decline.
Despite the toppling of Saddam Hussein’s regime and chaotic US occu-
pation, the original rationales voiced in favor of disarming Saddam Hussein’s Iraq
with its supposed reconstituted weapons of mass destruction (WMD) program
have disappeared. Despite the swift military victory and toppling of the oppres-
sive regime, it is irrefutable that this conflict’s stated objectives were at best
deceptive and at worst outright fraudulent. Many questions remain unanswered.
For example, the earlier 1990–1991 war against Iraq involved a broad
coalition of nations backed by a UN mandate, but why did the vast majority of
the previous coalition fail to join the US and UK during this recent conflict? If
Iraq’s old WMD program truly possessed the threat level repeatedly purported
Introduction 3
by the Bush and Blair administrations throughout 2002 and into 2003, surely
our historic allies would have lined up militarily to disarm Saddam Hussein if
he posed any semblance of this alleged threat level?
Why did the UN Security Council fail to provide a second resolution in
2003 authorizing the use of force? Clearly this lack of authorization reflected
the UN’s deep misgivings and resulted in a markedly unilateral war in which
America fielded an army of 255,000 in Iraq and surrounding nations, while
the British contributed 45,000, and the Australians committed a paltry 2,000
troops.2 The lack of UN authorization, lack of NATO support, and the global
community’s protests against the war were all unprecedented events.
Moreover, despite over 400 unfettered prewar UN inspections, no substantive
evidence was ever reported to the Security Council that Iraq was reconstituting
its WMD program. In fact, the Bush administration’s claims citing Iraq’s
WMD capability were highly improbable considering the severity of the
ongoing UN sanctions against Iraq. Lastly, and despite the Bush administration’s
repeated implications to the contrary, neither the CIA, DIA or the UK’s MI6
ever produced any viable links between Saddam Hussein and the Al Qaeda
terrorist network, nor has any evidence ever materialized suggesting Saddam
Hussein was involved in the September 11th attacks.
On the contrary, suggesting a relationship between Saddam Hussein, a
secular despot who oppressed the religious Shi’ite majority in Iraq, and Al
Qaeda terrorists who endorse a fanatical form of fundamentalist Islamic
Whabbism defies both logic and that region’s history. Numerous WMD and
counterterrorism experts warned that the publicly stated prewar justifications
were highly implausible. They were right.
What motivated the Bush administration to invade Iraq? The simplistic
answer is an effort to preserve US global dominance. Moreover, a little-
known fact belies the deeper reasons for the invasion: in order to prop up the
US’ declining economic status as the sole superpower, its military force was
required to gain strategic control of Iraq’s oil supply and oil currency for both
macroeconomic and geostrategic considerations.
More specifically, this was a war to gain control over Iraq’s hydrocarbon
reserves and, in doing so, maintain the US dollar as the monopoly currency
for the critical international oil market. It was, and is, about retaining the dol-
lar as the world’s reserve currency, and it is also about securing its continued
use as a mechanism for effortless US credit expansion and global supremacy.
It is also about the installation of numerous US military bases in Iraq to gain
strategic dominance of the region with the largest remaining hydrocarbon
reserves on the planet. As the reader will witness, these assertions are based
on a rigorous analysis of the facts, backed with stated US strategic goals.
Although completely unreported by our government and the US corpo-
rate media, one of the answers to the enigma surrounding the Iraq War was
the simple yet shocking realization that it was partly an oil currency war
waged by the US against the euro, currency of the European Union (EU).
The calculated goal of regime change in Baghdad was designed to prevent
further momentum within the Organization of the Petroleum Exporting
Countries (OPEC) toward the euro as an alternative oil transaction currency.
In order to preempt OPEC, the US government needed to gain control of
Iraq along with its oil reserves. Iraq was really no different than any other
imperial war; it was a war over power.
The purpose of this book is to stimulate much needed debate in our society,
our government, and hopefully in the international policy-making arena. Only
informed and motivated citizens compel changes within the decision-making
apparatus of their governments. I hope that US citizens and the world commu-
nity will begin an open dialogue regarding the complex issues discussed in
this book.
Chapter 1 of Petrodollar Warfare illustrates that in the post-WWII era,
hegemonic power was, and is, derived principally via channeling oil wealth
and the issuance of World Reserve Currency. Attempting to maintain these
two essential aspects of US hegemony provided motivation for the Iraq War
Chapter 2 outlines how the 2003 Iraq War was also an attempt to fulfill
the long-term US geostrategic objective of securing US bases in the center of
the Persian Gulf before the onset of global Peak Oil. Chapter 3 discusses the
implications of the geological phenomenon referred to as global Peak Oil,
which ASPO projected will occur around 2008.3 US and UK domestic energy
supplies are in permanent decline, whereas Iraq and Saudi Arabia are pre-
dicted to be the last to reach peak oil production.4
Chapter 4 outlines the macroeconomics of petrodollar recycling and the
unpublicized, but real, challenge to US economic hegemony from the euro
as an alternative oil transaction currency. Chapter 5 discusses the apparent
broad global movement away from the dollar. This development is due not
only to macroeconomic factors, which most likely were inevitable, but also to
recent geopolitical tensions following the invasion of Iraq. Unfortunately, it is
hard to argue that this movement would have been more containable if current
US foreign and defense policies were not seen as unilateral strategies designed
to obtain monopoly control over the world’s primary energy supply. Our trad-
ing partners and other affected nations would have been much more inclined
to help convert the dollar hegemony system into a new global monetary and
financial system in enlightened ways.
Chapters 6 and 7 end with a reflection and critique of past and present US
fiscal and foreign policies regarding oil and energy issues and propose various
policy alternatives utilizing a multilateral framework. These comprehensive
reforms are predicated on domestic reform of the US media conglomerates,
political campaign finance systems, and associated corporate sponsorship.
Introduction 5
General readers should find the petrodollar recycling process and effects
relatively straightforward once the basics are understood. Academic readers
seeking a technical analysis of this phenomenon from a purely economic per-
spective should read David E. Spiro’s book, The Hidden Hand of American
Hegemony: Petrodollar Recycling and International Markets.
A comprehensive analysis of Peak Oil and various alternative energy tech-
nologies is regretfully beyond the scope of this book. For readers interested
in a thorough review of those issues, two references by Richard Heinberg
provide an in-depth exploration of these subjects, The Party’s Over: Oil, War
and the Fate of Industrial Societies and his profound follow-up book Powerdown:
Options and Actions for A Post-Carbon World. Despite these two caveats relat-
ing to Petrodollar Warfare, the reader does not need a PhD in economics or
geology in order to recognize that the status quo of petrodollar recycling and
energy consumption is untenable considering the unsustainable structural
imbalances in the global economy and the vast implications of the impending
global Peak Oil phenomenon.
I advocate immediate reform of the global monetary system to include a
dollar/euro currency trading band with reserve status parity, a dual-OPEC oil
transaction standard, and a UN-sponsored multilateral project regarding
broad-based energy reform in alignment with the Upsalla Protocol. These
could potentially restore the damaged international stature of the US, while
providing new mechanisms to create a more balanced global monetary sys-
tem. Most importantly, given the imminent peaking of global oil production,
monetary and energy reforms are required if we are to avoid the devastating
outcome of global warfare over oil currency and oil depletion.
An analysis of current US geostrategic, monetary, and energy policies sug-
gests that the 21st century will be much different from the previous era, with
one possible exception. The first half of the 20th century was filled with
unprecedented levels of violence and warfare on a global scale (15 million
killed in WW I, 55 million in WW II). The first two decades of the 21st cen-
tury present challenges that could also result in the unleashing of another
period of catastrophic human suffering and destruction. In the post-nuclear
age, this must not be allowed to transpire. In order to avoid such a terrible
fate in this new century, American citizens, more than any others, must accept
and undertake sacrifices for the betterment of humanity; we must once again
begin living within our means relative to both fiscal and energy policies.
The United States’ founding fathers declared that the most fundamental
and patriotic duty was to be an informed citizenry. As such, this book was
written from my sense of patriotic duty in an effort to inform readers in the
US and abroad. While some may find the analysis presented in Petrodollar
Warfare controversial or perhaps disconcerting, it is presented in the hope
that the beginning of the 21st century may be crafted by the international
community into a more economically stable, energy sustainable, and less vio-
lent period than the opening decades of the previous century. Humanity and
morality demand nothing less.
Whenever the people are well-informed, they can be trusted with
their own government. Whenever things get so far wrong as to
attract their notice, they may be relied on to set them to rights.
— Thomas Jefferson, Author of the Declaration of
Independence, US President, 1801–1809
One
The American Century:

Post-World War II Period
Overview of US Economic and Military Hegemony:

A Contrast in Strengths and Weaknesses
We, I hope, shall adhere to our republican government and keep

it to its original principles by narrowly watching it.
The price of freedom is eternal vigilance.
7
A t the dawning of the 21st century, the United States is generally acknowl-
edged as the most powerful economic and military nation since the
Roman Empire. It is in fact the most absolute global power ever seen for its
reach, influence, and control. The US is rightly regarded as the unchallenged
superpower. Europe describes the US as the world’s “hyperpower,” while
academics describe the US as the global hegemonic power. Indeed, the US
economy is the world’s largest, with a Gross Domestic Product (GDP) of
approximately $10.5 trillion compared to an annual world GDP of $32 trillion.
Since the 1980s the US GDP per capita has grown much faster than that of
Japan and Europe. US economic growth is boosted by a high capital investment
rate from both domestic and foreign sources, and rising labor productivity
associated with its flexible labor markets. New York remains the premier
financial center of global banking and commerce, and the US is generally
regarded as the leader in globalization.
Since 2001 the general consensus is that tax cuts, cheap credit, and fiscal
priming on an unprecedented scale provided a tremendous stimulus to consumer
spending in the US economy. For the bullish consensus, this policy stance has
been most successful, as measured by recent GDP growth rates of four per-
cent and higher. However, this is a simplistic view that is based on unfounded
assertions. Most commentators have not sufficiently discussed the long-term
costs of this “recovery” as manifested in the ever-mounting structural imbal-
ances in both the domestic and global economy. Specifically, each of these
years has resulted in record US trade gaps, record levels of financial leveraging,
record levels of personal indebtedness, record levels of bankruptcies, record
levels of budget deficits, and abysmal national savings rates.
The budget deficit for fiscal year 2004 was a record $413 billion, which is
$38 billion more than in 2003 and over $70 billion more than originally esti-
mated by the Bush administration. Projected deficits of $5.9 trillion or more
over the next ten years will almost certainly drag down economic growth,
reduce job and wage opportunities.1 The US trade deficit also continues to
set new records. The trade gap for 2004 soared to a staggering $665.9 billion,
nearly six percent of GDP, and in far excess of the previous record set in 2003
of $496.5 billion. The cumulative US trade deficit since 1990 now totals well
over $3.5 trillion. To finance these deficits, the US must borrow an equivalent
amount, meaning everyday the American government is spending billions
borrowed from central banks in China, Japan, Taiwan, and from other foreign
entities and individuals, who now own 40 percent of the total current US
debt of $7.6 trillion.
Given these imbalances, the US trade deficits suggest our economy is cur-
rently not effectively able to compete with the Japanese and European economies
in our “post-industrial” society, but instead we are addicted to borrowing
prodigious amounts of money without providing goods and services in
The American Century 9
return. The reasons are simple; most US investment in sustainable markets

such as manufacturing has become foreign rather than domestic, while most
of our domestic investment is now in non-sustainable markets, commonly
referred to as the service-based industry. This pattern of US investment in
foreign manufacturing with a growing domestic service sector has produced
unprecedented imbalances in the US trade position that is not sustainable.
An analysis of the domestic economy indicates a deteriorating situation,
albeit more gradual than the external account position. Foremost is the very
mixed picture of job creation that is unlike any previous “recovery period.”
For example, the US has lost approximately 1.1 million jobs since 2001,
according to Labor Department statistics. On the other hand, the economy’s
growth in the second half of 2003 was reported to be a very healthy 6.1 percent,
the fastest six-month growth period in 20 years. In contrast, in 2003 the aver-
age duration of unemployment between jobs had risen to 20 weeks, again the
longest period since 1984.2 These disparities between “economic growth”
and lack of job creation are unique to the historical post-recovery pattern of
the US economy and reflect intrinsic contradictions in our so-called post-
industrial economy.
In a controversial admission, one of the top economic advisors in the Bush
administration publicly stated that these trends will somehow be helpful to
the US economy over the long term. In early 2004 President Bush’s chief
economic adviser, Greg Mankiw, implied that outsourcing white-collar ser-
vice jobs abroad where labor is cheaper is a benefit to the US economy, or
“just a new way of doing international trade …. It’s something that we
should realize is probably a plus for the economy in the long run.”3 This
seems contradictory given that the reduction in the net US tax base is now at
its lowest level since the 1950s. In fact, many of these recently displaced
workers were formerly earning sustainable manufacturing incomes, but are
now faced with lower-paying service-related jobs and, in some cases, personal
bankruptcy due to increasing debt levels. The recent data reflects the discon-
certing realization that the so-called service-based economy does not appear
to be a feasible long-term model for US economic viability or job growth,
even for those with first-rate technical skills.
In fact, the US employment figures have become exceptionally misleading.
At the time of writing, unemployment is listed at 5.5 percent, but these
highly politicized statistics are fundamentally flawed, as they do not include
individuals who are eligible to work but have simply given up finding a job
due to the lack of domestic job creation. Under the current methodology, the
US could continue to lose hundreds of thousands of workers each month,
but the unemployment rate could remain the same or fall even lower.
For example, the Labor Department stated in July 2004 that the economy
added a paltry 32,000 jobs, compared to the estimated 150,000 new jobs per
month that are required to keep up with population growth. Despite the fact
that only one fifth of the required job growth was created for those entering
the workforce, the unemployment figure dropped by 0.1 percent to 5.5 per-
cent.4 This “low” unemployment statistic is spun and proclaimed by politicians
as a sign of an “improving economy” that is “adding jobs,” when in fact since
2001 US population growth has far exceeded job creation.
In reality the US economy lost a net of at least 1.1 million jobs between
2001 and 2004, and over double that amount in lost manufacturing jobs dur-
ing the same period. This job market is in its longest slump since the Labor
Department began recording statistics in 1939. To illustrate the misleading
statistics, the real unemployment data for the first quarter of 2004, including
part-time employees who were seeking full-time work, was estimated to be
7.4 percent, rather than the reported 5.6 percent.5
Moreover, when underemployment is included — as defined by involuntary
part-time work, discouraged workers, and other marginally attached workers
(i.e., those who have looked for work in the last year but are not counted as
unemployed) — the job picture is much different. According to Job Watch
at the Economic Policy Institute, the total underemployment rate in June
2004 was 9.6 percent, which is far higher than the 7.3 percent in March 2001
when the recession officially began.6 Despite optimistic claims of the economy
entering into a “recovery stage” as of November 2001, the real unemploy-
ment rate reveals that jobs are being lost and are simply not being replaced
— at least not in the United States. This is one of many contradictions in sta-
tistical reporting of the US economy. In general, the ability to produce jobs
in the US is deteriorating.
Unfortunately these trends are not likely to dissipate in the near future,
partly due to overseas outsourcing of manufacturing and skilled information
technology-related positions, and partly due to generalized downsizing of
US-based employers. White-collar service jobs, such as engineering and even
US tax return preparation, have been suggested as new opportunities for out-
sourcing. Skilled information technology-enabled jobs are rapidly moving to
cheaper English-speaking labor markets such as India. The obvious deduction
is that the current US job market is contracting under the pressures that Morgan
Stanley economist Stephen Roach termed the “global labor arbitrage.”7 There
are no indicators that outsourcing of US jobs will abate in the near future.
The domestic imbalances are significant given the unprecedented chasm
that has grown between income levels of workers in the US. Kevin Phillips,
author of Wealth and Democracy: A Political History of the American Rich,
vividly illustrated the disparity in production worker versus corporate CEO
compensation.8 In 1988 the ratio of CEO wages to the hourly wages of pro-
duction workers was 93 times that of workers but increased to a massive 419
times by 1999. While the incomes of workers barely kept up with inflation,
the incomes of top executives went up 481 percent, despite corporate profits
rising by only 108 percent during the same period.9 Clearly, these changes are
not due simply to market forces.
Phillips deftly argued that perhaps the most important cause of today’s
wealth inequality in the US is a circular relationship between wealth and
political influence. The ultrarich, he explains, use their money to buy politi-
cal influence and then employ their resulting influence to accumulate more
money. Regardless of that assertion, Phillips is quite correct; the current
upward retribution of wealth does not bode well for our societal structure
and political system.
The present reality is a disconcerting picture of the middle class shrinking
as it goes further into debt, while the top one percent of income earners con-
tinue to consolidate more of the nation’s wealth. Despite statistics of four
percent economic growth, the main factor sustaining the economy is increased
personal debt through mortgage refinancing — courtesy of ultracheap credit.
What is currently unknown is the impact of higher interest rates as the Federal
Reserve begins to earnestly increase the overnight lending rate, given the
absence of any real growth in personal incomes. Obtaining middle-class sta-
tus in America is becoming increasingly difficult due to negligible growth in
wages and increasing debt levels. This pattern has contributed to personal
bankruptcies reaching historic highs in 2002, 2003, and 2004.10, 11
Some economists, such as Stephen Roach and former World Bank analyst
Richard Duncan, see the US economy as fundamentally unbalanced. The reasons
specified relate to the widening disparities in the world’s external accounts,
with the US as the main culprit. As Stephen Roach stated, “The United States
squanders its already depleted national saving [while the] rest of the world
remains on a subpar consumption path.”12 Duncan argued that the global
economy is in a “state of extreme disequilibrium,” and an evitable “unwinding”
of the global disequilibrium will soon occur, in which he predicted the cur-
rent US-centric economy will experience major dislocations as the global
economy rebalances.13
Both of these economic commentators claim that the situation in the US
economy can only get worse. In November 2004, during a private lecture on
the economy, Roach suggested the US would eventually experience an
“Economic Armageddon.”14 Such alarming predictions have been wrong
before, but it is quite clear the trade and budget deficits have made the US
economy much more vulnerable to external shocks that could be triggered by
an interruption of the oil supply, a large stock market/currency decline, or
perhaps a terrorist attack.
In summary, the US economy, as it is currently structured, has no mecha-
nism to reverse the massive trade imbalances, which are causing our nation to
sink deeper into debt and into an unfavorable power relationship of dependency
with other nations, especially China and Japan. In 2003,

The US economy, as it is the prestigious Bank of International Settlements (BIS)
currently structured, has no warned, “The global economy faces a fundamental
mechanism to reverse the dilemma, which is becoming more acute with time. How
massive trade imbalances, can imbalances in growth and external accounts across
which are causing our nation
the major economic regions be resolved while maintain-
to sink deeper into debt and
ing robust global growth overall?”15 The BIS suggested
that the rest of the world has been far too dependent on
into an unfavorable power
the US economy and that deflationary pressures would
relationship of dependency
build unless “expansionary demand management poli-
with other nations.
cies” were implemented in both Europe and Asia.
In other words, the world’s most prestigious bank
publicly stated its concerns about the declining dollar due to US structural
imbalances, and that the real test for the rest of the world was to become less
dependent on the US economy by creating additional engines for global growth.
Without a doubt, further increases in US trade deficits, budget deficits, con-
sumer and corporate debt creation, along with a corresponding disparity
between domestic savings is clearly unsustainable. Compounding these prob-
lems are the ideologically driven tax cuts in 2001 and 2003. Current levels of
US consumption instead of production are not a sustainable model for wealth
creation in any nation, including the United States.
Despite these significant economic imbalances and subsequent concerns,
US military power is regarded as essentially omnipotent, with unrivaled ability
to project military power to almost anywhere on the globe. While Russia had
the second-largest annual military expenditures of approximately $91 billion
in 2003,the US defense spending of $417 billion that year not only dwarfed
that of Russia, but exceeded the next 20 nations’ defense spending combined.16
To put this into perspective regarding the latest armed conflict, Iraq’s esti-
mated annual military expenditures in 2002 were only $1.4 billion, equivalent
to less than two days’ expenditures in annual US military spending. That year
Iraq held the 38th position in total annual military expenditures worldwide,
tied with the Philippines, and just below the Czech Republic with $1.6 bil-
lion.17 Although stateside commentary sometimes claims that China is a
potential challenger to US military power, with 2003 expenditures of only
$33 billion, this is unsubstantiated. In 2003 Japan ($47B), France ($37B),
and the UK ($35B) each had higher military expenses than did China.18
Technologically the US defense establishment is also the most broadly
advanced. A few nations have highly specific military capabilities that exceed
it, but none come anywhere close to the size, breadth, and depth of the US
defense superstructure. This is to be expected as we spend more on national
defense per capita than any nation, and by a very large margin. For example,
per capita military expenditures in the US and Israel are the highest in the
world, $1419 and $1551 respectfully.19 Third-highest is Saudi Arabia at $789,

while Japan and various European countries spend between $362 and $627
per capita; China spends $25. In 2003 US military expenditures represented
47 percent of the entire world’s share.20 This defies any meaningful comparison.
Additionally, no nation or alliance possesses basing that approaches the
global network of US military bases that have been continually constructed
over the past five decades. Using the terminology coined by Chalmers
Johnson, the US truly is “The American Empire of Bases.”21 The Department
of Defense currently lists 725 military installations in 120 countries, operating
or training in 130 of the 189 nations in the United Nations, from Iceland to
Australia, from Greenland to New Zealand. Johnson made the somewhat
startling observation that the US has 38 separate bases on the Japanese island
of Okinawa alone, covering the “choicest 20% of the island.”22 US naval
power, with its ability to project force from its fleet of aircraft carriers, has a
unique military capability. Even at its height, the Soviet Union had no com-
parable navy or military basing structure.
This vast empire of bases gives the US an unrivaled ability to roam the
world, virtually unchallenged, to do as it pleases seemingly unconstrained by
international convention. With the implosion of the old Soviet Union, now
over a decade ago, the semblance of a military competitor has disappeared.
Unknown to most Americans, CIA briefings given to Congress after the
breakup of the Soviet Union made it clear that the Soviets never had, or ever
funded, anything but a small fraction of what the US consistently spent
throughout the Cold War period.
Paradoxically, Americans find themselves in an unusual dilemma. Despite
its omnipotent military power and current position as the largest economy in
the world, the US has become an increasingly fearful and isolated nation. We
have been instilled with a belief that America is so vulnerable to a small rogue
group of terrorists that it must engage in a worldwide
“war on terror” that according to Vice President Cheney
Despite its omnipotent military
may last “beyond our lifetimes.” According to former
power and current position as
National Security Advisor Zbigniew Brzezinski, the US
the largest economy in the
has acquired a somewhat “paranoiac” view of the world.23
world, the US has become an
The question is, how could we as Americans think
increasingly fearful and
that our country would be anything more than mini-
isolated nation. ... instilled
mally vulnerable to isolated but specific terrorist-type
with a belief that America is so
threats? The most recent evidence of a “paranoiac”
worldview at the highest levels of US government was vulnerable to a small rogue
relayed in retired General Wesley Clark’s book, group of terrorists that it must
Winning Modern War. According to Clark, during a engage in a worldwide “war
visit to the Pentagon two months after the September on terror”.
11, 2001, attack, he became alarmed when informed of
US military planners working on a five-year, seven-war campaign against

nations that were deemed to be “state-sponsors” of terrorists groups.24 At the
time, Clark considered such a military strategy to be unfathomable, and
regretfully dismissed the plausibility that US leaders would actually advocate
such policies.
With the exception of the Taliban regime in Afghanistan, what other govern-
ments were actively supporting Al Qaeda? Much evidence suggests that Saudi
Arabia and Pakistan were sympathetic to the Taliban, and likely supporting
Osama bin Laden. Neither of these two countries were included as part of the
“axis of evil.”
Perhaps the ultimate illustration of this irrational paranoia in America’s
national sentiments was the amount of public support for the March 2003
invasion against Iraq — a nation that had over the previous 12 years become
reduced to a nearly de-industrialized country with a feeble military unable to
protect its borders or even its capital. Never before has the US openly defied
the international community and discarded international law in order to wage
an unprovoked “preventative war” against another country. That historical
event should be instructive of some underlying forces.
Although the majority of governments worldwide and the UN did not
agree with President Bush and Prime Minister Blair’s justifications for the
Iraq War, many Americans became convinced that Saddam Hussein posed an
imminent threat to the US, and as such, an immediate invasion of Iraq was
warranted. However, subsequent to the invasion, none of the originally stated
threats against the US have been proven to be true. During 2004 notable evi-
dence was provided by former members of the Bush administration stating
that the Iraq War was a predetermined decision when Bush was sworn in as
president in January 2001.
These assertions were verified in The Price of Loyalty, a book that detailed
the recollections of former US Treasury Secretary O’Neill. He was surprised
to learn during the very first National Security Council meeting in January 2001
that Bush sought to “find a way” to topple Saddam Hussein.25 A subsequent
book by former terrorism czar Richard Clarke, Against All Enemies, further
confirmed the Bush administration’s desire to invade Iraq after the
September 11th attacks. According to Clarke, when he informed President
Bush the next day, that Saddam Hussein had no ties to Al Qaeda, Bush “testily”
ordered him to “Look into Saddam, Iraq,” while Donald Rumsfeld stated his
desire, “getting Iraq.”26
Paradoxically, at the beginning of the Bush administration, former Secretary
of State Powell declared that the UN sanctions were effective and that Iraq
did not pose any threat to its neighbors or to the US. On February 24, 2001,
Powell stated: “[Saddam Hussein] has not developed any significant capabil-
ity with respect to weapons of mass destruction. He is unable to project
conventional power against his neighbors. So in effect, our policies have

strengthened the security of the neighbors of Iraq.”27 In 2005 the final report
from the chief US weapons inspector Charles Duelfer concluded that Iraq
had not produced any WMD since 1991 and that the “former regime had no
formal written strategy or plan for the revival of WMD.”28
Additionally, neither the Central Intelligence Agency (CIA) nor the Defense
Intelligence Agency (DIA) was able to find any credible links between
Saddam Hussein and the Al Qaeda 9/11 terrorist attacks despite an intensive
analysis.29 Considering that Saddam Hussein’s debilitated military force was
unable to challenge its immediate neighbors or the US, he was unable to
rebuild his WMD program, and there was no evidence of Iraqi involvement
in the 9/11 attack, or even tacit support of Al Qaeda, what was driving the
Bush administration to preemptively invade Iraq?
This book attempts to explain from an analytical perspective the non-publicly
disclosed, but major, economic and strategic forces that drove President
Bush’s desire to topple Saddam Hussein from the very beginning of his admin-
istration, well before 9/11. The actual threat to the US was not based on
violence or terrorism, but something different, yet not altogether surprising
— declining economic power and depleting hydrocarbons.
Throughout history, the rationales provided by various political leaders to
undertake wars usually turned out to be quite different from the real under-
lying reasons. Typically, in retrospective analysis the “simple reasons” stated
in public often obfuscate the much broader and complex issues that were
never publicly stated. Of course different constituents may draw different
conclusions from the historical analysis of contemporary warfare, but in either
case the objectives as publicly stated at the time are usually confounded with
underlying strategic issues.
Military historians have often observed that the vast majority of modern
warfare has usually been based upon underlying issues regarding access to
resources and related economic issues. Michael Klare, international energy
expert and author of Resource Wars: The New Landscape of Global Conflict,
noted that even so-called religious wars are often driven by underlying strate-
gies to gain control over natural resources.30 Throughout history, political
leaders have often exploited race or religion as mechanisms to create general-
ized hatred and draw popular support for campaigns of warfare.
This book presents facts that will refute the publicly stated reasons for the
2003 Iraq War, and offers an alternative hypothesis based primarily on well-
established US strategy regarding control of oil, and a unique analysis regarding
the macroeconomics of the US dollar.
While some Americans may not accept the conclusion offered in this text,
the majority of objective US readers and international observers will find this
analysis informative, convincing, and perhaps disconcerting. It is intended to
stimulate some level of debate within US and EU societies and at the policy-
making level regarding these crucial, yet essentially unreported, issues.
Although the US invasion of Iraq was a quick military success, for which
we are grateful, the US dollar has not regained its traditional safe-harbor status
following the war, but has continued its downward trajectory relative to most
other major currencies. Currency traders had expected the dollar to strengthen
following a successful US military campaign, as was witnessed after the 1991
Operation Desert Storm. Despite the appearances of a stock market rally in
2003–2004, the dollar’s continued deterioration suggests that the US econ-
omy is not exactly healthy. The dollar is the symbol of US economic power,
the center of the world’s financial markets, and the foundation upon which
the American Century was built.
However, since early 2002 the international capital
Since early 2002 the markets have developed a notable preference for the euro.
international capital markets Washington appears to have abandoned a strong dollar
have developed a notable
policy and allowed the dollar to fall without intervention,
preference for the euro.
other than that of the Japanese. The public comments from
Washington are that the markets should decide the value
Washington appears to have
of the dollar.
abandoned a strong dollar
A careful analysis of the nuances of international finance
policy and allowed the dollar
reveals that what is actually taking place is a high-stakes
to fall without intervention.
game for geopolitical influence. We are witnessing a
struggle between two competing global currencies: the
euro and the dollar. The emergence of the euro has provided the first viable
challenger to US dollar’s supremacy since the end of World War II.
The Bush administration’s drive toward a war in Iraq was represented not
only by the highly visible neoconservative hawks — such as Donald Rumsfeld,
Paul Wolfowitz, and Richard Perle — but also by the more powerful, veiled
interests whose global role depends upon the dollar’s status as the World
Reserve Currency. These influential groups are well represented by the cabinet
members of the Bush administration and include large transnational energy
companies, such as Halliburton, Exxon Mobil, and ChevronTexaco. The other
half of these influential interests are the Big Five American defense conglomer-
ates of Boeing, Lockheed-Martin, Raytheon, Northrop-Grumman, and TRW,
as well as numerous other military-industrial contractors.
These giant energy and military firms wield enormous political clout in
Washington, often hiring former Washington insiders to enhance their polit-
ical power. Cheney’s tenure as CEO of Halliburton between the two Bush
administrations is the most well-known example of the powerful government-
energy nexus. This is the same corporate–military–industrial–petroleum network
of conglomerates that preferred a puppet government in Iraq, for reasons that
will become apparent later in this chapter.
In the high-stakes power game of geostrategy, maintaining the dollar as

the World Reserve Currency was a major component in the Bush administra-
tion’s push for the Iraq War. Once this fundamental concept is known, the
strategic and political divisions between the US and the EU/Franco-German
alliance in both the prewar and postwar periods become understandable.
America’s dominant position as the sole superpower ultimately rests upon
two pillars: its overwhelming military superiority and its control of the
global economic system by the unique role of the dollar as the World
Reserve Currency. An analysis of the facts before, during, and especially after
the Iraq War strongly suggests it was designed to preserve the second pillar
of US domination — the dollar and its unique role regarding international
oil sales.
The American Century: Three Phases

A historical review of the American Century can be traced back through dis-
tinct economic periods in the post-World War II period. F. William Engdahl
offered an exemplary model in which he divides this postwar period of US
supremacy into three separate phases. The following constructs including the
three phases of US dominance is liberally borrowed from Engdahl’s online
essay, “The American Century? Iraq and the Hidden Euro-dollar Wars,”31
also chronicled in his updated book, The Century of War: Anglo-American
Oil Politics and the New World Order.32
Even before WW II and America’s emergence as a superpower, the US
had the largest economy, but at the time it was not a leading factor in global
management. In 1929, before the Great Depression, the US produced a prodi-
gious 44.5 percent of global industrial production, compared to Germany’s
11.6 percent, Great Britain’s 9.3 percent, France’s 7 percent, the Soviet
Union’s 4.6 percent, and Japan’s 2.4 percent.33
However, the aftermath of WW II dramatically reinforced this dynamic,
and the US emerged as a superpower. During the war its economy was trans-
formed into a semi-command economy in which industrial production almost
quadrupled. Women entered the workforce in vast numbers, while the
American citizens made significant sacrifices in lifestyle and consumption for
the war effort. By the end of the war the US had not only gained economic
dominance, but also enjoyed greatly enhanced security in the northern and
southern hemispheres.
Following the successful D-Day invasion of June 1944, the Allies realized
the war would probably end within a few years, and it was obvious the world
would be in dire need of economic and diplomatic stabilization. This led to
the famous Bretton Woods Monetary Conferences of 1944–1945 that estab-
lished a new international monetary system based on the US dollar. A plaque
erected at the original conference site in Carroll, New Hampshire, states:
In 1944 the United States government chose the Mount

Washington Hotel as the site for a gathering of representatives of
44 countries. This was to be the famed Bretton Woods Monetary
Conference. The Conference established the World Bank, set the
gold standard at $35 an ounce, and chose the American dollar as
the backbone of international exchange. The meeting provided
the world with badly needed post war currency stability.
For a time the US performed its new hegemonic role rather admirably.
The economies of Europe and Asia were literally bombed-out and desperately
needed to be reconstructed in the postwar period. Hence, it was the Bretton
Woods Conferences that created the World Bank and the International Monetary
Fund (IMF) to facilitate this noble goal. These two organizations were later
instrumental in rebuilding both the European and Japanese infrastructures.
The first phase of the American Century began in the immediate postwar
period from 1945 and 1948 when the Cold War officially began. Engdahl
and many other contemporary commentators refer to this period as the
“Bretton Woods Gold Exchange system.”34
Under the Bretton Woods system in the immediate aftermath of the war,
the international order was relatively tranquil. The United States emerged as
the sole superpower, with a strong industrial base and the largest gold
reserves of any nation. The initial task was to rebuild Western Europe, and in
1949 it was decided to create the NATO (North Atlantic Treaty
Organization) alliance against possible Soviet Union military incursions into
Western Europe. The role of the US dollar was directly tied to that of gold.
So long as America enjoyed the largest gold reserves, and the US economy
was in large measure the most productive and efficient producer, the entire
Bretton Woods currency structure from French franc to British pound sterling
and German mark was stable. Dollar credits were extended along with the
Marshall Plan to financially assist the rebuilding of wartorn Europe and Asia.
American companies, including oil multinationals, gained nicely from
their dominant positions in European trade at the onset of the 1950s.
Washington even encouraged the creation of the Treaty of Rome in 1958 in
order to boost European economic stability and generate larger US export
markets in the bargain. For the most part, this initial phase of what TIME
magazine publisher Henry Luce termed “the American Century” was a
period of enlightened US leadership. To be sure, in terms of economic gains
this immediate postwar period was relatively benign for both the US and
Europe.35 The US enjoyed healthy trade and fiscal positions, which allowed
subsequent economic flexibility.
Likewise, this was the era of American liberal foreign policy, such as the
Marshall Plan and the Berlin Airlift. The United States was welcomed as the
dominant power in the Western community of nations. As it commanded

overwhelming gold and economic resources compared with Western Europe,
Japan, and South Korea, the US could well afford to be open to European
and Japanese trade and exports. The tradeoff was European and Japanese
support for the role of the US during the Cold War. American leadership was
based during the 1950s and early 1960s less on direct coercion and more on
arriving at consensus, whether in trade rounds regarding the General
Agreement on Tariffs and Trade (GATT) or other issues. Elites, such as the
Bilderberg group, were organized to share the evolving consensus between
Europe and the United States.36
The first most benign and prosperous phase of the American Century
came to an end by the early 1970s. This, due in part to the escalating
expenses of the Vietnam War and the growing economic strength of Europe
and Japan, was greatly exacerbated by the unexpected arrival of domestic peak
oil production in the lower 48 US states in 1970. By the mid-1960s, the
Bretton Woods Gold Exchange began to break down, as Europe had rebuilt
its manufacturing base and had become a strong exporter. One visible example
of renewed economic power was Volkswagen automobile sales in the US.
This growing economic strength in Western Europe coincided with soaring
US public deficits as President Johnson escalated the tragic war in Vietnam.
Given the huge debt being created by the military operations in Southeast
Asia, several European countries became concerned about the dollar’s value
and began redeeming their dollars for gold. The most notable was Charles de
Gaulle of France, the first of the major European countries to take its dollar
export earnings and claim gold from the US Federal Reserve, which was legal
under the Bretton Woods Conference.
However, by November 1967 withdrawals of gold bullion from the US
Treasury had become extensive. The weak link in the Bretton Woods Gold
Exchange arrangement was Britain, often referred to as the “sick man of
Europe.”37 It broke the first link in the Bretton Woods monetary system in
1967, when the pound sterling was devalued. As Engdahl noted,
[This] accelerated the pressure on the US dollar, as French and
other central banks increased their call for US gold in exchange
for their dollar reserves. They calculated with the soaring war
deficits from Vietnam, it was only a matter of months before the
United States itself would be forced to devalue against gold, so
better to get their gold out at a high price.38
By the summer of 1971 the drain on the Federal Reserve’s gold stocks had
become critical, and even the Bank of England joined the French in demanding
US gold bullion for their dollars. In August 1971 the British ambassador
showed up at the Treasury Department to redeem $3 billion for its fixed
exchange value in gold of $35 per ounce (approximately 5.3 million ounces,
or 2600 tons of gold).39 At this time the Nixon administration opted to aban-
don the dollar-gold link entirely, thereby going to a system of floating
currencies on August 11, 1971. Otherwise Nixon would have risked the collapse
of the gold reserves of the US. Rather than risk damaging US credit, he
changed the rules, or more accurately, he abandoned the rules.
The break with gold effectively ended the Bretton Woods Agreement and
opened the door to an entirely new phase of the American Century. In this
phase, large international banks, such as Citibank, Chase Manhattan, or Barclays
Bank, in effect privatized control over monetary policy. These institutions
assumed the role that central banks held under the Bretton Woods gold system,
but of course without any ability to redeem dollars for gold. In this phase,
market forces determined the dollar’s value, which resulted in substantial
inflation during the early 1970s. In an effort to stem this inflation, the Nixon
administration adopted wage-price freezes in late 1971, but inflation continued
to increase significantly during the 1970s.
The combined forces of a free-floating dollar, a growing US trade deficit,
and massive debt associated with the ongoing Vietnam War contributed to
both the volatility and devaluation of the dollar in the 1970s. According to
research outlined in David Spiro’s book, The Hidden Hand of American
Hegemony, it was during this time that OPEC began discussing the viability
of pricing oil trades in several currencies. This unpublished proposal involved
a basket of currencies from the Group of Ten nations, or G–10.40 These mem-
bers of the Bank of International Settlements (BIS), plus Austria and
Switzerland, included the major European countries and their currencies,
such as Germany (mark), France (franc), and the UK (pound sterling), as well
other industrialized nations, such as Japan (yen), Canada (Canadian dollar),
and of course the US (US dollar). It should be noted the powerful G–10/BIS
also has one unofficial member, the governor of the Saudi Arabian Monetary
Authority (SAMA).
In order to prevent this monetary transition to a basket of currencies, the
Nixon administration began high-level talks with Saudi Arabia to unilaterally
price international oil sales in dollars only — despite US assurances to its
European and Japanese allies that such a unique monetary/geopolitical
arrangement would not transpire. In 1974 an agreement was reached with
New York and London banking interests that established what became
known as “petrodollar recycling.” That year the Saudi government secretly
purchased $2.5 billion in US Treasury bills with their oil surplus funds, and
a few years later Treasury Secretary Blumenthal cut a secret deal with the
Saudis to ensure that OPEC would continue to price oil in dollars only.41
In typical understatement Spiro noted that, “clearly something more than
the laws of supply and demand ... resulted in 70 percent of all Saudi assets in
the United States being held in a New York Fed account.”42 Naturally, this
arrangement with the Saudi government prevented a market-based adjust-
ment and was the basis for the second phase of the American Century, the
petrodollar phase. What follows is the extraordinary history in which
petrodollar recycling was vigorously implemented during the 1970s.
Recycling Petrodollars
In May 1973, with the dramatic fall of the dollar still vivid, a
group of 84 of the world’s top financial and political insiders met
at Saltsjobaden, Sweden, the secluded island resort of the Swedish
Wallenberg banking family. This gathering of [the] Bilderberg
group heard an American participant, Walter Levy, outline a ‘sce-
nario’ for an imminent 400 percent increase in OPEC petroleum
revenues. The purpose of the secret Saltsjobaden meeting was not
to prevent the expected oil price shock, but rather to plan how to manage
the about-to-be-created flood of oil dollars, a process US Secretary
of State Kissinger later called ‘recycling the petrodollar flows.’
[emphasis added]
— F. William Engdahl, A Century of War 43
Beginning in the mid-1970s the American Century system of global eco-

nomic dominance underwent a dramatic change. The oil price shocks of
1973–1974 and 1979 suddenly created enormous demand for the floating
dollar. Oil-importing countries from Germany to Argentina to Japan all were
faced with how to acquire export-based dollars to pay their expensive new oil-
import bills. The rise in the price of oil flooded OPEC members with dollars
that far exceeded domestic investment needs and were therefore categorized
as “surplus petrodollars.” A major share of these came to London and New York
banks where the new process of monetary petrodollar recycling was initiated.
Engdahl’s remarkable book, A Century of War, chronicled how certain
geopolitical events mirrored a “scenario” discussed during a May 1973 Bilderberg
meeting. Apparently powerful banking interests sought to “manage” the
monetary dollar flows that were premised upon what the group envisioned as
“huge increases” in the price of oil from the Middle East. The minutes of this
Bilderberg meeting included projections of OPEC oil prices increasing by
400 percent.44
In 1974 US Assistant Treasury Secretary Bennett and David Mulford of
the London-based Eurobond firm of White Weld & Co. set about the mech-
anism to handle the surplus OPEC petrodollars.45 Kissinger, Bennett, and
Mulford helped orchestrate the secret financial arrangement with SAMA that
creatively transformed the high oil prices of 1973–1974 to the direct benefit
of the US Federal Reserve Banks and the Bank of England.
Despite the financial windfall enjoyed by the US/UK banking and

petroleum conglomerates who “managed the recycling of petrodollar flows,”
most Americans regard the 1973–1974 oil shocks as a particularly painful
time of high inflation and long lines at every gas station. In the developing
countries these high oil prices created huge loans from the International
Monetary Fund — debts to be repaid entirely in dollars.
Saudi Arabia and the other OPEC producers deposited their surplus dollars
in US and UK banks, which then took these OPEC petrodollars and re-lent
them as Eurodollar bonds or loans, to goverments of developing countries
desperate to borrow dollars to finance their oil imports. While beneficial to
the US- and UK-based financial centers, the buildup of these petrodollar debts
by the late 1970s facilitated the basis for the developing world’s debt crisis of
the early 1980s. Hundreds of billions of dollars were recycled between
OPEC, the London and New York banks, and back to developing countries.
Also, following the collapse of the Bretton Woods Agreement, a massive
shift from gold to dollar reserve assets quickly took place. In 1971 gold rep-
resented approximately 50 percent of the International Reserve assets, but
after 1971 gold was rapidly replaced by foreign exchange currencies, which now
represent about 95 percent of Central Bank Reserve assets. Dollars became
the major reserve currency for most nations. Since then the net effect of
petrodollar recycling has provided the Federal Reserve with an unparalleled
ability to create credit and expand the money supply in such a manner that
was impossible under the previous Bretton Woods Agreement.
In The Dollar Crisis, Richard Duncan attributed the 1974 petrodollar
recycling mechanism to the “first boom-and-bust crisis of the post-Bretton
Woods era.”46 In fact this transitional period created an unbalanced system
replete with unforeseen and undesirable artifacts, mainly a massive developing
world debt as a result of the high oil prices. In August 1982 Mexico announced
it would likely default on repaying Eurodollar loans, breaking another chain
in the global monetary system. The developing world debt crisis was set in
motion when Paul Volcker and the US Federal Reserve had to unilaterally
increase US interest rates in 1979 in an effort to save the failing dollar.
After three years of record high US interest rates, the dollar was “saved”
by 1981, but most of the developing nations were drowning in what they
perceived as rather usurious US interest rates on their petrodollar loans. The
IMF enforced debt repayment to the London and New York banks by act-
ing as debt policeman in implementing the dreaded “austerity” programs.47
As a result, public spending for health, education, and welfare decreased as
the IMF required banks to provide timely debt service on their petrodollar
loans. These austerity programs were often perceived as draconian measures
by the local populations and may have contributed to the contemporary anti-
globalization movement.
The petrodollar supremacy phase was a successful attempt by the US’ ruling
establishment to slow down its geopolitical decline as the hegemonic power
of the postwar system. The IMF Washington Consensus enforced draconian
debt collection on developing countries, forcing them to repay dollar debts
despite the social upheavals and lack of funds for domestic growth.48
Moreover, this system prevented economic independence from developing
nations in our hemisphere, and kept the US banks and the dollar afloat.
In the 1970s Japan became the US’ largest trade partner, but with no
indigenous oil supply and yet a major industrial nation, it was, and still is, a
significant importer of oil. Japanese trade surpluses have been facilitated by
the export of cars, electronics, and other goods that are then used to buy oil
in dollars. The remaining surpluses are invested in US Treasury bonds to earn
interest. It has been suggested that the G–7 was founded in an effort to keep
Japan and Western Europe inside the orbit of the US dollar system. However,
from time to time into the 1980s and again after the 1997 monetary crisis,
various voices in Japan would call for three major currencies — dollar,
German mark, and yen — to share the World Reserve role. These reforms
aimed at balancing the global monetary system never transpired, while the
dollar continued its role as the official World Reserve Currency.
From a narrow standpoint, the petrodollar phase of US domination seemed
to work as it provided a level of stability regarding global oil prices. However,
as Engdahl noted, this situation has created unsustainable debt levels in many
developing nations, and some have suggested an ever-worsening economic
decline in living standards.49 The IMF “austerity” policies often damaged
national economic growth, while transferring the wealth out of the host
country and into areas for reinvestment that did not benefit the nation that
sold off its natural resources.
Despite the economic power gained from this artificial alliance with Saudi
Arabia, even in the petrodollar phase US geostrategists were basically of the
realist tradition and were able to construct a liberal consensus for American
foreign policy and military policy. To use a term coined by Joseph Nye,
American’s “soft power” was still used to negotiate periodic new trade arrange-
ments or other issues with its allies in Europe, Japan, and East Asia.50
Neoconservatives and the “Petroeuro” Challenge

The end of the Cold War in the early 1990s allowed the natural emergence
of a newly unified Europe and the European Monetary Union. As far back
as 1997 it was recognized that a unified Europe could begin to present an
entirely new challenge to the American Century. It took one decade after
the 1991 Gulf War for this new dynamic to emerge into a full-blown chal-
lenge, resulting in one of the underlying economic reasons for the 2003
Iraq War. The present conflict stemming from the 2003 invasion of Iraq is
the first major proxy battle in the new, third phase of securing American
dominance.
Several slogans have been offered to justify the Iraq War, but certainly one
of the most peculiar is the idea proffered by Stanley Kurtz, Max Boot, and
other neoconservative commentators who advocate military action and regime
change as part of their bold plan for “democratic imperialism.”51 However,
this neoconservative proclivity for Orwellian-like sophistry does not resemble
any useful model for geostrategic planning. The ongoing guerilla war in Iraq
suggests that “democratic imperialism” is likely viewed by vast swaths of Iraqi
society as militant imperialism. A more direct appraisal of the situation requires
a review of statements made by George Kennan, head of policy planning in
the US State Department. Kennan is often regarded as one of the key architects
of US global strategy in the postwar period. In 1948 he advocated the follow-
ing candid advice to US leadership:
We have about 50 percent of the world’s wealth, but only 6.3 per-
cent of its population. In this situation, we cannot fail to be the
object of envy and resentment. Our real task in the coming period
is to devise a pattern of relationships which will permit us to main-
tain this position of disparity. To do so, we will have to dispense
with all sentimentality and day-dreaming; and our attention will
have to be concentrated everywhere on our immediate national
objectives. We should cease to talk about vague and unreal objectives
such as human rights, the raising of the living standards, and
democratization. The day is not far off when we are going to have
to deal in straight power concepts. The less we are then hampered
by idealistic slogans, the better.52
The “idealistic slogans” that Kennan recommended US policy makers dis-
card are the very ideas that our government is supposed to represent, such as:
“human rights,” “raising living standards,” and “democratization.” While the
US has largely been able to avoid “straight power concepts” for five decades,
it has now become the only vehicle for which it can maintain its dominance.
Indeed, Kennan’s term “straight power” is the appropriate description of cur-
rent US geopolitical unilateralism. Unfortunately, the basis for the broad
proliferation of global anti-American sentiments is a tragic result of the Bush
administration’s insistence on hard power diplomacy.
The foundations for aggressive, overt US foreign polices are evident from
various interviews and policy papers provided by neoconservative thinkers,
such as Dick Cheney, Donald Rumsfeld, Paul Wolfowitz, Richard Perle,
David Frum, and William Kristol. The origin of these polices can be traced to
a controversial defense policy paper written by Wolfowitz in February 1992
for then Secretary of Defense Cheney. In this paper Wolfowitz advocated that
the US seek to dominate the world community in the aftermath of the Cold
War.
These policy documents specifically stated that no nation or group of
nations should be allowed to compete or even “play a larger role” in the world.
The potential challengers to US dominance as referenced in this document
included US allies such as Europe, Japan, and India.53 In March 1992 when
this paper was leaked, it created much controversy and thus was subsequently
toned down in a later version. Nonetheless, the idealistic goal of a US global
power enforcing its role of domination remained alive throughout the 1990s.
In September 2000, during the presidential election between Al Gore and
George W. Bush, a small Washington think-tank, the Project for a New American
Century (PNAC), released a major policy study, “Rebuilding America’s
Defenses: Strategies, Forces and Resources for a New Century.”54 This 90-
page report gives a better understanding of the Bush administration’s foreign
policies. This manifesto revolved around a geostrategy of US dominance —
stating that no other nations will be allowed to “challenge” US hegemony.
On Iraq, it stated, “The United States has sought for decades to play a
more permanent role in Gulf regional security. While the unresolved conflict
with Iraq provides the immediate justification, the need for a substantial
American force presence in the Gulf transcends the issue of the regime of
Saddam Hussein.”55 [emphasis added] The PNAC authors acknowledged
that for decades US geostrategists have sought to introduce permanent military
basing in Iraq, regardless of whether Saddam Hussein remained in power.
With the neoconservatives firmly in power, components of both the 1992
and 2000 policy papers were incorporated into formal US policy, the 2002
US National Security Strategy (NSS).
For decades the US has been successful in employing a combination of
both economic and military power to pursue neoliberal globalization, while
retaining its global military superstructure even after the demise of the Soviet
Union. However, these historical trends that facilitated
multilateral policies were largely abandoned under the neo- For decades the US has
conservative doctrine that advocates overt projection of US been successful in
military force to pursue global domination. Not surpris-
employing a combination
ingly, this radical US unilateralism has altered geopolitical
of both economic and
alignments and created tension around the world. Rather
military power to pursue
than work out areas of agreement with European partners,
neoliberal globalization,
Washington increasingly sees a united European Union as
while retaining its global
the major strategic threat to American hegemony, especially
military superstructure
the “Old Europe” of Germany and France.
even after the demise of
This strategy is unfortunately the historical pattern wit-
nessed from a declining economic power. The British Empire the Soviet Union.
began its decline around 1870, at which time the British

government often resorted to increasingly desperate imperial wars in South

Africa and elsewhere. So too is the US using its military might in an effort to
advance what it can no longer achieve by economic means.56 While no nation
or group of nations seeks to challenge its military superiority, the broad momen-
tum toward the euro presents a real, but unspoken, economic challenge to
US hegemony. At present, the US dollar has become its Achilles heel.
The successful introduction of the euro in January 1999 added an entirely
new element to the global monetary system and ushered in what may be
called the third phase of the American Century, in which the latest Iraq War
plays a major role. This phase, according to Engdahl, threatens to bring a new
“malignant or imperial phase” to replace the earlier phases of American hege-
mony.57 Certainly, the neoconservatives are quite open about their imperial
agenda, while more traditional US policy-makers attempt to either deny these
policies or obfuscate their motives by promoting ideals such as “spreading
democracy” through force of arms. Regardless, the economic imbalances in
the current US economy and the reality of a challenger to the dollar’s role in
the global economy define this new phase of the American Century.
Third Stage of the American Century: Petrodollar Warfare

This new emerging phase appears to be unfolding with a manifest difference
from the two initial phases of the American Century — 1945 to 1971, and
1971 to 1999.58 This new phase of unbridled unilateralism and hard power is
an attempt to continue US domination in the aftermath of 9/11 and the Iraq
War. American power from 1945 to 1999 can be described as predominately
that of an accepted global hegemon, based on its vast economic and military
capabilities. While a global hegemon dominates power in an unequal distri-
bution of international power, its influence is based more on consent among
its allies, and not generated solely by coercion.
During the first five decades after WW II, American dominance was largely
based on an understanding that the US would provide certain services to its
allies, such as military security or regulating world markets, that would benefit
both the larger group and itself. This period was marked with a sufficient
degree of American multilateralism within the UN framework and international
cooperation between the US and Europe regarding NATO military operations.
However, unlike a dominant power that enjoys some level of acquiescence
from other nation states, an imperial power has no obligations to allies, nor
does it have the freedom for such policies, as the only raw dictate becomes
how to hold on to its declining power, often referred to as “imperial over-
stretch.” This is the worldview that neoconservatives such as Cheney and
Rumsfeld advocate, nothing less than US domination of the international
order. This requires the doctrine of “preventative warfare,” military control
over the world’s primary energy supply, along with military enforcement of
the dollar — and only the dollar — as the international currency standard for
oil transactions. Unlike the previous periods of US domination, forward-leaning
military unilateralism is the underlying posture.
An unspoken war between the dollar and the euro for global supremacy is
at the heart of this new phase of the American Century, referred to in this text
as the petrodollar warfare stage. It will be vastly unlike the earlier period from
1945 to 1999. In this new era, the US freedom to grant economic concessions
to the G–7 industrialized nations is rather diminished.59 (This also applies to
Russia, the eighth member of the G–8).
The prewar diplomatic conflicts and ongoing reluctance of the world
community to broadly internationalize the postwar Iraq situation were the
opening acts in this new conflict. The ultimate prize in this game of strategy
is the currency that OPEC uses as their international standard for oil transac-
tions. It has traditionally been the dollar, but the euro is now challenging this
arrangement. In other words, we are witnessing an unspoken oil-currency
war between the US and EU.
The petrodollar warfare stage was ushered in on March 19, 2003, with the
unprovoked military invasion of Iraq by the US, UK, and a small contingent
of Australian soldiers. This stage will be based on two primary factors: using
the US military to secure physical control over the planet’s remaining hydro-
carbon deposits, and using the US military and its various intelligence agencies
to enforce the petrodollar arrangement. Iraq was the first overt conflict in this
third stage.
Bluntly stated, the petrodollar warfare stage unfortunately represents the
application of violence by the US intelligence agencies or military in an effort
to enforce the dollar standard as the monopoly currency for international oil
transactions. Iran, Venezuela, Russia, and potentially even Saudi Arabia may
move away from the petrodollar arrangement in the near to immediate term,
thereby becoming the targets of US antagonism. While the Russian political
apparatus is fairly immune to direct US interventions, the plausibility of regime
change in various less-powerful oil-producing states in the Middle East,
Caspian Sea region, West Africa, and Latin America remains ever present.
To understand the importance of this unspoken battle for currency
supremacy, we should review the events that facilitated the emergence of the
US as the dominant global superpower after 1945. It is obvious that US
hegemony has traditionally rested on two formidable pillars. Foremost is its
overwhelming military superiority over all other global rivals. In 2003 the
US’ defense spending was more than three times the total of the twelve-state
EU, approximately $417 billion versus $120 billion, with the US spending
more than the 20 next-largest nations combined. If this disparity were not
enough, Washington plans additional defense spending of $2.1 trillion over
the next five years (through 2009).
The US figure does not include the annual expenditures of its vast intelli-
gence network, totaling at least $30 billion. No nation or group of nations
comes close in defense or intelligence-related spending. China is most inter-
ested in economic development and is at least two decades away from
becoming a military power that could potentially challenge the US. Certainly
no other nations have any interest in challenging the formidable pillar of US
military dominance in the near term.
The second pillar of American dominance in the world is the role played
by the US dollar as the international World Reserve Currency. Until the
advent of the euro in 1999, there was simply no potential challenge to dollar
supremacy in world trade. Maintaining this is a strategic imperative if America
seeks global dominance. It should be noted that dollar hegemony is in many
respects more important than US military superiority. Indeed, removing the
dollar pillar will naturally result in the diminishment of the military pillar.
On September 24, 2000, Saddam Hussein emerged
On September 24, 2000,
from a meeting of his government and proclaimed
that Iraq would soon transition its oil export transac-
Saddam Hussein emerged from
tions to the euro currency.60 Why would Saddam
a meeting of his government
Hussein’s currency switch be such a strategic threat to
and proclaimed that Iraq
the bankers in London and New York? Why would the
would soon transition its oil
US president risk 50 years of carefully crafted global
export transactions to the
alliances with various European allies and advocate a
euro currency.
military attack that could not be justified to the world
community?
The answer is simple: the dollar’s unique role as a petrodollar has been the
foundation of its supremacy since the mid 1970s. The process of petrodollar
recycling underpins the US’ economic domination that funds its military
supremacy. Dollar/petrodollar supremacy allows the US a unique ability to
sustain yearly current account deficits, pass huge tax cuts, build a massive mili-
tary empire of bases worldwide, and still have others accept its currency as
medium of exchange for their imported good and services. The origins of this
history are not found in textbooks on international economics, but rather in
the minutes of meetings held by various banking and petroleum elites who
have quietly sought unhindered power.
US Dollar: Fiat Currency or Oil-Backed Currency?

What the powerful men grouped around the Bilderberg had evi-
dently decided that May [1973] was to launch a colossal assault
against industrial growth in the world, in order to tilt the balance
of power back to the advantage of Anglo-American financial inter-
ests and the dollar. In order to do this, they determined to use
their most prized weapon — control of the world’s oil flows.
Bilderberg policy was to trigger a global oil embargo in order to

force a dramatic increase in world oil prices. Since 1945, world oil
had by international custom been priced in dollars …. A sudden
sharp increase in the world price of oil, therefore, meant an
equally dramatic increase in world demand for US dollars to pay
for that necessary oil.
Never in history had such a small circle of interests, centered
in London and New York, controlled so much of the entire
world’s economic destiny. The Anglo-American financial estab-
lishment had resolved to use their oil power in a manner no one
could have imagined possible. The very outrageousness of their
scheme was to their advantage, they clearly reckoned.
— F. William Engdahl, A Century of War, 200461
At this point he makes an extraordinary claim: ‘I am 100 percent

sure that the Americans were behind the increase in the price of oil.
The oil companies were in real trouble at that time, they had bor-
rowed a lot of money and they needed a high oil price to save them.’
‘He says he was convinced of this by the attitude of the Shah
of Iran, who in one crucial day in 1974 moved from the Saudi
view’ … ‘to advocating higher prices.’
‘King Faisal sent me to the Shah of Iran, who said: “Why are you
against the increase in the price of oil? That is what they want? Ask
Henry Kissinger — he is the one who wants a higher price.”’
[emphasis added]
Yamani contends that proof of his long-held belief has recently
emerged in the minutes of a secret meeting on a Swedish island,
where UK and US officials determined to orchestrate a 400 per
cent increase in the oil price.
— Observer (UK) interview with Sheikh Yaki Yamani (Saudi
Arabian Oil Minister from 1962–1986) at the Royal Institute of
International Affairs, January 14, 200162
As previously noted, the crucial shift to an oil-backed currency took place in

the early 1970s when President Nixon closed the so-called gold window at
the Federal Treasury. This removed the dollar’s redemption value from a
fixed amount of gold to a fiat currency that floated against other currencies.
This was done so the federal government would have no restraints on printing
new dollars, thereby able to pursue undisciplined fiscal policies to maintain
the US’ superpower status. The only limit was how many dollars the rest of
the world would be willing to accept on the full faith and credit of the US
government. The result was rapid inflation and a falling dollar.
Although rarely debated outside arcane discussions of the global political

economy, it is easy to grasp that if oil can be purchased on the international
markets only with US dollars, the demand and liquidity value will be solidified,
given that oil is the essential natural resource for every industrialized nation.
Oil trades are the basic enablers of a manufacturing infrastructure, the basis
of global transportation, and the primary energy source for 40 percent of the
industrial economy.
During the 1970s a two-pronged strategy was pursued by the US and UK
banking elites to exploit the unique role of oil in an effort to maintain dollar
hegemony. One component was the requirement that OPEC agree to price
and conduct all of its oil transactions in the dollar only, and the second was
to use these surplus petrodollars as the instrument to dramatically reverse the
dollar’s falling international value via high oil prices. The net effect solidified
industrialized and developing nations under the sphere of the dollar. No
longer backed by gold, the dollar became backed by black gold.
Throughout this time President Nixon was increasingly embroiled in what
became known as the Watergate Scandal. Consequently he named Henry
Kissinger both Secretary of State and head of the White House’s National
Security Council. In these highly empowered roles, Kissinger promptly pursued
the monetary strategy as outlined in the Bilderberg plan. During 1973–1974
US Treasury Secretary William Simon began secret negotiations with the
government of Saudi Arabia in an attempt to buttress global oil sales in dollars
only, and thereby thwart discussions at that time of transitioning oil trades to
a basket of currencies. Saudi Arabia, as the largest OPEC oil producer, was
the natural choice. Neither Congress nor the CIA was informed of these
agreements until Saudi Arabia had completed their purchases of $2.5 billion
in US Treasury bills. By the time Congress was informed of this “add-on
arrangement,” it was a fait accompli.63
Engdahl contended that Kissinger, acting as Nixon’s intelligence czar, was
able to “misrepresent to each party [Israelis, Syrians and Egyptians] the critical
elements of the other, ensuring the [October 1973 Yom Kippur] war and its
subsequent Arab oil embargo.” He reasoned that once the oil embargo began,
“the Arab oil-producing nations were to be the scapegoat for the coming rage
of the world, while the Anglo-American interests responsible stood quietly in
the background.”64
Regardless of whether subsequent events unfolded as envisioned by the
Bilderberg group, it is obvious their prophetic “scenario” of oil prices esca-
lating by 400 percent, along with dramatic increases in dollar liquidity, did in
fact occur seven months later. By January 1974 the price of OPEC’s bench-
mark oil stood at $11.65 per barrel (up from $3.01 in early 1973).
Furthermore, it is also a matter of historical record that, during this time, the
US had engaged in secret negotiations with the Saudi Arabia Monetary
Authority to establish a petrodollar recycling system via New York and

London banks.
This brilliant, if somewhat nefarious, act of monetary jujitsu enormously
benefited not only the US/UK banking interests, but also the Seven Sisters
of the US/UK petroleum conglomerate (Exxon, Texaco, Mobil, Chevron,
Gulf, British Petroleum, and Royal Dutch/Shell). These major oil interests
had incurred tremendous debts from the capital requirements in their large,
new oil platforms in the inhospitable areas of the North Sea and Prudhoe Bay,
Alaska. However, following the 1974 oil price shocks, their profitability was
secure. Engdahl candidly noted that “while Kissinger’s 1973 oil shock had a
devastating impact on world industrial growth, it had an enormous benefit
for certain established interests — the major New York and London banks,
and the Seven Sisters oil multinational of the United States and Britain.”65
The unique monetary arrangement was formalized in June 1974 by
Secretary of State Kissinger, establishing the US-Saudi Arabian Joint
Commission on Economic Cooperation. The US Treasury and the New York
Federal Reserve would “allow” the Saudi central bank to buy US Treasury
bonds with Saudi petrodollars.66
Likewise, London banks would handle eurozone-based international oil
transactions, loaning these revenues via Eurobonds to oil-importing coun-
tries. The debt and interest from these loans would then flow to the
dollar-denominated payments to the IMF, thereby completing the recycling
of surplus petrodollars to the Federal Reserve.
Until November 2000, no OPEC country violated
the petrodollar oil price arrangement. As long as the Until November 2000, no OPEC
dollar was the strongest international currency, there country violated the petrodollar
was little reason to consider other options. However, oil price arrangement. As long
in the autumn of 2000, Saddam Hussein emerged as the dollar was the strongest
from a meeting of his government and announced that international currency, there
Iraq would soon transition its oil-export transactions was little reason to consider
to the euro. Saddam Hussein referred to the US dol- other options.
lar as currency of the “enemy state.”67 It is not clear
if Saddam Hussein initiated the idea of transitioning
to a petroeuro or if the EU approached him with this idea. Regardless, Iraq
opened up a euro-based bank account with the leading French bank, BNP
Paribas. Shortly thereafter, Iraqi oil proceeds went into a special UN account
for the Oil for Food program and were then deposited in BNP Paribas.68
At the time of the transition, Iraq’s UN Oil for Food account held $10
billion. A short news story detailing this development appeared on November
1, 2000, on the Radio Liberty website of the US State Department.69 CNN ran
a very short article on its website on October 30, 2000, but after this one-day
news cycle, the issue of Iraq’s switch to a petroeuro essentially disappeared
from all five of the corporate-owned US media outlets.70 (Note: These five
conglomerates collectively control 90 percent of the information flow within
the United States.)
Although this little-noted Iraqi move to defy the dollar in favor of the
euro, in itself, did not have a huge impact, the ramifications regarding further
OPEC momentum toward a petroeuro were quite profound. If invoicing oil
in euros were to spread, especially against an already weak dollar, it could create
a panic sell-off of dollars by foreign central banks and OPEC oil producers.
In the months before the latest Iraq War, hints in this direction were heard
from Russia, Iran, Indonesia, and even Venezuela. There are indicators that the
Iraq War was a forceful way to deliver a message to OPEC and other oil pro-
ducers: Do not transition from the petrodollar to a petroeuro system. Engdahl’s
conversation with a forthright London-based banker is rather enlightening:
Informed banking circles in the City of London and elsewhere in
Europe privately confirm the significance of that little-noted Iraq
move from petrodollar to petroeuro. ‘The Iraq move was a decla-
ration of war against the dollar,’ one senior London banker told
me recently. ‘As soon as it was clear that Britain and the US had
taken Iraq, a great sigh of relief was heard in London City banks.
They said privately, “now we don’t have to worry about that
damn euro threat.”’71
Petrodollar recycling works quite simply because oil is an essential com-
modity for every nation, and the petrodollar system demands the buildup of
huge trade surpluses in order to accumulate dollar surpluses. This is the case for
every country but the US, which controls the dollar and prints it at will or
fiat. Because the majority of all international trade today is conducted in dollars,
other countries must engage in active trade relations with the US to get the
means of payment they cannot themselves issue. The entire global trade struc-
ture today has formed around this dynamic, from Russia to China, from Brazil
to South Korea and Japan. Every nation aims to maximize dollar surpluses
from their export trade because almost every nation needs to import oil.
This insures the dollar’s liquidity value and helps explain why almost 70
percent of world trade is conducted in dollars, even though US exports are
about one third of that total. The dollar is the currency that central banks
accumulate as reserves, but whether it is China, Japan, Brazil, or Russia, they
simply do not stack all these dollars in their vaults. Currencies have one
advantage over gold. A central bank can use it to buy the state bonds of the
issuer, the United States. Most countries around the world are forced to control
trade deficits or face currency collapse.72
Such is not the case in the United States, whose number one export prod-
uct is the dollar itself. This unique arrangement is largely due to the dollar’s
World Reserve Currency role, which is underpinned by its petrodollar role.

Every nation needs to obtain dollars to purchase oil, some more than others.
This means their trade targets are countries that use the dollar, with the US
consumer as the main target for export products of the nation seeking to
build dollar reserves.
To keep this process going, the United States has agreed to be importer/
consumer of last resort because its entire monetary supremacy depends on
dollar recycling. The central banks of Japan, China, South Korea, and numer-
ous others all buy US Treasury securities with their dollars. That in turn
allows the US to have a stable dollar, far lower interest rates, and a $500–
$600 billion annual balance of payments deficit with the rest of the world.
The Federal Reserve controls the dollar printing presses, and the world needs
its dollars.
Another benefit in this process for the US is that when oil is priced in a
monopoly currency, the nation that prints that currency greatly minimizes its
exposure to “currency risk” for their oil/energy prices. In other words, as
long as OPEC prices a barrel of oil in the $22–$28 range, US consumers have
very steady oil prices regardless of whether the dollar is highly valued or
highly devalued against other major currencies. Until the dollar’s devaluation
relative to the euro in 2002, OPEC’s pricing band generally reflected the
price of international oil trades, and the US enjoyed a stable “oil bill.” Under
the OPEC pricing band established in 2000, a US petrodollar would be
worth between 1.5 and 1.9 gallons of sweet crude, when the price of the barrel
of oil was between $22 and $28 respectively (42-gallon production barrel).
No other hard currency in the world guarantees access to the most valuable
“commodity” on earth — oil and gas. (Note: I do not consider oil to be a mere
commodity. As writer/commentator/veteran Stan Goff noted: “Oil is not a
normal commodity. No other commodity has five US navy battle groups
patrolling the sea lanes to secure it.”73) Furthermore, no other hard currency
possesses this unique “storage of wealth” that is realized as the monopoly
currency for international oil purchases.
After August 1971 when the dollar lost its “gold backing” and became a
floating currency, the following three years were periods of volatile dollar
devaluation with escalating inflationary pressures. Subsequently, elite US and
UK banking interests, in conjunction with Saudi Arabia, created an oil-
backed dollar. By 1975 all of OPEC adopted a petrodollar recycling system
in which the dollar transitioned from being — “as good as gold” — to being
“as good as black gold.” For better or worse, this also meant that the printing
on US Federal Reserve notes could have been changed from “In God We
Trust” to the more accurate descriptor “In OPEC We Trust,” or most specif-
ically, “In Saudi Arabia We Trust.” Despite the lack of discussion in
mainstream economic commentary regarding this unique geopolitical
arrangement, in essence US dollar hegemony is strongly underpinned by

petrodollar recycling.
The old rules for valuation of the US dollar and economic power were
based on its flexible market, free flow of trade goods, high per-worker pro-
ductivity, manufacturing output, trade surpluses, government oversight of
accounting methodologies by the Securities and Exchange Commission
(SEC), developed infrastructure, education system, and, of course, total cash
flow and profitability. Superior US military power afforded some additional
confidence in the dollar. While many of these factors remain present, over the
last two decades the US has diluted many of the safe-harbor economic fun-
damentals. Since the mid-1970s the petrodollar created new rules for the
dollar and essentially eliminated US currency risk for oil consumption.
The lack of currency risk is one of the reasons that
The lack of currency risk is taxes on oil and gas are much lower in the United States.
one of the reasons that taxes The average world price for a gallon of gasoline in 2004
on oil and gas are much was about $5, nearly 60 percent higher than typical US
lower in the United States. prices.74 Higher petrol taxes in the EU and elsewhere
The average world price for a provide a cushion for other countries’ currency risks for
gallon of gasoline in 2004 was imported oil and energy purchases. Without this, a par-
about $5, nearly 60 percent
ticular country could experience wild swings in daily
higher than typical US prices.
prices at the gas pump due to fluctuations in its domestic
currency’s valuation relative to the dollar on the interna-
tional currency market.
The US has traditionally been immune to oil price risk and has enjoyed
relatively stable gasoline prices for this same reason. However, chapters 4 and
5 present evidence that the US dollar’s immunity to currency risk regarding
international oil pricing is diminishing. A stable oil bill is likely one of the rea-
sons why the EU would prefer a euro-based oil transaction option. One
interesting development in the US presidential campaign in the autumn of
2000 was a small spike in global oil prices. In order to ease prices, the Clinton/
Gore administration released 30 million barrels of oil from the US Strategic
Petroleum Reserve, for which candidate Bush criticized candidate Gore.75
What most Americans failed to realize were the dramatic effects of higher
gas (or petrol, as it is commonly known) prices in Europe. These high fuel
prices in the autumn of 2000 occurred when the euro was at its historic low
point compared to the US dollar, valued at about 82 cents, or 18 percent less
than the dollar. The French, Germans, Spanish, Greeks, and related eurozone
nations not only experienced an increase in fuel prices due to a dip in oil pro-
duction, but also felt the brutal effects of currency risk due to the euro’s
relative low valuation.
The situation in Western Europe during September 2000 in many ways
appeared reminiscent of the fuel crisis in the US of 1973–1974 and 1979.
Indeed, that autumn the entire European economy basically ground to a halt
with near-violent protests due to high petrol prices. Considering the euro’s
susceptibility to currency risk regarding energy prices and its low relative valua-
tion in 2000, an unwelcome crisis unfolded with soaring petrol prices within
the EU.
The crisis lasted only a few days but was so acute that French fishermen
blockaded the Channel ports because their fuel costs had doubled, even
though their fuel was already tax-free. Schools were closed, hospitals were put
on red alert, and supermarkets started rationing bread. Transportation came
to a near standstill in much of Western Europe. The EU’s currency risk for
their imported oil was dramatic.
Thousands of truckers from across Germany clogged the streets
around the capital’s center Tuesday demanding relief from higher
gas prices. And they got some when the government offered low-
interest loans to some trucking companies.
The protest is the biggest so far in Germany, on the heels of
demonstrations that halted traffic in France, Britain and Spain before
easing in recent days. Elsewhere Tuesday, minor blockages contin-
ued in Spain, where markets ran out of fish, and Greek motorists
fearing for shortages due to trucker strikes lined up for gas.76
At the time, the euro was beginning its widespread use, but its lower val-
uation relative to the US dollar that autumn appears to have not only
adversely impacted oil prices in Western Europe, but also facilitated societal
discord. Protests erupted in France where thousands of farmers drove their
tractors into Paris as a sign of their displeasure at the rapid increase in fuel
prices. This resulted in the deployment of French riot police. News reports of
the economic fallout also included disruptions in the UK, Spain, and Greece.77
European governments likely sought strategies to mitigate further crises
stemming from oil currency risk. In June 2001, both France and Russia pro-
posed in the UN Security Council that the 1991 UN sanctions against Iraq
be lifted, thereby allowing foreign investment to flow into Iraq in an effort to
repair its deteriorating oil infrastructure. However, this proposal was pre-
dictably killed by the US and UK. In a situation similar to in present-day Iran,
American companies were barred from investing in Iraq’s vital oil industry. If
Iraq had been determined to be disarmed, the UN sanctions would had been
lifted, and oil-lease contracts awarded to France, Russia, China, and Italy
would have been initiated.78
Of course, two years later a US military invasion toppled Saddam Hussein, and
postwar oil contracts were strictly limited to the war’s coalition partners, which
in this case included several US oil companies, British Petroleum (BP), and
the Worley Group, an Australian oil-engineering firm. Subsequent chapters
elaborate on the significance of what Vice President Cheney’s Energy Task

Force termed “foreign suitors of Iraqi oil.”79
US Structural Imbalances: Twin Deficits

The position of the dollar today is similar to that of sterling in the
1920s and 1930s, when sterling ceased to be the automatic global
reserve currency and started to face competition from other cur-
rencies, notably the dollar.
— Paul Donovan, economist at the
global investment bank UBS, 200380
The dollar has been the leading international currency for as long
as most people can remember. But its dominant role can no
longer be taken for granted. If America keeps on spending and
borrowing at the present pace, the dollar will eventually lose its
mighty status in international finance. And that would hurt: the
privilege of being able to print the World Reserve Currency, a
privilege which is now at risk, allows America to borrow cheaply,
and thus spend much more than it earns, on far better terms than
are available to others.
— “The Disappearing Dollar,” the Economist, December 200481
The US ruling establishment has to date been rather successful in diverting the
country’s attention from its growing economic crisis. We have heard that an
economic recovery has finally arrived and that real job creation will ultimately
occur. In late 2004 the Federal Reserve finally began increasing the overnight
lending rate in an effort to stem inflationary pressures supposedly created by
a “growing economy.” Only time will tell if the Federal Reserve will be able
to restore the overnight lending rates between banks to normal levels with-
out creating economic stagnation as the era of cheap credit in the US returns
to a more sustainable level.
Regardless, without a significant increase in the number of jobs and increased
wages, individual debt cannot be serviced by personal income. As the Federal
Reserve increases the lending rate, the increase in asset prices will diminish,
but the high debt levels will remain. Indeed, not only will the debt remain,
but the cost of servicing it will go up noticeably. As interest rates rise in 2005,
wages and salaries must increase or massive debt defaults will follow.
The structural problems are beginning to expose themselves, most notably
in the dollar’s multi-year decline, along with significantly unbalanced domes-
tic fiscal policies. In this highly unstable system US trade deficits and net
debt/ liabilities to foreign accounts are now well over 25 percent of GDP and
climbing rapidly. Since the 2000 stock market decline and the re-emergence
of budget deficits in Washington, the net debt position almost doubled.82 The
net foreign indebtedness of the US has become an

Before 1985 the United States
ominous sign of an unbalanced global economy.
In 1999, the peak of the dot.com bubble mania, had been a net creditor, gaining
US net debt to foreigners was some $1.4 trillion. By the more from its foreign investments
end of 2004, it was projected to exceed $3.7 tril- than it paid to them in interest on
lion. Before 1985 the United States had been a net
83 Treasury bonds or other US assets.
creditor, gaining more from its foreign investments than However, since the end of the
it paid to them in interest on Treasury bonds or other Cold War, the US has become the
US assets. However, since the end of the Cold War, world’s largest debtor nation.
the US has become the world’s largest debtor nation.
In comparison, the EU traditionally has a small but positive net trade sur-
plus, with an aggregate current account of one percent. As a percent of its
GDP, during 2002 the US exported 9.3 percent, while the EU exported 19.7
percent. While the economic growth of the US economy far outpaced that of
the EU since 1999, when the euro was launched, this was partly due to the
dollar’s reserve role and the unique privileges derived from that designation.
Most notably, the dollar’s role has allowed the Federal Reserve and the US
government to inject an unprecedented amount of liquidity into the US
economy. During the 1960s France’s Charles de Gaulle complained about
the exorbitant privilege that accrued to the United States by virtue of the dol-
lar’s role in the post–WW II international monetary system.
Following the collapse of the Bretton Woods Agreement in 1971, all restraints
of proper fiscal discipline were lifted, resulting in excessive credit and debt
creation. Some have argued that this process, when combined with the dollar-
denominated debts from the IMF and World Bank, amounted to “super
hegemony.” Economist Michael Hudson famously titled his groundbreaking
1972 book Super Imperialism: The Origin and Fundamentals of US World
Dominance.84
It does not require much foresight to see the strategic threat of these
deficits to the role of the United States. With a stunning trade deficit of $665
billion, the US must import or attract, at a minimum, $1.8 billion every day,
to avoid a dollar collapse and keep its interest rates low enough to support
the debt-burdened corporate economy.
Euro Challenges US Dollar Hegemony

The monetary integration of Europe could alter ‘the political char-
acter of Europe in ways that could lead to confrontation with the
United States’ …. and could lead to a world that was ‘very different
and not necessarily a safer place.’
— Martin Feldstein, former head of the President’s Council
of Economic Advisors, 199785
Americans do not yet understand the significance of the euro, but

when they do it could set up a monumental conflict, it will change
the whole world situation so that the United States can no longer
call all the shots.
— Helmut Schmidt, former German Chancellor, 199786
The introduction of the euro heralded not only a new stage in European eco-
nomic integration, but also an important potential challenge to the dominance
of the US dollar as the international reserve currency. Indeed, it presaged the
only real macroeconomic challenge to US global primacy. When the euro was
launched in 1999, leading EU government figures, bankers from Deutsche
Bank, and French President Chirac went to major holders of dollar reserves
— China, Japan, Russia — and tried to convince them to shift some of their
reserves from dollars into euros.87 However, that proposal was perhaps pre-
mature at the time and clashed with the need to devalue the highly appreciated
euro so German exports could stabilize growth within the newly integrated
eurozone. A falling euro was the case until 2002.
With the debacle of the US dot-com bubble bursting, the Enron and
Worldcom finance scandals, and the recession in the US, the dollar began to
lose its attraction for foreign investors. The euro gained steadily until the end
of 2002. Then, as France and Germany prepared their diplomatic strategy to
block war in the UN Security Council, the central banks of Russia and China
quietly began to unload dollars and buy euros. The result was severe dollar
devaluation in the few months just before the war. Perhaps central banks were
hedging their investment risks due to war. Iraq is just one pawn in this high-
stakes strategic game of chess.
However, in Washington and New York, the upper echelons of the US
political and banking establishment knew what was at stake. The Iraq War was
not about Saddam Hussein’s old WMD program or the “war on terrorism.”
It was the threat that other members of OPEC would follow Iraq and shift to
a petroeuro system, thereby eroding the dollar’s dominant role in the global
economy. Engdahl forewarned that if France, Germany, Russia, or OPEC oil
exporting countries were to shift “even a small portion of their dollar reserves
into euro to buy bonds of Germany or France or the like, the United States
would face a strategic crisis beyond any of the postwar period.”88
As one economist termed it, an end to the dollar’s World Reserve role
would be a catastrophe for the United States. To stem a sudden divestiture of
dollar assets, US interest rates from the Federal Reserve would have to be
pushed higher than in 1979 when Paul Volcker raised rates above 17 percent
to stop the collapse of the dollar’s valuation.89
The global community is currently witnessing a clash between Wall Street
and competing Franco-German financial interests, with London and the
pound sterling caught in the middle. In 2002 Canadian economist Michel

Chossudovsky eloquently described the significance of these economic and
strategic developments in his book War and Globalization. Well before the
Iraq War, he noted the unfolding global monetary movements regarding the
dollar and the euro.
The European common currency system has a direct bearing on

strategic and political divisions. London’s decision not to adopt
the common currency is consistent with the integration of British
financial and banking interests with those of Wall Street, not to
mention the Anglo-American alliance in the oil industry (BP, Exxon-
Mobil, Texaco Chevron, Shell) and weapons production (by the “Big
Five” US weapons producers plus British Aerospace Systems).
This shaky relationship between the British pound and the US
dollar is an integral part of the Anglo-American military axis.
What is at stake is the rivalry between two competing global
currencies: the euro and the US dollar, with Britain’s pound being
torn between the European and the US-dominated currency sys-
tems. In other words, two rival financial and monetary systems are
competing worldwide for the control over money creation and
credit …. What we are dealing with is an ‘imperial’ scramble for
control over national economies and currency systems.90
Eurasia versus the Anglo-American Alliance

Oil and gas are not the ultimate aims of the US [in Iraq]. It’s
about control. If the US controls the sources of energy of its rivals
— Europe, Japan, China, and other nations aspiring to be more
independent — they win.
— Pepe Escobar, Asia Times, January 200291
The current clash of petrodollars versus petroeuros, which began in Iraq, is

by no means over. Despite the initial US military victory in Iraq, the after-
math of the war has not effectively thwarted other oil producers from stating
their interest in converting their export currency to the euro. During 2003
and 2004, numerous public statements by the Iranian and Russian govern-
ments illustrated momentum toward a petroeuro system.92 Naturally, these
developments appeared in the foreign media but not in the US media.
To be sure, the euro was created by European geopolitical strategists to
establish a multipolar world after the collapse of the Soviet Union. The aim
was to balance the overwhelming economic dominance of the US in world
affairs. If the euro succeeds in becoming an established international oil
transaction currency, this will indeed facilitate the creation of a bipolar world,
with the US and EU serving as two powerful engines for global economic
growth.
Regarding the Iraq invasion, it should be noted that neither the American
nor the French and German governments was primarily concerned with the
deplorable humanitarian condition and fate of Iraq’s people. The German
and French opposition to the US drive to war was recognition that America’s
rush to create absolute global domination posed a serious threat to the political,
economic, and strategic interests of the German and French ruling classes;
the goal of the opposition was to forestall the US’ ability to enhance its global
projection of power. In essence, the Iraq War was about dollars, euros, oil,
and geostrategic power in the 21st century.
In February 2003, a French intelligence-connected newsletter, Intelligence
Online, presented an interesting analysis, “The Strategy Behind Paris-Berlin-
Moscow Tie.”93 This article referred to the emergence of a France-Germany-
Russia bloc that prevented the US and UK from gaining UN Security
Council authorization for the Iraq War. This Paris-based intelligence report
noted the recent geostrategic shift of European and Russian political alliances
in an effort to create a counter power to the United States. Referring to these
new ties between France and Germany, and more recently with Russia, it
observed, “a new logic, and even dynamic seems to have emerged. An alliance
between Paris, Moscow, and Berlin running from the Atlantic to Asia could
foreshadow a limit to US power.”94
In his classic 1998 book, The Grand Chessboard, former US National
Security Adviser Zbigniew Brzezinski recognized that control over Eurasia
was a geostrategic imperative in order to maintain US hegemony. His candid
comments about a US empire may prove prophetic, as current events suggest
“collusion” between the “vassals” is forming in opposition to the neoconser-
vative doctrine of global domination:
Eurasian geostrategy involves the purposeful management of
geostrategically dynamic states and the careful handling of geopo-
litically catalytic states, in keeping with the twin interests of
America in the short-term preservation of its unique global power
and in the long-run transformation of it into increasingly institu-
tionalized cooperation. To put it in a terminology that hearkens
back to the more brutal age of ancient empires, the three grand
imperatives of imperial geostrategy are to prevent collusion and
maintain security dependence among the vassals, to keep tributaries
pliant and protected, and to keep the barbarians from coming
together.95
As reiterated by Engdahl, this basic “strategic approach of creating a
Eurasian heartland is the historical origin of many clashes between
Continental powers and maritime powers over the past century.”96 During the
1990s this emerging strategic challenge from a French-German-EU policy
regarding Iraq and other countries likely fostered some members in the US
policy establishment to begin contemplating preemptive strategies to enforce
the petrodollar system before Bush became president. Leading neoconservatives
were developing a bold strategy to preserve the faltering US economic system.
This strategy was detailed in policy papers written by members of PNAC.97
Major proponents of this consensus included Cold War veterans, such as
Donald Rumsfeld and Dick Cheney.
Although many Americans are not familiar with the imperial goals out-
lined by PNAC, foreign media reports suggest that traditional US allies are
alarmed at the implications of its global domination. In September 2000
PNAC’s major policy document, “Rebuilding America’s Defense: Strategy,
Forces and Resources for the New Century,” “The challenge of this coming
century is to preserve and enhance this ‘American peace,’ ” and in order to pre-
serve this “peace,” the US must be able to “fight and decisively win multiple,
simultaneous major-theater wars.”98 [emphasis added]
One of the most severe public critiques of neoconservative policies before
the Iraq War was offered by Tam Dalvell, a British Labour MP. In 2002 he
delivered the following polemical remarks regarding PNAC’s policy docu-
ment that called for large increases in defense spending in an effort to gain
control over numerous areas of “US strategic interest.”
This is a blueprint for US world domination — a new world order
of their making. These are the thought processes of fantasist
Americans who want to control the world. I am appalled that a
British Labour Prime Minister should have got into bed with a
crew which has this moral standing.99
In the week following the invasion of Iraq, Pat Rabbitte, leader of the
Labour Party in Northern Ireland, wrote in an opinion piece for the Irish
Times, “These men are intent on world domination or, as they put it them-
selves, ‘American global leadership.’ They have an imperial agenda, which
they have been pursuing for more than five years.” As Rabbitte candidly
noted, “In the eyes of international law, this is an illegitimate war. But that
does not concern these policy-makers.”100
Unfortunately, the majority of nations that have traditionally been our
allies share unfavorable views such as those expressed by Dalvell and Rabbitte.
According to international polls conducted one year after the Iraq War, the
majority of people in allied nations, such as Canada, Mexico, Britain, France,
Italy, Germany, and Spain, had an unfavorable view of President Bush’s role
in world affairs.101 In addition, according to a poll conducted by the Pew
Global Attitudes Project, the majority of people living in Jordan, Morocco,
Pakistan, Turkey, France, Germany, and Russia also held negative views
toward the US. The majority of respondents — including countries that have
historically been allied with the US — believed “the US is conducting its
campaign against terror to control Mid East oil and to dominate the world.”102
[emphasis added]
Only in the United States and Britain did the majority of
Only in the United people indicate that the campaign against terror was a sincere
States and Britain did effort to reduce international terrorism. It is clear much of the
the majority of people global community has lost confidence in US leadership and is
indicate that the suspicious of its intentions regarding the war on terror. In
campaign against terror
addition, astute observers and writers have become cognizant
was a sincere effort to
of the fact that the 2003 Iraq War was initiated from a defensive
posture — in an effort to preserve a faltering system of
reduce international
American economic hegemony. Unfortunately, without a major
terrorism.
change in US strategy, the Iraq War will not be the last impe-
rial war over the oil reserves in the Persian Gulf and elsewhere.
The global community has reached a critical moment in history, with two
foreseeable outcomes: an attempt at multilateralism and the preservation of
peace, economic prosperity, and security; or a unilateralist world plagued with
increasing geopolitical tensions that could lead to global warfare over depleting
oil and competing oil transaction currencies. What is not yet clear, and must
be openly debated within societies and governments, is how to adjust the
global economy to the formidable challenges presented by Peak Oil, and how
to piece together a compromise between the US, EU, and Asia in regard to
a more balanced global monetary system.
The success or failure to create multilateral accords toward these two
colossal undertakings will define the human condition in the 21st century.
This book examines the history of these events and offers numerous policy
recommendations within a multilateral framework.
The liberty of speaking and writing guards our other liberties.
Dissent is the highest form of patriotism.
— Thomas Jefferson
Two
US Geostrategy and the Persian Gulf:

1945–2005
I hereby find that the defense of Saudi Arabia is vital to the

defense of the United States.
— Franklin D. Roosevelt, US President 1933–1945, 19431
We could solve all our economic and political problems by taking

over the Arab oil fields [and] bringing in Texans and Oklahomans
to operate them.
— Former US Saudi Ambassador, Chris Akins, commenting
on an article by Miles Ignotus (pseudonym), “Seizing Arab Oil,”
Harper’s Magazine, 19752
The process of transformation, even if it brings revolutionary

change, is likely to be a long one, absent some catastrophic and
catalyzing event — like a new Pearl Harbor.
From an American perspective, the value of such bases [in
Iraq] would endure even should Saddam Hussein pass from the
scene. Over the long term, Iran may well prove as large a threat
to US interests in the Gulf as Iraq has. And even should US-
Iranian relations improve, retaining forward-based forces in the
region would still be an essential element in US security strategy
given the longstanding American interests in the region.
— Project for a New American Century (PNAC),
“Rebuilding America’s Defenses: Strategies, Forces and
Resoaurces for a New Century,” 20003
43
First, for more than seven years the United States is occupying the
lands of Islam in the holiest of its territories, Arabia, plundering its
riches, overwhelming its rulers, humiliating its people, threatening
its neighbors, and using its [military] bases in the peninsula as a
spearhead to fight against neighboring Islamic peoples.
There is no better proof of all this than their eagerness to
destroy Iraq, the strongest of the neighboring Arab states, and
their attempt to dismember all of the states of the region, such as
Iraq and Saudi Arabia and Egypt and Sudan into petty states,
whose division and weakness would ensure the survival of Israel
and the continuation of the calamitous Crusader [US] occupation
of the lands of Arabia.
— Osama bin Laden, “Declaration of the World Islamic
Front for Jihad Against the Jews and the Crusaders,” 19984
US Geostrategy and the Persian Gulf 45
Covert Hegemony to Neoconservative Domination
I n February 1945, as allied victory in World War II was becoming assured,

President Franklin D. Roosevelt held a meeting on a US Navy warship
with Abdul-Aziz ibn Saud, known as Ibn Saud, the founder of the modern
Saudi dynasty. Although the official record is somewhat silent about the issue
of oil, it is generally agreed that after Roosevelt and King Saud met, the US
tacitly agreed to protect the royal family against its external and internal ene-
mies, and in return the US was assured privileged US access to the vast oil
reserves of Saudi Arabia.5 The Saudi dynasty has relied on US military agree-
ments to arm and protect the Saudi monarchy as a quid pro quo, with Saudi
Arabia traditionally ranking as one of the largest buyers of US arms.
(Approximately 25 percent of total US armament exports from 1950 to 2000
were purchased by Saudi Arabia.)
Almost 60 years later another US president, George W. Bush, held meetings
in the summer of 2001 at his private home in Crawford, Texas, with Saudi
ambassador Prince Bandar. On September 13, 2001, just two days after the
terrorist attacks in New York and Washington, President Bush dined with the
Saudi ambassador at the White House.6 This meeting occurred despite the
fact that US intelligence agencies reported that Osama bin Laden, an exiled
Saudi terrorist, had just attacked the US, murdering thousands. For many
years he had received the majority of his funding from wealthy Saudis.
Even after the 9/11 tragedy, Saudi purchases of US armaments in 2002
were a very robust $5.2 billion.7 These seemingly incongruous events are not
surprising given an objective analysis of longstanding US foreign policies in
the region. Over the past 60 years, a common trajectory of US foreign policy
has been a continuous preoccupation with the fossil fuels of the Middle East,
with particular focus on Saudi Arabia.
Following the oil embargos during the 1970s,
American citizens were forced to become painfully aware The oil price shocks of
of the importance of oil from the Persian Gulf region. 1973–1974 and again in 1979
The oil price shocks of 1973–1974 and again in 1979 resulted in the formulation of
resulted in the formulation of aggressive geostrategic aggressive geostrategic plan-
planning that included a US military invasion to gain ning that included a US
control over the oil reserves in the Persian Gulf. The ori- military invasion to gain con-
gins of these policies became public in 1975, when trol over the oil reserves in the
Henry Kissinger stated the US was prepared to wage
Persian Gulf. The origins of
war over oil.
these policies became public in
In 1980 President Jimmy Carter initiated the Carter
1975, when Henry Kissinger
Doctrine when he stated the US would use any force
stated the US was prepared to
necessary, including military power, to repel foreign
wage war over oil.
influence (i.e., Soviet) from the Persian Gulf oil supply.8
In view of the Iran Revolution and Soviet invasion of
Afghanistan in 1979, along with the “Cold War politics” during that time,
the Carter Doctrine was an understandable policy statement. It was a clear
announcement that the US military would intervene if the global oil spigot
in the Middle East were threatened by our formal arch rival, the Soviet Union.
Subsequent to the demise of the Soviet Union in 1989, it would seem that
planning for a US military invasion of the Persian Gulf would have diminished.
However, in August 1990 Iraq invaded Kuwait, thereby affording Washington
a new impetus and opportunity to position US military force in the region.
In 1991 former president George H.W. Bush brought together a large UN
coalition to forcibly drive Saddam Hussein’s army out of Kuwait during
Operation Desert Storm.
Following the 1991 Persian Gulf War, the US was “invited” by the Saudi
monarchy to maintain US military forces near Riyadh. At the same time, the
Department of Defense stored vast quantities of munitions and military material
in Kuwait and Qatar in order to facilitate future combat operations without
having to wait for the delivery of heavy equipment.9 Moreover, during the
1990s Iraq’s military force was systematically diminished through UN sanctions
and continued aerial bombing strikes by US and UK aircraft. Operations
using overt US military force in the Persian Gulf region were primarily limited
to Iraq’s air-defense installations, with the exception of the 1998 Operation
Desert Fox bombing campaign of locations suspected of WMD production
facilities.
Interestingly, just as the Iraq War was initiated in March 2003, an article
by Robert Dreyfus in Mother Jones Magazine chronicled the resurrection of
US geostrategy from the 1970s that advocated an invasion of the Persian
Gulf. His award-winning article, “The Thirty-Year Itch,” included an interview
with James Akins, a former US diplomat, who confirmed the long-standing
military plans to invade and control the oil in the Persian Gulf region.10 Akins
lucidly recalled his personal experiences when the original invasion plan sur-
faced almost 30 years ago. He stated: “It’s the Kissinger plan. I thought it had
been killed, but it’s back.”11 The following excerpt from Dreyfus’s article illus-
trated the historical context of the original Kissinger plan:
In 1975, while Akins was ambassador in Saudi Arabia, an article

headlined “Seizing Arab Oil” appeared in Harper’s [Magazine].
The author, who used the pseudonym Miles Ignotus, was identified
as ‘a Washington-based professor and defense consultant with
intimate links to high-level US policymakers.’ The article outlined,
as Akins puts it, ‘how we could solve all our economic and political
problems by taking over the Arab oil fields [and] bringing in
Texans and Oklahomans to operate them.’ Simultaneously, a rash
of similar stories appeared in other magazines and newspapers. ‘I
knew that it had to have been the result of a deep background

briefing,’ Akins says. ‘You don’t have eight people coming up
with the same screwy idea at the same time, independently.’
‘Then I made a fatal mistake,’ Akins continues. ‘I said on tele-
vision that anyone who would propose that is either a madman, a
criminal, or an agent of the Soviet Union.’ Soon afterward, he
says, he learned that the background briefing had been conducted
by his boss, then Secretary of State Henry Kissinger. Akins was
fired later that year.12
An overview of current global oil consumption illustrates the pervasiveness
of the increasing oil demand in the global economy. Global oil use in 2004
was estimated at 82 million barrels a day (mb/d). In 20 years world oil con-
sumption is projected to increase dramatically to 120 mb/d. By 2020 it is
anticipated that the Asian economies, lead by China, will consume 25 percent
of the world’s energy; the US, 25 percent; Western Europe, 18 percent;
Eastern Europe and the former Soviet Union, 13 percent; and Latin America,
5 percent.13 In 2004 the US consumes approximately 20 mb/d, or nearly one
out of every four barrels of global oil production. The US has an estimated 2
percent of the world’s oil reserves but uses 25 percent of the world’s oil.
Twenty-four percent of US oil imports are from the Middle East. These
trends are expected to rise sharply as other sources disappear.
The Middle East holds an estimated 65 percent of global oil reserves, with
Saudi Arabia reported to hold the world’s largest reserves (25 percent of the
total). Recognizing that the Saudi monarchy has become increasingly alienated
from Washington, has come under attack from probable Al Qaeda elements,
along with the fact that most of the 9/11 hijackers were reported to be Saudi
citizens, it is obvious that US policy-makers may be concerned about losing
access to the eastern oil fields of Saudi Arabia should the monarchy fall. Iran
and Syria have often been mentioned as potential targets under the “war on
terror,” but the neoconservatives have repeatedly suggested that Iraq is the
first stage in a much larger project of regional regime change.
Cold War Geostrategy: Domestic Peak Oil in the

Former Soviet Union
‘In November 1985, oil was $30 a barrel,’ recalled the noted oil
economist Philip Verleger. By July of 1986, oil had fallen to $10
a barrel, and it did not climb back to $20 until April 1989. ‘Everyone
thinks Ronald Reagan brought down the Soviets,’ said Verleger.
‘That is wrong. It was the collapse of their oil rents.’ It’s no accident
that the 1990s was the decade of falling oil prices and falling walls.
— Thomas Friedman, “A New Mission for America,” 200414
As illustrated throughout Daniel Yergin’s classic book, The Prize: The Epic
Quest for Oil, the pursuit of petroleum was a key strategic factor during both
world wars and the Cold War.15 Knowledgeable observers have suggested that
the decline of domestic Russian oil production likely played a much larger role
in ending the Cold War than what is typically acknowledged. History suggests
that Saudi-induced low oil prices during the mid-1980s, in conjunction with
a natural decline in Russian oil production, contributed to the economic decline
in the downfall of the Soviet Union. Strategically, the Soviet invasion of
Afghanistan accelerated their economic decline.
Recently declassified CIA documents suggested such topics were carefully
analyzed with regard to the anticipated peak in Russian oil production. In
March 1977 a CIA intelligence memorandum, “The Impending Soviet Oil
Crisis,” was issued by the Office of Economic Research and classified Secret.16
It was made publicly available in January 2001 in response to a Freedom of
Information Act (FOIA) request. This memorandum predicted an impending
peak in Soviet oil production “not later than the early 1980s.”17 The authors
noted this phenomenon would have important consequences regarding the
Cold War standoff. Oil production charts within this document estimated the
goal for Russian oil production in 1980 would be 12.9 mb/d, but the CIA
predicted that peak oil would likely occur at 11.8 mb/d.
The CIA analysts were fairly close in their estimates; actual oil production
in Russia showed a preliminary peak in 1983 with 12.5 mb/d, followed by
the actual peak in 1987 at 12.6 mb/d. Russian oil production in 2004 is
approximately 9 mb/d, approximately 25 percent less than its peak out-
put.
The unnamed authors of the CIA document proffered: “During the next
decade, the USSR may well find itself not only unable to supply oil to Eastern
Europe and the West on the present scale, but also having to compete for
OPEC oil for its own use.” Additionally, this document forecast that peak oil
within the Soviet Union would create adverse economic influences upon the
Soviet Union’s fiscal solvency. It stated, “When oil production stops growing,
and perhaps even before, profound repercussions will be felt on the domestic
economy of the USSR and on its international economic relations.”18 [emphasis
added] Indeed, ten years after this memo was written, Russia reached peak oil
production. Two years later, the Berlin Wall came crashing down, and the
Cold War was finally over.
In 1977 the CIA was undoubtedly interested in this subject as the US had
reached domestic peak oil production in 1970–1971, an event that marked
the end of an era, and a difficult period of economic decline for the US econ-
omy. Although difficult to imagine today, until that time America was the
world’s foremost oil producer, and its oil reserves were crucial in helping the
Allies prevail in both the world wars of the 20th century. During much of the
Cold War, the former Soviet Union was the second-largest oil-producing
nation (today Russia is the second-largest oil exporter in the world).
Evidently the CIA analysts who prepared this document clearly under-
stood the importance of domestic oil production peaking in the US and
predicted that the peaking of oil production in the USSR would have similar
consequences for the Soviet Union.
Richard Heinberg, author and energy expert, postulated a compelling theory
based on this CIA document — did a joint US/Saudi strategy facilitate eco-
nomic decline of the USSR — which was at that time trapped in an expensive
occupation and futile quagmire in Afghanistan? Heinberg suggested that for-
mer CIA Director William Casey may have advised the Reagan administration
to persuade Saudi Arabia to dramatically increase oil production during the
1980s, knowing that Soviet oil production would reach its peak even sooner
under such exacerbating economic pressure. Heinberg summarized:
Throughout the last decade of its existence, the USSR pumped
and sold its oil at the maximum possible rate in order to earn for-
eign exchange income with which to keep up in the arms race and
prosecute its war in Afghanistan. Yet with markets awash with
cheap Saudi oil, the Soviets were earning less even as they pumped
more. Two years after their oil production peaked, the economy
of the USSR crumbled and its government collapsed.19
Regardless of this hypothesis, it is a matter of historical record that Saudi
Arabia increased its oil production significantly after 1985, which quickly
reduced global oil prices by over 60 percent. This certainly had an adverse
effect on the Soviet Union’s main export income and, consequently, their
ability to maintain foreign currency reserves when it was engaged in its own
“Vietnam experience” against the Mujahideen of Afghanistan. Although still
speculative at this point in history, it seems plausible that Washington might
have utilized an innovative form of oil/economic warfare to cripple the Soviet
Union’s economy and thereby facilitate its ultimate collapse.
World Oil Consumption 2000 to 2020

I cannot think of a time when we have had a region emerge as
suddenly to become as strategically significant as the Caspian.
—Former CEO of Halliburton, Dick Cheney, 199820
On our present course, America 20 years from now will import
nearly two out of every three barrels of oil — a condition of
increased dependency on foreign powers that do not always have
America’s interests at heart.
— Vice President Cheney’s Energy Task Force paper, 200121
The Cheney report is very guarded about the amount of foreign

oil that will be required. The only clue provided by the [public]
report is a chart of net US oil consumption and production over
time. According to this illustration, domestic oil field production
will decline from about 8.5 million barrels per day (mb/d) in
2002 to 7.0 mb/d in 2020, while consumption will jump from
19.5 mb/d to 25.5 mb/d. That suggests imports or other sources
of petroleum … will have to rise from 11 mb/d to 18.5 mb/d.
Most of the recommendations of the NEP [National Energy
Policy] are aimed at procuring this 7.5 mb/d increment, equiva-
lent to the total oil consumed by China and India.
— Michael Klare, international energy expert, “Bush-Cheney
Energy Strategy: Procuring the Rest of the World’s Oil,” Foreign
Policy in Focus, 200422
In a speech to the International Petroleum Institute in London in late
1999, Dick Cheney, then CEO of the world’s largest oil services company,
Halliburton, presented a disconcerting forecast to his audience of oil industry
insiders: “By some estimates there will be an average of two percent annual
growth in global oil demand over the years ahead, along with, conservatively,
a three percent natural decline in production from existing reserves.”23
Cheney ended his presentation on a profound note: “That means by 2010 we
will need on the order of an additional fifty million barrels a day.” That under-
stated reference to an “additional fifty million barrels” per day is equivalent
to more than five times the oil production of Saudi Arabia (current output of
approx. 9 mb/d).
On January 20, 2001, President George W. Bush was sworn into office as
the 43rd president. Nine days later he announced that Vice President Cheney
would chair a cabinet-level group of advisors in the newly created National
Energy Policy Development Group (NEPDG), commonly referred to as
Cheney’s Energy Task Force. This group began its meetings immediately, and
on May 17, 2001, released their report, formally titled National Energy Policy
(NEP).24
Perhaps it was no coincidence that Cheney, as Vice President, was chosen
to head a Presidential Task Force on Energy as his first major assignment. As
Engdahl noted, Cheney “knew the dimension of the energy problem facing
not only the United States, but the rest of the world.”25 Although the full con-
tents of meetings held by the NEPDG remain secret based on a ruling of the
US Supreme Court, the original report illustrated the energy challenges that
are facing the United States.
The Middle East is reported to contain approximately 65 percent of the
world’s “proven” oil reserves. Although such estimates are rightly viewed with
considerable skepticism by many oil geologists,

it is typically accepted as factual that Iraq alone The Middle East is reported to
has a reported 11 percent of the world’s proven contain approximately 65 percent of
reserves, an estimated 112 billion barrels. The US the world’s “proven” oil reserves. ...
Energy Department further stated that some it is typically accepted as factual that
analysts (the Baker Institute, Center for Global Iraq alone has a reported 11 percent
Energy Studies, and the Federation of American of the world’s proven reserves, an
Scientists) believed that the vast western desert estimated 112 billion barrels.
region of Iraq might hold up to an additional
100 billion barrels of oil, but this area has not
been explored. The Department of Energy’s website also lists a caveat,
“Other analysts, such as the US Geological Survey, are not as optimistic, with
median estimates for additional oil reserves closer to 45 billion barrels.”26
[emphasis added]
Michael Klare, an international expert on natural resource conflict and
author of Resource Wars 27 and Blood for Oil,28 provided the following analysis
of the NEPDG report. The report made three key points about US energy
challenges between 2000 and 2020:
The United States must satisfy an ever-increasing share of its oil
demand with imported supplies. (Note: By 2020, daily US imports
will total nearly 17 million barrels, or 65 percent of consumption, up
from 10 m/bl, or 53 percent in 2000.)
The United States cannot depend exclusively on traditional
sources of supply like Saudi Arabia, Venezuela and Canada. It will
also have to obtain substantial imports from new sources, such as
the Caspian states, Russia, and West Africa.
The United States cannot rely on market forces alone to gain
access to these added supplies, but will also require a significant effort
on the part of government officials to overcome foreign resistance to the
outward reach of American energy companies.29 [emphasis added]
Instead of advocating various policies to reduce America’s consumption of
oil, either through conservation, improvements in efficiency, or the develop-
ment of large-scale alterative energy sources, the 2001 Bush/Cheney energy
policy implicitly assumed the US will continue to consume what is almost
universally regarded as excessive oil consumption. According to Klare this was
a “fateful decision.” It means the US must find a way to increase oil imports
from 11 mb/d to 18.5 mb/d by 2020. Klare noted, “Securing that increment
of imported oil — the equivalent of total current oil consumption by China and
India combined — has driven an integrated US oil-military strategy ever
since.”30 [emphasis added] The 2001 NEPDG energy plan obliquely inferred
that the primary role of the US military in the beginning decades of the 21st
century will be to “secure” physical control of the world’s largest hydrocarbon

reserves.
Klare and others have noted that the Bush administration has pursued a vis-
ible convergence of the US military with regard to energy issues. The influential
Council on Foreign Relations (CFR) advocated that the Defense Department
be included in Cheney’s energy task force meetings. Secondly, a joint publi-
cation by the Council on Foreign Relations and the James A. Baker III
Institute for Public Policy unequivocally, if obliquely, recommended “military
interventions [to] secure” energy supplies.31
Geostrategic policies advocating an overt US military invasion of the
Persian Gulf went below the surface during the 1980s and 1990s, but the
group of strategists who later became known as “neoconservatives” main-
tained this viewpoint throughout this period. Most of these individuals served
with the Reagan Defense Department, and some such as Cheney served in
the former George H.W. Bush administration.
For many years successive US administrations have sought to control OPEC,
which was largely accomplished by convincing the Saudis to invest heavily in
the US financial instruments and armament procurements. However, with
the possible exception of Russia, oil production in non-OPEC countries is
now in permanent decline, giving the OPEC countries a dominant position
in the global oil market into the foreseeable future.
Project for a New American Century (PNAC) Neoconservative

Policies: 1992_2002
Our first objective is to prevent the re-emergence of a new rival,
either on the territory of the former Soviet Union or elsewhere,
that poses a threat on the order of that posed formerly by the
Soviet Union.
There are three additional aspects to this objective: First, the
US must show the leadership necessary to establish and protect a
new order that holds the promise of convincing potential competi-
tors that they need not aspire to a greater role or pursue a more
aggressive posture to protect their legitimate interests. Second, in the
non-defense areas, we must account sufficiently for the interests
of the advanced industrial nations to discourage them from chal-
lenging our leadership or seeking to overturn the established
political and economic order. Finally, we must maintain the mech-
anisms for deterring potential competitors from even aspiring to a
larger regional or global role. [emphasis added]
— February 18, 1992, draft of the Defense Planning
Guidance for the Fiscal Years 1994–1999, prepared by then
Undersecretary of Defense for Policy Paul Wolfowitz, for then

Secretary of Defense Cheney.32
The United States has for decades sought to play a more perma-
nent role in Gulf regional security. While the unresolved conflict
with Iraq provides the immediate justification, the need for a sub-
stantial American force presence in the Gulf transcends the issue
of the regime of Saddam Hussein.
New methods of attack — electronic, ‘non-lethal,’ biological
— will be more widely available .… combat likely will take place
in new dimensions, in space, cyberspace, and perhaps the world of
microbes .... advanced forms of biological warfare that can target
specific genotypes may transform biological warfare from the
realm of terror to a politically useful tool.
— Project for a New American Century,
“Rebuilding America’s Defenses: Strategies, Forces and
Resources for a New Century,” 200033
Despite the initial shock of the terrorist attacks in New York and Washington,
many aspects of current US geostrategy following 9/11 were apparently
planned in the late 1990s. A cursory analysis of various policy documents
published by PNAC relay sufficient details of the Bush administration’s global
strategy. Interestingly, the American media and general population failed to
appreciate the implications of these radical policy papers published over a ten-
year period, beginning in 199234 and continuing into 199835 and 2000.36
In 1992, the final year of George H.W. Bush’s presidency, Paul Wolfowitz
took the lead in drafting an internal set of military guidelines that is typically
referred to as the Defense Planning Guidance. Wolfowitz was then undersec-
retary of defense for policy (the Pentagon’s third-highest-ranking civilian)
and originally authored this document for then Secretary of Defense Cheney.
This draft document advocated that, with the fall of the Soviet Union, a window
of opportunity was available for the US to exert an aggressive unilateral doctrine
with a stated goal of preventing any nation or any group of nations from
“aspiring to a larger regional or global role or pursue a more aggressive posture
to protect their legitimate interests.”37 The Washington Post summarized this
1992 draft with the following description:
The central strategy of the Pentagon’s framework is to ‘establish
and protect a new world order’ that accounts ‘sufficiently for the
interests of the advanced industrial nations to discourage them from
challenging our leadership,’ while at the same time maintaining a
military dominance capable of ‘deterring potential competitors from
even aspiring to a larger regional or global role.’38 [emphasis added]
This strategy for US global dominance requires a hybrid economic/military/

intelligence nexus in order to enforce American supremacy in the immediate
post–Cold War period. Forebodingly, in this Defense document Wolfowitz
defined “access to vital raw material, primarily Persian Gulf oil” as a key objective
of US policy and advocated military intervention — preemptive, if necessary
— to gain such access.39 However, this document did not escape the public’s
attention once it was leaked to the press, instantly creating controversy in
Washington DC and likely within the capitals of other nations. In 2003 PBS’s
Frontline interviewed Washington Post reporter Barton Gellman, who offered
insight into the reactions of this story in 1992:
You have to take yourself back to 1992. This is the first time that the
Defense Department gathers itself to say, ‘What is our new strate-
gic mission in the world now that there is no more Soviet Union?’
[And] they said, ‘Our number one mission in the world, now that
we are the sole superpower is to make sure we stay that way.’ They
wanted to pocket that gain. And what was so politically insensitive
in this internal document, which wasn’t meant for distribution, is
it talked about not only Russia, but Germany, Japan, India, all as
potential regional hegemons that could rise up to challenge the
United States as at least a regional and, potentially, a global super-
power. They said their number one mission is to quash that.
PBS reporter: What was the reaction?
Well, most of the countries I just named were on some kind of
friendly terms, or central allies of the United States. They were
none too pleased to be named as potential rivals. The public reac-
tion was, ‘Good God, we’re supposed to have a peace dividend
now. The Cold War is over. Let’s get on with our lives. Of course,
stay strong enough to protect ourselves. But what in the world are
you doing, going out there and looking for trouble?’
It was very controversial in Congress. There was an enormous
amount of commentary by the opinion leaders saying, ‘This is way
over the top.’ And, it was an election year. And they caved.40
Based on the largest worldwide protests in history during February 14–16,
2003, (estimated to have included 12 million people in 700 cities, represent-
ing 60 countries) the overall reaction of the global community protesting US
ambitions for an Iraq War was assuredly unprecedented. Based on the political
fall out in both the UN and NATO, the majority of governments sympathized
with their citizens by expressing manifest intolerance of a US geostrategy
based upon unilateral warfare and global domination.
Indeed, the world community seems increasingly intolerant and fearful of
a hegemonic US superpower in the opening years of this new century. The
failure of the Bush administration to gain UN authorization for the 2003 Iraq
War, in conjunction with the largest anti-war protests in recorded history,
showed that a great number of nations and their citizens still opposed the
neoconservative agenda as “way over the top.”
The supporters of PNAC openly seek to create a global empire, which in
their terms is a blueprint for maintaining global US preeminence, precluding
the rise of a great power rival, and shaping the international security order in
line with American principles and interests. These policy-makers see little or
no value in using America’s “soft power.” Contrarily, they advocate “hard
power” policies, such as an aggressive militarization of US foreign policies,
and provide an excellent contrast to the concept coined by Joseph Nye as
America’s traditional reliance on multilateral approaches when possible, or in
his terms, “soft power.”41
Instead of using America’s soft power, the neoconservatives advocated
grandiose unilateral policies designed to “discourage advanced industrial
nations from challenging our leadership or even aspiring to a larger regional
or global role.”42 [emphasis added] What’s more, this document stated that
the doctrine of US global dominance must be pursued “as far into the future
as possible.”43 Numerous governments have indicated their revulsion to such
a contemptuous geostrategy, which is not in the least surprising.44
This small group of ideologues provided the basis for a new overt US foreign
policy agenda. To appreciate the significance of 9/11 and how it has been
used to pursue previously documented policies requires careful analysis.
Individuals, such as Paul Wolfowitz, were considered fringe members of the
Republican Party’s far-right wing. After the 1992 elections, this group was
out of power but began the process of preparing for the next opportunity
when Republicans would win back the White House.
In 1997 like-minded members of this group had founded the Project for
a New American Century (PNAC).45 This organization included an impressive
array of politicians and theorists: Donald Rumsfeld, Dick Cheney, Lynne
Cheney, James Woolsey, Paul Wolfowitz, Richard Perle, James Bolton, Jeb
Bush, Zalmay M. Khalilzad, William Bennett, and Dan Quayle. The views of
PNAC members, despite their reputations and authority, were often regarded
as perhaps too extreme by the mainstream conservatives who controlled the
Republican Party.46
However, following the 2000 election of George W. Bush, these former
political “outsiders” became powerful “insiders” within the White House,
and were placed in positions where they could exert maximum influence on
US policy: Dick Cheney as Vice President, Rumsfeld as Defense Secretary,
Wolfowitz as Deputy Defense Secretary, I. Lewis “Scooter” Libby as
Cheney’s Chief of Staff, Elliot Abrams as the official in charge of Middle East
policy at the National Security Council (NSC), Dov Zakheim as comptroller
for the Defense Department, John Bolton as Undersecretary of State,

Richard Perle as chair of the Defense Policy advisory board at the Pentagon,
and Paula Dobriansky as the Undersecretary of State for Global Affairs in the
Bush administration.47 Additional members of the PNAC included Jeb Bush,
younger brother of George W. Bush and Governor of Florida, and William
“Bill” Kristol, editor of the Weekly Standard magazine.
The military–industrial–petroleum–intelligence nexus was also represented
in PNAC by former Lockheed-Martin vice president Bruce Jackson, ex-CIA
director James Woolsey, and senior fellow at the Hudson Institute, Norman
Podhoretz, all of whom were signatories to the PNAC policy document,
“Rebuilding America’s Defenses: Strategies, Forces and Resources for a New
Century.”48 In effect, PNAC members were able to construct incoming
President George W. Bush’s foreign policies. In his first eight months in
power, some of these policies were openly pursued, such as insistence on a
National Missile Defense (NMD) system and the cancellation of the Anti-
Ballistic Missile (ABM) treaty.
However, these advisors were not able to pursue the more ambitious aspects
of their global strategy. PNAC’s famous strategy document from September
2000 lamented that the desired “transformation” of the US military would
be a long and difficult process without a massive external threat to provide a
catalyst for their larger goals. This document noted that perhaps only a “new
Pearl Harbor” could facilitate their goals of military “transformation.”49
Historians will undoubtedly record that it was the
Tragically, the American media has Bush administration’s response to the historical
still failed to offer much-needed opportunity presented in the aftermath of the 9/11
analysis to inform the people of terrorist attacks that allowed the government to
the imperial policies espoused
overtly pursue previously unpalatable foreign policies.
by PNAC and the resulting
Tragically, the American media has still failed to offer
much-needed analysis to inform the people of the
international blowback stemming
imperial policies espoused by PNAC and the resulting
directly from the doctrine of
international blowback stemming directly from the
US global domination.
doctrine of US global domination.
In contrast to the subservient media, information
about this group and careful analysis of their policy documents can be found
on numerous websites. Perhaps most significant is the widespread analysis by
European policy-makers, many of whom have openly expressed significant
concerns about the transformation of the US from a largely multilateralist
nation to one that openly espouses an eagerness for global dominance and
endless warfare. PNAC’s policies are seen as an open US declaration to seek
global domination — at any costs.
PNAC’s strategy papers provided the theoretical basis for the controver-
sial US defense document released in September 2002, “The National
Security Strategy of the United States of America” (NSS).50 The Iraq War was
the test case of the new “Bush doctrine” of “preventative warfare.” One of
the many US websites that analyze and critique neoconservative geostrategy
is Bernard Weiner’s informative “Crisis Papers.”51 Weiner, who has taught
American politics and international relations at Western Washington University
and San Diego State University, offered the following analysis of the under-
lying doctrine behind the NSS strategy, otherwise known as the Bush doctrine:
The [National Security Strategy of the United States of America]
document asserts as the guiding policy of the United States the
right to use military force anywhere in the world, at any time it
chooses, against any country it believes to be, or it believes may at
some point become, a threat to American interests. No country
has ever asserted such a sweeping claim to global domination as is
now being made by the United States.
Furthermore, it declares that ‘The US national security strategy
will be based on a distinctly American internationalism that reflects
the union of our values and our national interests.’ This bold sort
of internationalism may appear presumptuous to other countries,
governments and religious groups when it proclaims that what-
ever is good for America is good for the world. As President Bush
asserts in the introduction of the document, America’s values ‘are
right and true for every person, in every society.’52 [emphasis added]
While many people from around the world naturally tend to harbor nos-
talgic notions of their own country, it is often problematic for a nation state
to boldly proclaim that its national interests and values are true for every
nation on Earth. The NSS did not address what constitutes national interests
and, as such, represented another Orwellian phrase similar to the oft-repeated,
but never actually defined, “American way of life.” According to the Declaration
of Independence, the unalienable universal rights of mankind are to “Life,
Liberty and the pursuit of Happiness.” Clearly preventative warfare is not one
of the self-evident truths, but rather appears to be an aggressive strategy for
enforcing our national interests upon other states.
The essential claim in the 2002 NSS document is the right of the US to
take unilateral military action against another country without having to offer
verifiable evidence that it is acting to prevent a clear and verifiable threat of
attack. This assertion was used to justify the 2003 Iraq War and basically
stated that the US has all-encompassing power to resort to violence whenever
it decides to, while using very vague language that cannot withstand the
scrutiny of critical analysis or international law: “We must be prepared to stop
rogue states and their terrorist clients before they are able to threaten or use
weapons of Mass Destruction.”53
This philosophy represents a radical departure from the post–WW II period,

as it does not apply to a nation’s right to self-defense from imminent attack,
but proclaims that any potential, ambiguous threats at some point in the future
will be used to justify US military action. From a forthright geostrategic per-
spective, this policy appears to advocate the use of military force to overrule
economic realities. As US policy-makers lose confidence in the economic
strength and competitiveness of the American economic structure vis-à-vis its
major international rivals, policy-makers may increasingly be fearful of dislo-
cations within the domestic social structure. The ruling elites may view the
application of US military power as the mechanism by which it can counteract
some of the troubling economic reality.
Rarely mentioned in our censored press, but widely disseminated in the
foreign media, is the disheartening realization that the majority of interna-
tional legal opinion has interpreted the concept of “preventative war” as illegal
under international law. The International Commission of Jurists denounced
the invasion of Iraq, claiming the attack represented a “war of aggression.”54
In September 2004 UN Secretary General Kofi Annan unequivocally stated
the UN’s position on the war, “I’ve indicated that it was not in conformity
with the UN Charter from our point of view, and from the Charter point of
view it was illegal.”55 (Note: The US helped write the original UN charter and
ratified it in 1948.)
The New Great Game: Geopolitical Tensions over

Diminishing Hydrocarbon Reserves
The United States will find the world of liquefied natural gas
potentially much more troubling than that of oil. To the extent
that the so-called war on terror is a cover for increasingly desper-
ate moves to control the world’s dwindling oil supply, expansion
into LNG, which is liquid natural gas, with its main production
sources in politically anti-American states, threatens an even greater
likelihood of endless war, covert disruption and forced regime
change.
— Julian Darley, author of High Noon for Natural Gas: The
New Energy Crisis, 200456
Anxious to diversify its suppliers, Beijing has directed its state-
controlled companies to buy into oilfields around the world .…
‘It reflects the generally uneasy feeling in the government,’ said Joe
Zhang, head of China research at UBS in Hong Kong. ‘Strategically,
politically, militarily, somehow they don’t feel comfortable.’
— “China Unable to Quench Thirst for Oil,”
Financial Times, 200457
In 2003 China became the second-largest oil consumer of energy behind the
US. This has far-reaching implications and provides further impetus to develop
alternative energy sources in an effort to reduce geopolitical tensions. Gal Luft,
Executive Director of the Institute for the Analysis of Global Security (IAGS)
in Washington DC, and Anne Korin, Director of Policy and Strategic Planning
at IAGS, noted that China may come into conflict over oil in the Middle East.
[It] is worth bearing in mind that the US, which has been trying
for three decades to break its addiction to Middle Eastern oil, has
only become more dependent with each passing year. Whether the
Chinese can do better remains at best an open question. For the
time being, the trend lines are what they are: oil reserves elsewhere
are being depleted faster than in the Middle East, and before too
long that region will contain the last remaining reservoir of cheaply
extractable crude. If each barrel the US needs is also sought after
by China, a superpower conflict in the world’s most unstable
region can once again become an omnipresent danger. At that
point, as Napoleon foresaw, the world will surely tremble.58
This warning provided yet another reason for the US government to
undertake a sustained and concerted effort to reduce our excessive oil consump-
tion. Although China’s population is over four times that of the US (1.2 billion
versus 300 million) and has accounted for the majority of economic growth
in the opening years of the 21st century, its energy consumption is much less
than that of the US. For example, in 2002 daily US oil consumption was a
prodigious 7,191 mb/d, whereas China consumed a miserly 1,935 mb/d.59 To
place this imbalance in perspective at the individual level, the average American
consumes 25 barrels of oil a year; in China, the average is 1.3 barrels.60
Notably, from the mid-1990s until early 2002 there were optimistic claims
that the Caspian Sea region could have up to 200 billion barrels(b/bl) of
untapped oil, making it the “oil find of the century.”61 Cheney’s energy plan
may have been written based on these optimistic estimates. The highly rep-
utable Jane’s Intelligence Review reported in March 2001 that the US was
working with Russia to “tactically and logistically counter the Taliban” well
before the September 11th attacks and the “war on terrorism” was declared.62
Furthermore, according to the French book, The Forbidden Truth, the
Bush administration ignored the UN sanctions that had been imposed upon
the Taliban and entered into secret negotiations with the supposedly “rogue
regime” from February 2, 2001, to August 6, 2001.63 According to this
book, the Taliban were not cooperative, based on the statements of Mr. Naik,
Pakistan’s former ambassador. He reported that the US threatened a military
option if the Taliban did not acquiesce to Washington’s demands.64 Fortuitous
for Cheney’s energy plan, as outlined in the May 2001 NEPDG report, a few
months later Osama bin Laden delivered upon US soil the unprecedented
9/11terrorist attacks.
The pre-positioned US military, along with the CIA providing millions in
cash for the Northern Alliance leaders, led the invasion of Afghanistan, and
the Taliban were routed. The pro-Western Karzai government was ushered
in. The $3.2 billion pipeline project was reinvigorated shortly thereafter, with an
agreement signed between Turkmenistan, Afghanistan, and Pakistan in 2002.65
According to Dale Allen Pfeiffer, an oil industry researcher for Michael
Ruppert’s website (www.fromthewilderness.com), after three exploratory
wells were built and analyzed, it was reported that the Caspian region con-
tained much smaller oil reserves than originally reported, although it does
appear to have a lot of natural gas.66 In fact, it was discovered that the Caspian
oil is also of poor quality, with up to 20 percent sulfur content, expensive to
refine, and creates huge volumes of environmentally damaging waste product.
In December 2001, just after US troops took over the capital of
Afghanistan, British Petroleum (BP) announced disappointing Caspian drilling
results. The consulting group PetroStrategies published a study estimating
that the Caspian Basin contained only 8 to 39.4 b/bl of oil.67 Shortly after
this report was discussed in the petroleum news sources, BP and other
Western oil companies began reducing investment plans in the region.68
Despite exaggerated claims of the “oil find of the century” and predictions
of a new Saudi Arabia outside the Middle East, the US State Department
announced in November 2002 that “Caspian oil represents 4% of world
reserves. It will never dominate the world’s markets.”69 Subsequently, several
major companies dropped their plans for the pipeline, citing the massive pro-
ject was no longer profitable.
Unfortunately, this unexpected realization about the Caspian Sea region
has serious implications for the US, India, China, Asia, and Europe, as the
amount of available hydrocarbons for industrialized and developing nations
has been decreased. Although the contents of the Cheney’s energy task force
are still unpublished, Judicial Watch won a small victory in July 2002 with the
release of a few documents under a Freedom of Information Act (FOIA). The
following is a synopsis of the seven pages of disclosed documents from these
secretive energy meetings held during early 2001:
• Detailed map of all Iraqi oil fields (an estimated 11 percent of
world supply)
• Two-page specific list of all nations with development contracts
for Iraqi oil and gas projects and the companies involved,
“Foreign Suitors for Iraqi Oilfield Contracts,” dated March 2001
• Detailed map of all Saudi Arabian oil fields (an estimated 25
percent of world supply)
• List of all major oil and gas development projects in Saudi Arabia
• Detailed map of all oil fields in the United Arab Emirates (an
estimated 8 percent of world supply)
• List of all oil and gas development projects in the UAE70
It is widely reported as factual that Iraq holds 11 percent of the world’s

total oil reserves (112 billion barrels). However, due to armed conflict with
Iran and then Kuwait, no geological surveys have been conducted in Iraq since
the 1970s. The Russians, French, and Chinese were eager to lease Iraq’s unex-
plored fields, which some organizations claimed may contain up to 200 billion
barrels.71 However, these appear to be markedly irresponsible claims, as tech-
nical reports suggest Iraq’s recoverable oil may be significantly lower than
expected, perhaps to only 15 to 25 percent of its 112 b/bl reserve estimates.72
Furthermore, the convergence of overt military actions to pursue energy
policy requires the US president to obfuscate the underlying energy issues in an
effort to create public support for such war. It would have not been easy to
convince the masses that the Iraq War was based on the US’ need to somehow
acquire an additional 7.5 mb/d to meet projected energy consumption by 2020.
Obviously the UN would not sanction a war based on such a narrow self-
interest. Hence, the Straussian/neoconservative ideology to create an external
threat was actively pursued by our political leaders in order to deceive the
domestic population, in an effort to pursue otherwise unpalatable foreign
policies. Despite the success of the ruling elites to launch the Iraq War, two
flaws in neoconservative geostrategy remain. First, the observation that neither
the world community, nor the UN, is as easily propagandized as the domestic
US audience. In other words, the tactics involving the creation of an ominous
external threat to American security is ineffectual on the international stage.
Secondly, most of the countries targeted for increased oil supply to the US
are typically plagued with either internal conflict based on differing ethnic
groups or are anti-American based on perceptions or historical experience
with unsavory US foreign interference. The Iraq War was claimed to be a logi-
cal extension of the “war on terror.” However, the generalized failure of the
international community to support the US occupation in the aftermath of
the Iraq War exemplified the inherent weaknesses of neoconservative doctrine.
Although only obliquely addressed by the mainstream media, international
agreements and competition over oil exploration contracts in a post-sanction
Iraq were key factors.
One of the documents that Cheney reviewed during the spring of 2001
was entitled “Foreign Suitors for Iraqi Oilfield Contracts.”73 These detailed
reports are representative of those prepared by the highly regarded Swiss firm
IHS Energy (formerly Petroconsultants). A careful analysis of these two pages
suggests that, around 1997 many nations, including China, Russia, and France,
approached the Saddam Hussein regime to secure oil exploration contracts.

Apparently an international consensus was beginning to emerge that Iraq’s
WMD program had been effectively dismantled and the 1991 UN sanctions
against Iraq would soon be lifted. After the sanctions were lifted, those nations
awarded oil lease contracts by the Iraqi government stood to gain — but with
Saddam Hussein likely excluding the US and UK oil companies due to his
animosity over ongoing bombing campaigns in southern and northern Iraq.
These documents reveal that energy giants, such as Russia’s Lukoil and
France’s TotalFinaElf, had signed “production-sharing contracts”(PSCs)
going back to 1997. In total, over 30 nations were listed as foreign suitors for
Iraq’s oil.74 The two conspicuous nations missing from this list were the
United States and United Kingdom (two small UK companies were listed,
but not British Petroleum/BP). Incidentally, the Clinton administration uni-
laterally pulled the UN weapons inspectors out of Iraq and launched a
bombing campaign in December 1998, Operation Desert Fox. This effec-
tively ended the UN inspection process within Iraq, but foreign oil companies
continued to pursue contractual agreements with Saddam Hussein until 2002,
believing the UN sanctions would ultimately be lifted. In the meantime the
US and UK continually blocked motions to lift the sanctions despite the
ongoing humanitarian crisis in Iraq.
Figure 2.1 below helps illustrate why neither Washington nor London was
unable to gain approval for the Iraq War at the UN Security Council. According
to the International Energy Agency’s “World Energy Outlook 2001,” these
contracts for Iraqi oil were worth up to $1.1 trillion.75
According to an article in the Observer, both European and Russian offi-
cials voiced concerns about an “oil grab” by Washington in the event of a US
Company Country Iraq Reserves Area or Oil

(billion barrels) Field
Elf Aquitaine, Total SA* France 9-20, 3.5-7 Majnoun,

(Now part of TotalFinaElf) Nahr Umr, etc.
Lukoil, Zarubezneft, Russia 7.5-15 Rafidain, West

Mashinoimport Qurnah,etc.
China National Petroleum China Under 2 North Rumaila
ENI/Agip Italy Under 2 Nasiriya
Japex Japan n/a Gharraf
Ranger, CanOxy, etc. Canada n/a Block 6, Ratawi
2.1: Iraqi oil contracts. Source: IEA "World Energy Outlook 2001"
invasion of Iraq.76 It is reasonable to assume that the governments of the US,

UK, France, Germany, Russia, or China were likely motivated more by
geostrategic interests than the deplorable human rights conditions in Iraq.
The Russian official said his government believed the US had bro-
kered a deal with the coalition of Iraqi opposition forces it backs
whereby support against Saddam Hussein is conditional on their
declaring — on taking power — all oil contracts conceded under
his rule to be null and void.
“The concern of my government,” said the official, “is that the
concessions agreed between Baghdad and numerous enterprises
will be reneged upon, and that US companies will enter to take
the greatest share of those existing contracts. Yes, you could say it
that way — an oil grab by Washington.”
— A government insider in Paris told the Observer that
France also feared suffering economically from
US oil ambitions at the end of a war.”77
These concerns about a US oil grab, as expressed by various foreign govern-
ments, were not unfounded accusations, considering the explicit comments of
former CIA director R. James Woolsey. In an interview with the Washington
Post before the war, he warned, “France and Russia have oil companies and
interests in Iraq. They should be told that if they are of assistance in moving
Iraq toward decent government, we’ll do the best we can to ensure that the
new government and American companies work closely with them.” But he
added, “If they throw in their lot with Saddam Hussein, it will be difficult to
the point of impossible to persuade the new Iraqi government to work with
them.”78 [emphasis added] Woolsey’s unveiled message was quite clear about
future oil prospects in Iraq: Join the “coalition of the willing” — or your oil
contracts will be voided.
A review of Iraq’s oil production history shows a peak in December 1979
at 3.7 mb/d. In 1980, shortly after the Iran-Iraq War started, Iraq’s oil pro-
duction decreased. Likewise, one month before Saddam Hussein’s August
1990 invasion of Kuwait, Iraq’s daily oil production was near the previous
peak, with July 1990 oil production reaching 3.5 mb/d. However, during
the decade of the 1990s, Iraq’s oil infrastructure deteriorated under the UN
sanctions. According to the Energy Information Administration, Iraq’s oil
production reached perhaps 2.0 mb/d, with “gross” production (including
re-injection, water cut, and unaccounted-for oil) of around 2.2 mb/d. For the
first ten months of 2004, Iraqi crude oil output was averaging 2.0 mb/d.79
Before the 2003 invasion it was widely speculated that a reconstituted
Iraqi oil production infrastructure would garner billions in new investment
that could potentially double oil production, reaching up to 6 mb/d. It was
also presumed that such oil production exports would pay for the majority of
Iraq’s reconstruction costs.
However, in 2001 and in 2003 it was reported that, during the UN
embargo period throughout the 1990s, Iraqi oil engineers were injecting
400,000 barrels of oil back into the giant Kirkuk field in an effort to main-
tain reservoir pressure. Over time this poor engineering technique will degrade
the internal structure of the reservoir, thereby jeopardizing future production
output in order to maintain current production levels. As an oil field matures,
the internal oil pressure begins to drop. In order to maintain internal pres-
sure, large amounts of water or oil can be injected back into the reservoir, but
eventually the field will “water out,” often resulting in a drastic collapse in
output.
Similar concerns have arisen regarding the world’s largest oil find, Ghawar
in Saudi Arabia. This mature field produces over half of all Saudi oil, approxi-
mately 4.5 mb/d. However, in order to achieve this output, Saudi engineers
are injecting 7 million barrels of seawater per day into Ghawar, a sign that the
world’s largest oil field is nearing a collapse of output.80
Regarding Iraq, apparently the lack of spare parts and inability to conduct
engineering repairs in the reservoirs throughout the 13 years of comprehensive
UN sanctions (1991 to 2003) resulted in severe, and potentially permanent,
damage to Iraq’s two major oil fields, and likely other fields as well. If these
reports are even only partially accurate, Iraq’s oil production capability may
never reach oil production levels of 5-6 mb/d that was proclaimed prior to
the 2003 invasion.
In June 2001 the UN Given these disconcerting issues, some oil geologists
reported that, without have downgraded Iraq’s oil reserve figures to approximately
immediate and extensive half of what is typically reported as its reserves: 112.5 billion
repairs of Iraq’s two main
barrels. In June 2001 the UN reported that, without imme-
oil reservoirs, the fields
diate and extensive repairs of Iraq’s two main oil reservoirs,
the fields may become permanently damaged, thereby signif-
may become permanently
icantly decreasing the amount of recoverable oil.
damaged, thereby signifi-
The January 2004 newsletter for the Association for the
cantly decreasing the
Study of Peak Oil & Gas (ASPO) addressed the issue of
amount of recoverable oil.
damaged oil reservoirs as reported by the UN and inferred
that a realistic downgrade of Iraq’s oil reserves was war-
ranted. Additionally, the ASPO omitted the “political oil” reserve revisions
typical of the late 1980s and concluded that Iraq’s recoverable oil reserves are
more likely in the 50-billion-barrel range.81
The report says that it may now be possible to recover only 15% to
25% of the oil in place. Meanwhile the occupying forces are con-
centrating on trying to repair the surface facilities being hesitant
to address the subsurface for fear, as the New York Times no less
admits, the objective of the invasion should become self-evident.
It looks as if a serious downward revision of Iraq’s future produc-
tion potential is called for. The published reserve estimate of 112.5
Gb looks increasingly unreliable. Perhaps it makes more sense to
revert to something around 50 Gb, closer to what was reported
prior to the anomalous jump to 100 Gb in 1988, when the OPEC
countries were vying with each other for quota based on reported
reserves.82
This UN report likely presented a paradox for the Bush administration —

had the 1991 UN sanctions been lifted, the French, Russian, and Chinese oil-
leasing contracts could have been legally implemented. These nations would
then have been in the enviable position of pouring massive reinvestment into
Iraq’s oil sector in an effort to make the necessary upgrades and engineering
repairs.
On the other hand, lifting of the UN sanctions would have presumably
denied the major US and UK oil companies from oil exploration contracts
inside Iraq, while also allowing higher volumes of Iraqi oil production sales
denominated in the euro. Given the disconcerting reports of deterioration
within Iraq’s major oil reservoirs, a larger question should have been contem-
plated in 2001, What course of action in Iraq would be beneficial to the
global community? It was not in anyone’s interests, including the people of
Iraq or the international community, to allow Iraq’s oil reserves to be adversely,
and perhaps permanently, damaged due to the insistence of continued US/UK-
sponsored sanctions.
The evidence of Iraq’s effective disarmament was growing by 1997–1998,
but in an effort to keep “foreign suitors” from beginning oil exploration in
Iraq — at the exclusion of the major US and UK oil conglomerates — the
plan under the Bill Clinton, George W. Bush, and Tony Blair administrations
appears to have been an active attempt to block and postpone any attempts
to lift the UN sanctions until Saddam Hussein was replaced with a pliant regime.
The real costs of preserving Iraq’s oil profits for the US/UK corporate–military–
industrial–petroleum–banking conglomerate can be now measured in lost
human lives: American, British, and Iraqi — estimated in excess of 100,000
violent deaths.
There were alternatives to an invasion of Iraq, but sacrifice in the pursuit
of nonviolent approaches to our energy and economic challenges was not
what the Bush administration was able, or willing, to ask of the American
people. Nonetheless, previously “pro-war” commentators such as New York
Times columnist Thomas Friedman are now advocating that the US earnestly
seek alternative energy strategies:
If Bush made energy independence his moon shot, he would dry

up revenue for terrorism; force Iran, Russia, Venezuela, and Saudi
Arabia to take the path of reform … strengthen the dollar; and
improve his own standing in Europe, by doing something huge to
reduce global warming. He would also create a magnet to inspire
young people to contribute to the war on terrorism and America’s
future by becoming scientists, engineers and mathematicians.
‘This is not just a win-win,’ said the Johns Hopkins foreign pol-
icy expert Michael Mandelbaum. ‘This is a win-win-win-win-win.’
Or, Bush can ignore this challenge and spend the next four years
in an utterly futile effort to persuade Russia to be restrained, Saudi
Arabia to be moderate, Iran to be cautious and Europe to be nice.
— Thomas L. Friedman, “A New Mission for America,”
International Herald Tribune, December, 200483
West Africa: Expanding the War on Terror, or War on Global

Oil Control?
I think Africa is a continent that is going to be of very, very sig-
nificant interest in the 21st century … we’re going to have to engage
more in that theater … [warning that West Africa’s ungoverned
regions] could become terrorist breeding grounds.
— General James Jones, head of the US European
Command, statement before a Senate Panel in May 2003, as
quoted in the Washington Times, September 200384
The US is always looking for alternative sources of oil. We need
to find sources that we can depend on, and certainly the Gulf of
Guinea is one of those areas, but oil is not the driving force in this
region. Clearly, shoring up security in these regions helps us in
our global war on terrorism, which is a major linchpin of our cur-
rent foreign policy.
— State Department official, Washington Times, September 200385
The [West African] people are fed up and angry at the exploita-
tion of their resources.
— Mr. Ayittey of American University, Washington Times,
September 200386
Why does America end up supporting dictators and autocrats
around the world?
Unfortunately, American oil and gas or mining companies are
very likely to support a dictatorship because it makes the natural
resource extraction and sale that much easier and more profitable.
US oil companies are in Nigeria, its mineral companies are in Sierra
Leone. Under lobbying pressure, the American government ends
up supporting its largest natural resource companies and quickly
becomes an ally of the dictator’s regime and an enemy of his people.
— John Talbot, Where America Went Wrong and How to
Regain Her Democratic Ideas, 200487
According to a September 2003 article in the Washington Times, the US is on

a global “hunt for new oil,” with West Africa emerging as a key strategic area
of interest.88 Negotiations are underway for multiple US military outposts in
this region. Currently the US receives about 14 to 15 percent of its oil
imports from Africa, with Nigeria and Angola serving as the two prime pro-
ducers there. Cheney’s 2001 National Energy Plan estimated the US could
receive up to 25 percent of its total energy from Africa. For comparison, cur-
rently the US receives approximately 30 percent of its imports from Canada
and Mexico, with 26 percent imported from the Persian Gulf.
While the oil reserves in West Africa are believed to be around 77 billion
barrels, this pales in significance to the estimated total reserves in the Middle
East of a reported 686 billion barrels. Nonetheless, at least six nations in West
Africa will likely become more important during this decade as global oil pro-
duction winds down in the US, UK, and elsewhere. According to Michael
Rodgers, senior director for PFC Energy in Washington,
Several other West African countries — like Chad, Congo-Brazzaville,
Equatorial Guinea, and Sao Tome and Principe — are emerging as
new and potentially strong oil producers. West African oil produc-
tion, currently at 3.5 million barrels per day, could top 6 million
barrels per day in the next decade.89
Despite the oil wealth in Nigeria and Angola, the Washington Times article
noted that human rights abuses and poverty levels rank very high in the two
most oil-rich nations of Africa. Likewise, these conditions of economic dis-
parity have created both ethnic and political conflicts that plague this region.
Furthermore, much of the societal strife in these nations appears to be directed
at Western oil companies that are seen as exploiting the natural resources of
the region without reinvesting in the native country. The indigenous antag-
onism toward US oil companies has created an expansion of the so-called war
on terror into West Africa. Timothy Burn of the Washington Times outlined
the growing risks associated with African oil exports:
Political and ethnic strife are rampant throughout West Africa. The
presence of huge amounts of oil has fueled the unrest, as billions
of dollars in petroleum revenue pour into government coffers.

Little finds its way to impoverished local populations.
Militant protesters in West Africa often aim their wrath at
Western oil companies, accusing them of exploiting Africa’s oil
wealth while their nations struggle under poverty.90
The anger and frustration espoused by the impoverished populations in

West Africa sound eerily reminiscent of claims stated by Osama bin Laden
regarding the exploitation of oil wealth and corrupt Middle Eastern govern-
ments. Since the mid-1990s, the Saudi government has been perceived by bin
Laden and his followers to be a corrupt regime that has transferred vast
wealth into Western oil companies, presumably US oil companies. Regarding
Nigeria and Angola, if the indigenous populations become increasingly mili-
tant with feelings of exploitation, the US strategy of relying on West African
sources of oil may not be a viable long-term national security strategy.
To mitigate such conflicts, transparent policies should be pursued with
respect to oil export profits. For example, Prime Minister Blair has called for
more openness in the financial dealings between oil companies and oil-rich
nations. One organization advocating transparency is Publish What You Pay.
Their goal is to “help citizens of resource-rich countries hold their govern-
ments accountable for how revenue from oil is distributed, and thereby is
designed to improve the living standards of local populations, rather than lining
the pockets of corrupt government leaders.”91 It would appear that increasing
the transparency behind these financial agreements could lessen social discord.
This effort is spearheaded by billionaire financier George Soros, but not surpris-
ingly, the Bush administration is opposed to such transparency.
Oil and War in the 20th Century: The Emerging Role of the US
Military in the 21st Century
The need for oil certainly was a prime motive [in Hitler’s decision
to invade Russia] …
— Albert Speer’s testimony at Nuremburg War Trials,
German Minister for Armaments and War Production,
1941–194592
The thrust is clear: Once it has seized the oil wells of west Asia,
the US will determine not only which firms would bag the deals,
not only the currency in which oil trade would be denominated,
not only the price of oil on the international market, but even the
destination of the oil.
— “Behind the Invasion of Iraq,”
Aspects of India’s Economy, 200293
Iraq is hardly the only country where American troops are risking
their lives on a daily basis to protect the flow of petroleum. In
Colombia, Saudi Arabia, and the Republic of Georgia, US personnel
are also spending their days and nights protecting pipelines and
refineries, or supervising the local forces assigned to this mission.
American sailors are now on oil-protection patrol in the Persian
Gulf, the Arabian Sea, the South China Sea, and along other sea
routes that deliver oil to the United States and its allies. In fact,
the American military is increasingly being converted into a global
oil-protection service. [emphasis added]
— Michael Klare, “Transforming the American Military into a
Global Oil-Protection Service,” October 7, 200494
During the two great wars of the 20th century, oil often proved to be the
defining natural resource that was required to project military power on the
sea, air, and land. Indeed, oil factored in the victory or defeats in major mil-
itary campaigns throughout the 20th century. During both of the world wars,
the US had an abundance of oil. The transatlantic transport and supply of this
oil was critical to our success in helping our allies prevail during both world
wars. Conversely, while Germany had a large supply of domestically sourced
coal, she had little domestic oil. The geological history of Germany ultimately
impaired its goal of an empire.
It is estimated that during WW I a staggering 6 out of 7 million barrels of
oil used by the English and French to defeat the Axis powers were provided
by the United States. Lord Cuzon, chairman of the Inter-Allied Petroleum
Conference famously remarked after WW I, “The Allied cause had floated to
victory upon a wave of oil.”95 In WW II, the German U-boat fleet tried to
stop the flow of US oil being shipped to England but was ultimately unsuc-
cessful after the allies invented underwater sonar technology.
A young German soldier who fought in WW I became convinced in the
intervening two decades between the world wars that one of the reasons for
Germany’s defeat in WW I was due to its lack of crude oil. This man was
Adolph Hitler, later the chancellor of Germany, who, according to his gener-
als, was fascinated with the history of oil. By the time Hitler had begun his
imperialist campaign in Europe, German scientists had developed a process
that broke down coal molecules to produce synthetic oil for fuel and lubrica-
tion (Fischer-Tropsch process). Despite this breakthrough, the German army
still sought sources of crude oil to power the Nazi military machines. Naturally,
Hitler told the German people his invasion of Russia was absolutely necessary
to “save the Western world” from the barbaric and Godless communists.
After the war the true strategic reasons for the Russian invasion were
revealed. Albert Speer, the German Minister for Armaments and War
Production, stated during his interrogation in

Hitler told the German people May 1945 that “the need for oil certainly was a
his invasion of Russia was prime motive” in the decision to invade Russia.96
absolutely necessary to “save Indeed, Hitler’s invasion of Russia in 1941 was
the Western world” from the in large part initiated so the Nazi war machine
barbaric and Godless communists. could reach the oil-rich Caucus region of south-
After the war Albert Speer, ern Russia. Hitler reportedly told Field Marshall
the German Minister for von Mannstein, “Unless we get the Baku oil, the
Armaments and War Production, war is lost.”97 By the winter of 1942, the Russians
stated that “the need for
had stopped the German offensive. In turn, the
oil certainly was a prime
inability of the German Wehrmacht to gain con-
trol over the oil-rich Baku region played an
motive” in the decision to
important factor in thwarting Hitler’s dreams of
invade Russia.
an empire.
As illustrated by Daniel Yergin’s epic analysis
of oil-related conflict during the 20th century, political leaders resorted to
both deception and fear as methods to disguise their imperial conquests of
gaining control over oil deposits in various places around the world. The 21st
century is showing a similar pattern, using the “external threat” of terrorism to
scare the masses into compliance for geostrategic maneuvers.
A cursory review of recent US military activity shows a pattern of military
basing activity that translates to deployments in areas with either energy
reserves or oil pipelines. Since 9/11 US military deployments have included
areas ranging from South America to the Caspian Sea region, stretching
down to the Middle East and over to West Africa. Undeniably, these world-
wide military deployments are in areas that lack evidence of Al Qaeda, but do
fall within US “strategic interests” as they designate the locations of oil and
gas deposits, the associated pipelines, or proposed routes, such as the Baku-
Tbilisi-Ceyhan pipeline. This drive to establish new US military bases has not
escaped the attention of world leaders.
Consequently, it is naïve to believe recent US military deployments were
designed to fight terrorism, rather than to ensure US dominance over oil sup-
plies and Western oil interests, should indigenous populations protest against
foreign oil companies. Naturally, any indigenous protests against perceived
exploitation of their countries’ natural resources by Western oil and gas inter-
ests will likely be considered as “terrorism.” Also, if Iraq is any indicator of
the future, oil exporting nations that switch their oil export currency to the
euro might also find they are the next US target in the “war on terror.”
An Australian newspaper noted that to US policy-makers “defence redefined
means securing cheap energy.” This aspect of geostrategy appeared in an article
by Lieutenant Colonel Liotta, professor of national security affairs at the
Naval War College. According to this report, Liotta’s article advocated the
use of military force “for more than simply protecting a nation and its people
from traditional threat-based challenges.” Liotta argued that defense meant
protecting the US lifestyle, the circumstances of “daily life.”98 This obliquely
advocated a military strategy of waging war to maintain our excessive consump-
tion of oil, regardless of whether or not our nation faces any threat.
Moreover, former British MP Meacher characterized US strategic maneu-
vers as revolving around a “bogus” war on terror. After reviewing the goals
outlined in PNAC doctrine, Meacher concluded that, “all this analysis must
surely be that the ‘global war on terrorism’ has the hallmarks of a political
myth propagated to pave the way for a wholly different agenda — the US
goal of world hegemony, built around securing by force command over the
oil supplies required to drive the whole project.”99
In May 2001, four months before 9/11, General Franks reviewed war
plans that were to be used in the upcoming campaign in Afghanistan. At that
time, Michael Klare observed that US military planning had become increasingly
defined as providing “resource security as their primary mission.”100 [emphasis
added] Although this was hardly addressed in the US media, in April 2002
Franks testified that one his key missions as commander of the Persian
Gulf/South Asia region was to provide “access to [the] region’s energy
resources.”101
While it is true the US Navy plays an important role in keeping the sea
routes safe for the transportation of oil, it is interesting to note that in the
months prior to 9/11, US policy planners were increasingly devising military
frameworks around potential energy issues. According to Klare’s book, Blood
and Oil, a top-secret document dated February 3, 2001 directed the “NSC
(National Security Council) staff to cooperate with the NEPDG in assessing
the military applications of the energy plan”102 [emphasis added]. According to
Jane Meyer of the New Yorker, who has reportedly seen a copy of the docu-
ment, it envisioned the melding of two White House priorities: “review of
operational policies toward rogue states [such as Iraq] and actions regarding
the “capture of new and existing oil and gas fields.”103 Klare succinctly appraised
the 2001 Quadrennial Defense Review (QDR) and related US joint energy-
military policy documents:
In fact, it is getting harder to distinguish US military operations

designed to fight terrorism from those designed to protect energy
assets. And the administration’s tendency to conflate the two is
obvious in more than just the Gulf and Caspian areas. In Latin
America, the US Southern Command has been ordered to
strengthen the Columbian army’s ability to defend oil pipelines
against guerrilla attack — again on the basis of expanding the war
against terrorism. In the Caucasus, the European Command is
doing its part in the war on terror by training Georgian forces to

protect the soon-to-be-completed Baku–Tbilisi–Ceyhan pipeline;
terrorism and the vulnerability of the oil supplies are also provid-
ing the justification for Eurcom’s efforts to enhance America’s
power-projection capacity in Africa.104
Recent strategy documents prepared by US government officials, remarks

of high-ranking members of the US armed forces, and new military bases
depict an open declaration by both the civilian leadership and military com-
manders that the US military’s role in the new century is not limited to
protecting the Constitution from enemies both foreign and domestic, but is
an overt attempt to gain access to, or more accurately domination over, the
world’s largest oil reserves — all under the guise of the “war on terror.”
Europe, Russia, and China are naturally resisting this strategy.
Despite the unprecedented resistance at the geopolitical level against the
war, the Bush administration launched Operation Iraqi Freedom in March
2003. Today, US soldiers, US contractors, and a handful of international coali-
tion members are suffering under daily attacks and violent hostage-taking
strategy by Iraqi insurgents. Meanwhile US political leaders use ambiguous
phrases to justify their imperial goals with lofty statements, such as securing
access to energy, providing economic security, and spreading democracy. Despite
these proclamations, most industrialized and developing nations simply engage
in legal trade agreements with the nations who export their natural resources
such as oil, and typically leaders do not resort to Orwellian phraseology to
justify faraway wars against “terror” or obfuscate their hidden agenda under
the impressive-sounding slogan of “spreading democracy.”
It is important to realize that, according to Cheney’s energy plan, the US
oil consumption will grow by an additional 7.5
It is important to realize that,
mb/d by 2020. Current global production is
according to Cheney’s energy plan,
around 82 mb/d, which is stretching the supply
of all oil producers. As OPEC’s President
the US oil consumption will grow
Yusgiantoro warned in August 2004, “There is
by an additional 7.5 mb/d by
no additional supply.”105 Furthermore, in
2020. Current global production
December 2004 Igor Bashmakow, the executive
is around 82 mb/d, which is
director of the Russian Center for Energy
stretching the supply of all oil
Efficiency, stated that if Russia does not increase
producers.
its abysmally low energy efficiency it “may lead
to a situation where Russia will be forced to stop
all exports of energy sources such as oil and gas as early as 2010.106 [emphasis
added] If these sentiments by energy experts are accurate, the question
becomes, who will provide the projected 18–20 percent increase in demand
by the year 2020?
Technical data on oil discovery and production, in conjunction with the

analyses of numerous veteran oil geologists, clearly indicate that 7.5 mb/d of
additional oil supply may only be possible under one ominous scenario — by
strategically using the US military to thwart oil exports from the Middle East
into China, India, and perhaps the EU. This is an aggressive and destabiliz-
ing strategy that has predictably produced geopolitical tensions.
Current US geostrategy, as articulated by the PNAC documents and sub-
sequent NSS policy, is a bold attempt to justify unilateral military action
anywhere on the globe, including the potential militarization of space. This
remarkable merging of foreign policy with overt military doctrine provides
further evidence that US policy-makers are acutely aware of the upcoming
phenomenon known as global Peak Oil. Indeed, this realization would
explain current geopolitical tensions and the growing expansion of US mili-
tary deployments in the Middle East, Central Asia, West Africa, and Latin
America.
America does not go abroad searching for monsters to destroy.
— President John Quincy Adams, 1821
Three
Global Peak Oil:

The Millennium’s Greatest Challenge
All truth passes through three stages: First it is ridiculed. Second,

it is violently opposed. Third, it is accepted as being self-evident.
— Schopenhauer, Philosopher
The world is not running out of oil — at least not yet. What our
society does face, and soon, is the end of the abundant and cheap
oil.
— Colin J. Campbell, founder of the Association for the
Study of Peak Oil and Gas (ASPO), 19981
Every generation has its taboo, and ours is this: that the resource
upon which our lives have been built is running out. We don’t talk
about it because we cannot imagine it. This is a civilization in
denial.
— George Monibot, the Guardian (UK), December 20032
By the time this is being read, currently available oil production

capacity all around the world will be producing flat out. How sus-
tainable this proves to be remains to be seen.
— Chris Skrebowski, editor, Petroleum Review, August 20043
You shall know the truth and the truth shall make you free.
— Inscription on the marble entranceway of
the CIA headquarters, Langley, Virginia4
75
Global Peak Oil: The Greatest Story Never Told
F or the past 100 years the industrialized world has become dependent
upon the very cheap and abundant energy provided by hydrocarbons; it
is this energy supply that has created the global economy. At the nation-state
level, economic development requires sources of energy, and currently,
hydrocarbons comprise 90 percent of the world’s transportation fuel and 40
percent of the world’s primary energy.
The United States remains the world’s largest energy consumer; it represents
5 percent of the world’s population, but consumes more than 25 percent of
the world’s oil production. The US was estimated to consume 7.5 billion bar-
rels of oil in 2004, despite the fact that its oil production was then at its
lowest level since the early 1950s and was declining by more than 2 percent
per year.5 It is projected that by 2010 the United States will have less than 15
billion barrels of domestic oil reserves and will have to import 65 percent of
its projected oil demand by 2020 (estimated at 26 mb/d).6, 7
The concept of Peak Oil was first illustrated in bell-shaped curves that US
geophysicist M. King Hubbert developed when working for Shell Oil in
Houston. He studied the past production characteristics of individual oil
fields all across the US and developed a methodology to predict the natural peak
and decline of oil fields. During a petroleum conference in 1956 he explained
his research and predicted that US oil production in the lower 48 states
would peak between 1966 and 1972.8 Although he was a respected geophysicist
at the time, his prediction was strongly criticized by others in the oil indus-
try. Similar to the story of the tragic figure of Cassandra in Greek mythology,
no one believed Hubbert’s predictions about a future in which US oil pro-
duction would soon peak and then enter a permanent state of slow decline.
However, Hubbert’s methodology for predicting future oil recovery based
on an analysis of past oil production data was proven correct when the US
reached peak oil production in 1970. Kenneth Dreffeyes, his colleague, recalled
this event when he read a rather cryptic sentence in the 1971 San Francisco
Chronicle: “The Texas Railroad Commission announced a 100 percent allowable
for next month.”9 Dreffeyes knew that during the 1960s the Texas Railroad
Commission had been given the task of determining when peak oil production
would occur in the lower 48 states. After reading that sentence, Dreffeyes real-
ized that Hubbert’s controversial prediction of 16 years before was correct.
Peak oil discovery in the lower 48 states occurred in 1930 in the east Texas
oil field, with domestic US oil production peaking 40 years later.
Conventional oil production peaked in 1970 at 9.5 mb/d and had slowly
declined to around 4.4 mb/d by 2004.10 These same bell-shaped curves for
oil production have now been repeated in 50 oil producing nations.
The most crucial observation in this graph is the fact that global oil discovery
peaked in 1964. Simply put, we cannot burn what we have not found, and
Global Peak Oil 77
60
50 Past Discovery
Future Discovery
40
Production
Gb/a
30
Past discovery based on
ExxonMobile (2002).
20 Revisions Backdated
10
0
1930 1950 1970 1990 2010 2030 2050
3.1: Global oil discovery since 1930, with projections to 2050

Source: Institute for Environmental and Legal Studies11
over the past 40 years we have found increasingly smaller amounts of oil. Due
to advances in exploration technology, most regions whose geological char-
acteristics indicate hydrocarbon deposits have already been explored. As
noted in an excellent article by the Institute for Environmental and Legal
Studies (of Mauritius Island), “planet Earth has been searched for oil pretty
thoroughly. Few areas are left for exploration. Indeed exploration has now shifted
to very inhospitable places like the Arctic or the Deep Sea, off continental
shelves.”12
Oil industry consultant and economist Michael Lynch is often regarded as
the “leading critic of the peak-oil theorists.”13 He and other commentators
often argued that the decline in oil discoveries since the 1960s is an artifact
of economics and that “it’s not geology that[’s] causing that drop” in global
oil discovery.14 Lynch argued that increased oil exploration and drilling will
result in sufficient new discoveries.15 Some oil geologists refer to advocates of
this nonfinite viewpoint of oil as “flat-earth economists.”
Indeed, an objective review of the empirical facts refutes Lynch’s claims.
Referring again to the article “Fossil Fuels and Human Civilization,” the facts
are self-evident: “While oil discoveries fell in the seventies and eighties, the
number of wildcats (exploratory drills) increased dramatically in the seventies
but then fell sharply by 1985 wielding few large discoveries. It is no longer
safe to assume that any increases in exploration will yield large finds.”16
Regardless of the ongoing battle between the “peak-oil theorists” versus
the “flat-earth economists,” many industry observers have noted that invest-
ments by several major corporations in oil exploration have tapered off during
the last few years. These business decisions are simply based on reduced
expectations of finding major oil fields and reduced expectations of a positive
Return on Investment (ROI) for the small finds. The fact is oil companies
cannot find enough new discoveries that will be able to replace the large
declining fields. In November 2004 the UK-based Oil Depletion Analysis
Centre (ODAC) analyzed 68 global “mega projects” that are scheduled to go
online from 2004 to 2010 and reported that, if oil demand does not ease, a
potentially permanent supply-side shortage could occur after 2007. Upon
reviewing this analysis, ODAC Board member Chris Skrebowski stated, “This
could very well be a signal that world oil production is rapidly approaching
its peak, as a growing number of analysts now forecast, especially in view of the
diminishing prospects for major new oil discoveries.”17
Given the rising price and global demand for oil, especially by China, it is
no longer logical for economists, such as Lynch and others, to claim that the
oil industry’s lack of investment is due to economic factors. Objectively speak-
ing, decreasing finds are to be expected with any finite natural resource
created under a process of fossilization millions of years ago.
Figure 3.2 is a model of global Peak Oil based on the technical analysis by
the Association for the Study of Peak Oil and Gas(ASPO). Each oil field in
the world follows a basic bell-shaped curve, with the composite view of the
world’s thousands of oil fields as one gigantic, uneven bell-shaped curve. In
their mid-2004 update the ASPO model predicted the “Peak” would arrive
two years earlier, in 2008 instead of 2010.
Although there are currently mitigating issues in global oil production
with regard to Iraq, it should be noted that during 2004, evidence mounted
that we may be reaching a plateau in Peak Oil production — reinforced by
some petroleum experts who have stated oil production is now “flat out.”19
Establishing when global Peak Oil occurs will be determined in the subsequent
year or two after the actual peak in oil production.
35
30
Billion Barrels a Year (Gb/)
25
20
M. East
15
10 Other
5 Russia
Europe
US-48
0
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
US - 48 Europe Russia Other M.East Heavy etc. Deepwater Polar NGL
3.2: Oil and gas liquids, 2004 scenario Source: ASPO website18
Global Peak Oil 79
The Paradigm Shift: Energy Return on Energy Invested (EROEI)

One of the crucial concepts required to understand the importance of Peak
Oil relates to a phenomenon in physics commonly described as Energy
Return on Energy Invested, or EROEI. Unlike the traditional financial met-
ric, Return on Investment (ROI), EROEI refers to the amount of energy spent
compared to the amount of energy extracted. EROEI is the ratio between
energy expended to extract a barrel of oil, versus the energy provided by that
barrel of oil.
Fifty years ago when some of the super-giant oil fields were still being dis-
covered, one of these could produce an EROEI of 200, that is, energy 200
hundred times greater than the energy actually expended to extract the oil. In
contrast, oil wells in deep water currently achieve an EROEI of less than 5.
Oil removed from the tar sands, as found in Canada, have a very low EROEI
of 1.5, along with a slow extraction process.
Once global Peak Oil is reached and exceeded, a critical point is attained
on the downward side of Hubbert’s curve, when it requires more energy to
extract a given unit of oil than what it will produce if extracted. Of the
remaining oil in the ground or at the bottom of the ocean, a positive EROEI
is required if that oil is to be used as transportation fuel. To reiterate, when
the energy required to extract very low-grade or geographically undesirable oil
is equal to or greater than the energy that would be provided by that new bar-
rel of oil, it will no longer be logical to expend the energy to extract the oil.
In such a scenario, the EROEI for that oil field becomes an energy sink, and
the oil will simply remain in the ground.
It is for these reasons that the world will never technically run out of oil;
rather, it will ultimately become simply too energy-intensive to extract low-
quality or geographically inaccessible oil. Unlike ROI calculations, the amount
of money invested in a mature oil field is completely irrelevant if the energy
required to extract the oil is greater than the energy that would be derived
from recovering the oil.
Despite the historic, social, economic, and geopolitical implications of global
Peak Oil, many governments still appear reluctant to publish this information
— even though the facts regarding global oil discovery and production are
perfectly apparent to the rational observer. Instead, the global society has
acquired an unfounded belief that more oil will be discovered as needed in
order to further economic growth, but this is a false construct.
Reported Oil Reserves versus Technical Analysis
The pessimists use technical data, whereas the optimists use the
political data.
— Jean H. Laherrère, renowned oil geologist,
ASPO Conference, May 200320
Dr. Salameh tackles the thorny question of how accurate are

Middle East reserve estimates. His conclusion that these may be
overstated by up to 300 bn [billion] barrels, or roughly five North
Seas, will certainly give pause for thought. If his assessments are
right, the world faces very major challenges in developing and
securing the oil supplies it will require.
— Chris Skrebowski, Petroleum Review,
All objective oil geologists Editorial, August 200421
agree that global Peak Oil
will occur — the real debate
All objective oil geologists agree that global Peak Oil
centers around exactly
will occur — the real debate centers around exactly when it
will happen. One of the great difficulties of predicting Peak
when it will happen.
Oil is the ambiguous definition of “oil reserves;” another
issue is the politically motivated reporting of oil reserve
data. Typically, the mass media, government spokespersons, and economists
utilize the suspicious political oil reserve figures as if they were facts. At the
opposite extreme is the network of oil geologists, scientists, and interested
citizens who attend annual conferences sponsored by the Association for the
Study of Peak Oil and Gas. Of course various intelligence agencies, such as the
CIA, also fall into the latter technical camp whose primary mission is to pro-
vide rigorous, unbiased, analytical intelligence.
IHS Energy (formerly Petroconsultants) is regarded as the premier source
of technical data on the world’s hydrocarbon reserves. The main asset of this
Geneva-based company is their proprietary databases containing all signifi-
cant information on the world’s petroleum concessions, companies,
exploration, and development wells outside the US and Canada. IHS Energy
has proprietary data on virtually all discoveries, production history by coun-
try, fields, and company, as well as details pertaining to geophysical surveys.
The detailed reports produced by this firm are not inexpensive, as their elite
clientele pay approximately $35,000 for these reports. The oil and gas indus-
try recognizes that no other organization has such a comprehensive database
on the upstream petroleum industry. According to Kenneth Dreffeyes, a 40-
year veteran oil geologist, the CIA was rumored to be one of the largest
clients for Petroconsultants.22
The most obvious examples of politically motivated reporting occurred
from 1986 to 1990 when OPEC countries revised their oil reserve numbers in
quota wars. In essence, OPEC members added about 300 billion barrels of oil
to their reported reserves. Without doubt, the sensitive nature of publishing
technical oil reserve data is often relegated to opaque ministries within vari-
ous governments and is typically performed without any type of third-party
verification. According to Jean Laherrère, veteran oil geologist and member
of ASPO, “oil is so important that publishing reserve (even production) data
Global Peak Oil 81
has become a political act.”23 [emphasis added] For example, Russia’s reserves
are considered a state secret, and thus disclosure of its official reserve data is
subject to a penalty of seven years in jail.24 Nonetheless, the value of Russia’s
reserves are well known, and trained geologists use past production data to
build empirical models of Hubbert’s curve to calculate likely oil reserve data
in all oil-producing nations.
The temptation for OPEC countries to manipulate their reserve data was
based on proposals during the 1980s in which oil production quotas were to
be proportional to one’s “proven reserves.” Consequently, in 1988 Venezuela
began listing its heavy oil as part of its proven reserves, thereby more than
doubling its reported reserves from 25 billion barrels to 56 billion barrels.
Unlike light, sweet crude, heavy oil is not currently suitable for use as trans-
portation fuel, such as gasoline or diesel fuel, but is used instead for various
industrial purposes. Unlike mankind, all oil was not “created equally.”
The emergence of “political oil” reserve data during the 1980s is easily
appreciated in the following chart of reported “proven reserves” by the main
OPEC oil producers. OPEC data is likely significantly overstated based on
analysis of technical data — before the advent of “political oil.” In Figure 3.3,
please note the transitions to the shaded areas regarding reserve figures. This
suspicious “political” data illustrates why transparency and technical analysis
is critical to develop models regarding Peak Oil.
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
UAE 28 29 31 31 30 30 30 31 92 92 92
Iran 58 57 57 55 51 48 48 49 93 93 93
Iraq 31 30 30 41 43 44 44 47 100 100 100
Kuwait 65 66 64 64 64 90 90 92 92 92 92
Saudi 163 165 165 162 166 169 169 167 167 170 257
Arabia
Venezuela 18 18 20 21 25 26 26 25 56 58 59
1991 1992 1993 1994 1995 1996 1997 1998

UAE 92 92 92 92 92 92 92 92
Iran 93 93 93 90 88 93 93 90
Iraq 100 100 100 100 100 112 112 112
Kuwait 94 94 94 94 94 94 94 94
Saudi 257 258 259 259 259 259 259 259
Arabia
Venezuela 59 63 63 64 65 65 72 73
3.3: OPEC's "Political" Oil Reserve data

Source: Oil and Gas Journal, "Statistical Review of World Energy 2003."25
If OPEC’s reported reserves are to be believed, then 1988 was a year in

which four OPEC members suddenly “discovered” they had a combined
total of 189 billion barrels of extra “proven oil reserves.” One reason for
these absurdly exaggerated figures was Kuwait’s decision in 1985 to increase
its “proven reserves” by almost a third, from 64 billion to 90 billion barrels
of oil. Even Saudi Arabia engaged in creative accounting in 1990 when it
declared its proven reserves went from 170 billion barrels to 257 billion bar-
rels — despite the fact that no giant oil fields had been discovered to justify
these huge upward revisions.
From 1985 to 1990, the aggregate “proven” oil reserve data for those six
countries went from 379 billion barrels to proven reserves of 693 billion barrels.
However, according to retired oil geologist Colin Campbell, the actual oil
discoveries during this time period were around 10 billion barrels.26 Despite
these reported reserves appearing to be blatant political figures, the US gov-
ernment and most of the media continue to report these fantastic reserve
numbers as if they were somehow factual.
Could the world’s reported oil reserve data for the six largest OPEC pro-
ducers — together containing an estimated 65 percent of global figures — be
overstated by almost 40 percent, or 300 billion barrels? Many veteran oil
geologists have stated this may indeed be the case due to political/economic
reasons and an ambiguous definition of proven reserves.
Most recently, Canada engaged in somewhat confusing reporting of its oil
deposits by broadening its definition of reserves to include all of its oil sand.
In 2003 the oil sands found in Alberta were listed as proven oil reserves, caus-
ing Canada’s oil reserves to increase in one year from 4.9 billion barrels to an
incredible 180 billion barrels.27 As a result, according to the United States
Geological Survey (USGS), Canada is now listed as having more “proven oil
reserves” than Iraq, second only to Saudi Arabia.
While it is true that Canada does have billions of barrels of oil trapped in
sand, separating the sand from this heavy oil requires huge amounts of energy,
mainly tremendous volumes of high-pressure water that must be heated, usually
by natural gas. This process also produces an enormous amount of wastewater
that is environmentally dangerous and reportedly carcinogenic. Unfortunately,
considering the fresh-water requirements, environmental damage, and a low
Energy Return on Energy Invested (EROEI), oil extraction from Canada’s
immense deposits of tar sands will never be a panacea for either Canadian or
US energy needs.28
ANWR: False Panacea

A brief discussion of oil exploration prospects in the Alaska National Wildlife
Refuge (ANWR) is warranted at this point. Despite the ongoing political
debate between the Republicans and Democrats over possible oil exploration
Global Peak Oil 83
in ANWR, this area is of little importance with regard to US energy needs.

In fact, it is not helpful to frame this debate as oil/energy lobbyists versus
environmentalists, which is based on the false panacea attributed to this issue.
It is perhaps more useful to analyze other Alaskan oil fields to place the
ANWR debate into the proper context. The Badami oil field between
Prudhoe Bay and ANWR is about to be shut down according to British
Petroleum (BP).29 The cumulative production results of this field was 4 mil-
lion barrels, but at the time of development it was reported to have 120
million barrels. (Actual production was only 1/30 of the original projec-
tions.) Likewise, it was forecasted that its peak production would reach
35,000 b/d. However, the actual peak oil production was only a fraction of
the original projections, reaching only 3200 b/d.30
The USGS (Open file 98-34) estimated in 1999 that technically recoverable
oil for ANWR would range from 5.7 to 16 billion barrels, with a mean of 10.3
billion barrels. The US Department of Energy (SR/O1G/2000-02) forecasted
that ANWR would achieve peak output between 1.0 and 1.3 mb/d 20 years
from start.31 Notably, current US oil consumption is approximately 20 million
barrels per day, thus illustrating that an additional 1 mb/d 20 years from now
will provide less than 1/25 of daily projected demand (projected US demand in
2020 is 26mb/d). In other words, from an objective perspective ANWR’s
production would be far too little and too late, or as oil geologist Jean
Laherrère stated, “a very quick and negligible blip in the production curve.”32
In conclusion, if oil exploration and drilling were to take place in ANWR
— even under a “best case” production scenario — Americans must be realistic
that it will not provide a panacea for US oil consumption. The political rhetoric
surrounding ANWR is inappropriate considering that its potential contribu-
tion to projected US energy demand and national security is quite negligible
— unless of course certain politicians are attempting to gain millions in cam-
paign cash from petroleum companies seeking favorable oil leases in ANWR.
Glimpse of Alternative Energy Technologies

After oil, the most important hydrocarbon for energy use is natural gas, or
methane gas using the industry’s terminology. The situation regarding natural
gas is no better than that of oil. Energy experts, such as Matthew Simmons,
have stated that enduring natural gas shortages in the US are imminent. He
predicted this may result in power interruptions similar to what happened on
August 14, 2003, when 57 million people in northern US and into Canada
experienced a power blackout.
Due to provisions within the NAFTA treaty, Canada is currently exporting
50 percent of its natural gas to the US, but this practice may not be sustainable
as its own domestic supply will soon peak. According to Julian Darley, a
British environmental researcher and author of High Noon for Natural Gas,
both the US and Canada are experiencing near-critical declines in natural gas
production.33
A few of the well-known alternative energy technology options are dis-
cussed below. Some of the interesting newest technologies such as thermal
depolymerization do not have published EROEI data, but readers are
encouraged to review any prospective alternative technologies with net
energy in mind.34 The main point to reinforce regarding discussions centered
on alternative energies is that any meaningful analysis must be based on the
crucial factor of EROEI, a metric reflecting physics, not money. Jeff Wright,
author of this book’s foreword, evaluated various alternative energy sources
as found in Richard Heinberg’s book on Peak Oil, The Party’s Over: Oil, War
and the Fate of the Industrialized Societies.35
In the following excerpt, Wright stressed the importance of EROEI when
analyzing any type of alternative energy technology, especially claims of an
energy panacea. He discounted the possibility of using shale oil for a variety
of reasons, despite the fact that there are potentially tens of billions of recov-
erable barrels in the US. The reason is simple, “The EROEI factor of shale
oil is way too low (0.7) to be useful. It takes too much energy to produce the
equivalent energy from shale oil.”36
Wright also noted two important environmental artifacts encountered
when extracting shale oil. First, it is an extremely dirty process, considering
that it takes “more than 100 gallons of water to produce a gallon of shale oil.”
Secondly, the amount of wastewater produced means that when replacing “all
of our [conventional] oil with shale we [will] need to find a large basin to hold
a new Lake Erie of wastewater.”37 [emphasis added]
Additionally, Wright addressed the question of nuclear power that accord-
ing to Heinberg is an energy source that requires a complex analysis of EROEI.
The results are somewhat disappointing when the fully loaded costs of nuclear
power are factored in:
The costs for nuclear-generated electricity (1.8¢ – 2.2¢/kWh) are
operating costs only, including fuel, maintenance, and personnel
… such figures omit costs for research and development, plant
amortization and decommissioning, and spent-fuel storage. Fully
costed, nuclear power is by far our most expensive conventional
energy source. Indeed, total costs are so high that, following the
passage of energy deregulation bills in several states, nuclear plants
were deemed unable to complete, and so utility companies like
California’s PG & E had to be bailed out by consumers for
nuclear-related ‘stranded costs.’38
Heinberg persuasively argued that nuclear power, as currently implemented,
is a dead-end solution when viewed from an EROEI perspective. He concluded:
Global Peak Oil 85
Industrial societies have, in energy terms, been able to afford to

invent and use nuclear technologies primarily because of the avail-
ability of cheap fossil fuels with which to subsidize the effort.39
Another alternative energy resource that warrants brief inclusion in this

text is the so-called hydrogen economy. Bill Butler has provided a succinct
analysis of the issues surrounding the hydrogen economy on his website, “The
Great Rollover Juggernaut.”40 Butler generally dismissed the popular myth
that hydrogen will somehow become our energy panacea after Peak Oil. On
his website he exposed why hydrogen fuel cells may not provide the answer
to the global transportation challenges following Peak Oil.
This is everyone’s ‘favorite solution’ to the gasoline problem.

Nice, clean, efficient hydrogen for fuel cells to power automo-
biles. It is quite true that if you have an adequate supply of
hydrogen, you could use it instead of the present internal com-
bustion engine. There is a bit of a problem that everyone ignores.
Where do you get the hydrogen and how much will it cost?
Today hydrogen is produced by reacting methane gas and
steam yielding carbon monoxide and hydrogen …. In terms of use-
ful energy, this is less efficient than just burning the methane. As
noted above, natural gas is going to be in short supply after a couple
of decades. Scratch natural gas as a source for hydrogen. Perhaps
nuclear or ‘renewable’ based electric power can produce hydrogen
via electrolysis (or some other electric process), or some biomass-
based reaction can produce hydrogen sometime in the distant
future, but this is at best decades away — and very expensive.41
Butler’s online critique of hydrogen referred to several reports on this sub-

ject, including a technical report entitled “Energy and the Hydrogen Economy.”
The report concluded with a warning: “The ‘Pure-Hydrogen-Only-Solution’
may never become reality.”42 He also lamented that the US was about to
spend billions on hydrogen “pork barrel projects” that may not provide real
benefits. A July 2003 white paper by TMD Management warned that hydro-
gen is not the panacea as sometimes described by proponents:
In most instances, the total energy cost of producing, compress-

ing, liquefying, transporting and delivering it to the user will be
far higher than the energy recovered from it. In addition, it is
inconvenient and often dangerous to use. It makes no contribu-
tion whatever to energy independence — i.e., to weaning the US
off imported energy supplies — and almost no real contribution
to eliminating or minimizing environmental issues such as global
warming — that all has to be dealt with at the hydrogen or energy

manufacturing plant and is independent of the choice of fuel.43
Richard Heinberg’s second book on energy, Powerdown, carefully exam-

ined the unwarranted hype about hydrogen-based energy sources and listed
several experts who warned against the uninformed who may be “High on
Hydrogen.”44 A paper published in Science by Alex Farrell, assistant professor
of energy and resources at UC Berkeley, and David Keith, associate professor
of engineering and public policy at Carnegie Mellon, reached similar conclu-
sions about the unrealistic expectations of hydrogen-based transportation
systems.45 During an interview, Farrell surmised, “Hydrogen cars are a poor
short-term strategy, and it’s not even clear that they are a good idea in the
long-term.”46
The only renewable energy that could theoretically be implemented on a
worldwide basis to replace the depletion of oil and natural gas is the enormous
solar energy captured every day by the world’s tropical oceans. During the
1970s, promising research on Ocean Thermal Energy Conversion (OTEC)
was conducted by the US government along with Japan.47 OTEC is a renew-
able system that produces electricity — and potable water — based on the
temperature variance between the warm surface water in the tropics and the
consistently cold water found at a depth of 1000 meters.48 Unfortunately, in
1982 the Reagan administration cut much of the funding for OTEC research
and development.
However, Hawaii has continued developing OTEC technology with pos-
itive results. The process itself of developing and implementing alternative
sources of energy requires large amounts of energy, and so it is critical that
the global community immediately invest in a fleet of 50- to 100-Megawatt
OTEC “plantships” and other renewable technologies while we still have a
surplus of energy based on fossil fuels. While potential solutions such as OTEC
continue to be researched, the success of any alternative energy inevitably
depends much on their EROEI. While the OTEC process is inefficient when
compared to burning hydrocarbon molecules, in the long-term it is clearly
superior, considering that it is renewed every day by sunlight and, if properly
implemented, is much more environmentally benign than any fossil fuel-
based system.49
Regarding some of the more popular alternative energy sources, Heinberg
warned that we should not allow a false belief in a miraculous conversion to
a hydrogen economy, or another energy panacea, thereby creating a mentality
of “waiting for the magic elixir.”50 After analyzing all the currently available
alternative energies, he concluded in his second book that there is no foreseeable
magic elixir, and therefore self-limitation is the only realistic and sustainable
alternative for the human species. Heinberg titled his book after his term for
Global Peak Oil 87
the bold, personal, and societal strategy of reducing overall energy consumption
in a hopefully managed environment, Powerdown.
It is unpredictable how the current global financial system will react to
Peak Oil. From an economic perspective, after Peak Oil the global oil supply
will begin its long and irreversible decline, regardless of economic theorems
regarding supply and demand. Peak Oil will ultimately produce the decline of a
pervasive source of electrical energy that will no longer be aligned with current
economic theorems of unlimited growth. The result will be a demand-side
rebalancing.
Perhaps an entirely new paradigm will eventually evolve that includes met-
rics such as EROEI, incorporating new theorems that refer to “ecological
economics.” This system would take into consideration the ecosystem, including
biophysical laws and related ecological limitations. In my opinion, whoever
successfully constructs a viable mechanism for ecological economics will likely
deserve the Nobel Peace Prize.
Peak Oil and the War on Terror

Oil fuels military power, national treasuries, and international pol-
itics. It is no longer a commodity to be bought and sold within
the confines of traditional energy supply and demand balances.
Rather, it has been transformed into a determinant of well-being,
of national security, and of international power.
— Robert E. Ebel, Director of the energy program, Center
for Strategic and International Studies, Mother Jones Magazine 51
Bush and Blair have been making plans for the day when oil pro-
duction peaks, by seeking to secure the reserves of other nations.
— George Monibot, “Bottom of the Barrel,” Guardian(UK)52
‘The US has usurped the right to attack any part of the globe on
the pretext of fighting the terrorist threat .… [We have concluded
that al-Qaeda] is not a group but a notion .… The fight against
that all-mighty ubiquitous myth deliberately linked to Islam is of
great advantage for the Americans as it targets the oil-rich Muslim
regions,’ Shebarshin emphasized.
— Leonid Shebarshin, ex-chief of the Soviet Foreign
Intelligence Service, and head of the Russian National Economic
Security Service consulting company, as interviewed for the
Vremya Novostei newspaper, mosnews.com.53
Although the documents used during Vice President Cheney’s 2001 energy
meetings have been blocked from public review, one individual who was present
during some of those meetings has been active in publicly discussing Peak
Oil. Matthew Simmons, an investment banker in Texas and CEO of Simmons
and Co. International, was a key advisor to the Bush administration and par-
ticipated on Cheney’s 2001 Energy Task Force. In May 2003 at an ASPO
conference in Paris, France, Simmons stated:
I think basically that now, the peaking of oil will never be accu-
rately predicted until after the fact. But the event will occur, and
my analysis is leaning me more by the month, the worry that
peaking is at hand; not years away. If it turns out I’m wrong, then
I’m wrong. But if I’m right, the unforeseen consequences are dev-
astating. But unfortunately the world has no Plan B if I’m right.
The facts are too serious to ignore. Sadly the pessimist-optimist
debate started too late.54
Simmons hopes he is wrong, but as illustrated in the 1980’s OPEC quota
wars, there is considerable evidence to suggest that Saudi’s oil reserves have
been exaggerated for the past 15 years, perhaps by as much as 40 percent. His
analysis of over 200 technical reports on Saudi’s oil production provided evi-
dence that cast doubt on Saudi Arabia’s ability to effectively serve as the
swing producer in the global oil market. Simmons stated that Saudi Arabia
may essentially be “out of spare capacity.”55
The peak of domestic oil production in the UK may have provided one of
the reasons British Prime Minister Blair endorsed the Iraq War. The UK has
no significant oil reserves other than the North Sea, which reached peak pro-
duction in 1999. Unfortunately, the precipitous decline rate in North Sea oil
production from 2000 to 2004 is undoubtedly quite disconcerting to the
British government, as the depletion rate is reported to be rather steep at
around 6.1 percent per year.56
Like the US, the UK will soon import the majority of its oil. Perhaps Blair
agreed to the invasion given that British Petroleum (BP) has been the only
non-US oil company that has been stated in the mix for oil exploration priv-
ileges in the post-Saddam Iraq.57 Of course, unlike EU nations such as France
and Germany, the UK has not yet ascended to the euro currency.
The neoconservatives have repeatedly suggested that Iraq is the first stage in
a much larger project of regional regime change, with Iran, Syria, and even Saudi
Arabia as candidates for regime change and so-called democratization. Given
that the Saudi monarchy is increasingly alienated from the US, has come under
attack from supposed Al Qaeda elements, and that most of the 9/11 hijackers
were reported to be Saudi citizens, it is likely that US policy-makers have mil-
itary contingency plans for an invasion of the eastern oil fields of Saudi Arabia.
Realistically, US troops were stationed after the 1991 Gulf War not to
ensure the flow of oil, but to ensure that the House of Saud was not overthrown.
Global Peak Oil 89
Despite irresponsible rhetoric about using the US mili-

tary to seize control of Saudi Arabia’s oil fields, any such Realistically, US troops were sta-
invasion to grab the oil fields would be an irrational tioned after the 1991 Gulf War
strategy unless the government and military were fully not to ensure the flow of oil,
willing to engage in a genocidal war of massive attrition but to ensure that the House of
— throughout the entire region. Obviously this would Saud was not overthrown.
also result in an unprecedented recruitment opportunity
for the Al Qaeda terrorist organization.
In April 2003, just after the Iraq War began, the Bush administration qui-
etly removed the remaining US military personnel from Saudi Arabia.58 It
does not require a logical stretch to understand that maintaining US hege-
mony in accordance with stated neoconservative doctrine requires military
bases in the Persian Gulf — even if “Saddam Hussein [should] pass from the
scene.”59 As the intelligence firm Stratfor suggested, “other locations, from the
Horn of Africa to Syria to Saudi Arabia could fall under US sights, and Riyadh
will carefully gauge its reaction to the diplomatic dustup to remain just outside
the US area of operations.”60 [emphasis added]
In 2004 Saudi Arabia rejected oil-lease contracts with US companies for
its natural gas fields and awarded these natural gas contracts to Russia,
China, Italy, and Spain. Stratfor’s analysis asserted these exploration contracts
were “clearly politically motivated.”61 In a somewhat oblique fashion, Stratfor
also suggested Washington might “begin to set its sights” on Saudi’s oil
fields.62
There is every reason to assume that the Bush administration understood
the essential outlines of the situation. The president, vice president, and national
security advisor are former oil industry executives. Matthew Simmons, one of
the Energy Task Force petroleum analysts, repeatedly warned his clients of
coming energy-supply crises in both oil and natural gas.63 Declassified CIA
documents concerning the peak of Russian oil production revealed that the
CIA had been carefully monitoring global petroleum supplies as far back as
1977.64 Furthermore, the CIA is reported to be the largest client of the highly
regarded firm IHS Energy (formerly Petroconsultants). Their 1995 report,
“The World’s Oil Supply (1930 – 2050)”, predicted that the peak of global
oil production would occur in the decade following 2000.65
When we examine what is known about today’s existing oil production,
global oil reserves, and where they are in light of the analysis of Peak Oil, it
becomes much clearer why both Bush and Cheney would be willing to risk
so much in terms of America’s standing among allies and other nations relat-
ing to their geostrategy of occupying the oil fields of Iraq. It is reasonable to
assume that Cheney probably knew during the late 1990s exactly what the
global oil reserve situation was when he was former CEO of Halliburton
Corporation, the world’s largest oil services company. I am not alleging a
conspiracy but merely presenting facts indicating that Bush and Cheney had
information and motives that neither was willing to publicly state.
Undoubtedly, the alternative to the Iraq War would have required asking
the American people to make sacrifices, while Washington engaged in multi-
lateral negotiations with respect to oil currency and energy depletion issues.
Regrettably, one of the most tragic missed opportunities that pragmatic US
leadership could have provided in the aftermath of 9/11 was the need for US
energy reform. We could have received an inspiring call to duty, a John F.
Kennedy type of speech challenging our nation to “go to the moon” by the
end of this decade regarding energy policy and energy independence.66
Instead the message we heard was: Unite. Go shopping, and don’t be afraid to
fly. Failing to rally the citizenry for the truly patriotic purpose of strengthen-
ing the nation was perhaps the greatest missed opportunity since the end of
the Cold War.
Nevertheless, it is still plausible that under enlightened leadership, policy-
makers who effectively advocate meaningful energy reform — beginning with
Americans’ excessive consumption levels — could move the US forward in
pursuing the crucial patriotic goal of enhancing our security by becoming one
of the world’s leaders in advocating, developing, and implementing alternative
energy technologies. The effective adoption of such a domestic energy strategy
could potentially provide the US with a unique opportunity to reinvigorate
its manufacturing industry. Indeed, this could restore its leadership role.
The United States desperately needs a real national energy policy, instead
of an endless war on terrorism. Today’s blowback is partly due to the US’
ongoing support of corrupt Middle East regimes and dictatorships. Creating
a more equitable global monetary system, while maintaining a strong transat-
lantic relationship with Europe, is in the long-term national security interest
of the US. Hopefully, monetary and energy reform could mitigate future armed
or economic warfare over oil, thus ultimately fostering a more stable, safe, and
prosperous 21st century.
Clearly, for the past 25 years, successive US administrations in both major
political parties have failed to make the necessary preparations regarding
energy transformation required today. Jimmy Carter, who lost his bid for re-
election in 1980, was the only president who attempted to seriously address
this issue. Peak Oil will affect the entire world, and as such, the US is not
alone in facing this dilemma, but Americans use one out of every four barrels
of world oil production and arguably waste the most energy.67 Time is not on
our side, as Mother Nature will not wait for politicians or scientists to “go fig-
ure out something.”
In truth, some commentators have suggested our collective failure to devise
a sustainable energy infrastructure in conjunction with the global depletion of
hydrocarbons could adversely erode our civil liberties and democratic processes.
Global Peak Oil 91
Retired US Special Forces soldier Stan Goff offered a sobering, yet alarming,
analysis in his online essay, “The Infinite War and Its Roots”:
When I was working in Special Forces, we were part of a foreign
policy doctrine called Internal Defense and Development (IDAD).
That was old school. As I prepared to leave the Army, there was
much emphasis, doctrinally and technologically, on something called
Operations Other Than War (OOTW). The process of uneven
development has begun to culminate in the concentrated urban-
ization of much of the world’s population.
One is the ever-closer relationship and blurring of lines
between military and police. The other is the technological devel-
opment of sub-lethal weapons systems and highly sophisticated
population control measures for both police and military — glob-
alized military policing. This is one key component in the mad
doctrine of ‘full spectrum dominance’ championed by the feverish
Secretary of Defense Donald Rumsfeld.
This dialectical relation between energy, currency, and the mil-
itary is at least one key concrete condition for us to understand if
we are to see into the mind of capital (big business and its politi-
cal establishment) in this period of imperialism in crisis.
It is this inevitable attack on the living standards of average
Americans that will either wake us to the folly of this manufac-
tured patriotism and push us into resistance to this regime, or in
the worst case, into atavistic racialism and fascism. Which it will be
depends in some part on how effective some of us are at telling
people in advance what they can expect ... and why.68
Post-Peak Oil World: Three Scenarios

During times of universal deceit, telling the truth becomes a rev-
olutionary act.
— George Orwell, author of Nineteen Eighty-Four 69
Undeniably, the passing of Peak Oil and the slow, but irreversible, depletion
of hydrocarbon resources will entail monumental effects on geopolitics,
domestic politics, economics, and societal structure itself. Given the focus of
this book, geopolitical considerations will be the primary category addressed.
Acknowledgement of Peak Oil likely implies the development of three poten-
tial scenarios by the end of this decade and into the next.
The first possibility is the status quo, a principally unipolar global commu-
nity with the US remaining the sole superpower. Clearly, attempting to
maintain the US in this role is the basis of neoconservative geostrategy, which
openly stated in 1992 the US imperative of “convincing potential competi-

tors that they need not aspire to a greater role or pursue a more aggressive posture
to protect their legitimate interests .… We must maintain the mechanisms for
deterring potential competitors from even aspiring to a larger regional or
global role.”70 [emphasis added]
This strategy of dominance requires the US military to not only physically
patrol the major sea lanes used by the world’s 3500 oil tankers, but also increas-
ingly attempt to physically control the regions with the world’s largest remaining
hydrocarbons — thereby invoking indigenous opposition. This doctrine
could only be attempted by outright imperial military force, massive oppres-
sion of the indigenous populations in the oil-rich regions, along with
suppression of political dissent at home.
From a macroeconomic perspective, global trends suggest the likely emer-
gence of a multi-polar world, which itself can be destabilizing if poles act
unilaterally, as opposed to multilaterally. In the second scenario, real attempts
to arrive at a multilateral compromise would prove to be the paramount goal.
This is my preferred outcome, as the challenges presented by Peak Oil cannot
be resolved by military force — but in fact would only be exacerbated by the
levels of capital, energy, and men that would ultimately be wasted on military
operations when these resources should be allocated towards Energy
Reconfiguration. Moreover, the monetary and energy issues inherent in Peak
Oil could only be resolved with broad international cooperation between the
major industrial nations, most likely within a UN framework.
The foremost multilateral treaty developed thus far in response to the
dilemma presented by global Peak Oil is the Uppsala Accord, also called the
Rimini Accord.71 Researchers at the Uppsala University in Sweden, in con-
junction with oil geologists Colin J. Campbell and Kjell Aleklett, based this
protocol on a global rationing system that reflected individual and aggregate
depletion rates.
Despite the inherent difficulties of implementing the Uppsala Accord on
a worldwide basis, it is irrefutable that any multilateral accord will be prefer-
able to warfare between industrialized nation states or alliances of states,
many of whom are nuclear powers. The only rationale strategy would include
the G–8 nations plus China and India, in conjunction with the UN, to devise
an exceedingly difficult treaty regarding the allocation of hydrocarbon
reserves. Failure to reach a multilateral accord could result in the systemic
breakdown of international relationships and the destabilization of the global
community.
This segues into the worst-case scenario, the surfacing of a fragmented,
unilateral and multi-polar world that seeks to gain control over its hydro-
carbon reserves in an effort to deny other industrialized nations their requisite
access to energy. Richard Heinberg called this the Last One Standing scenario,
Global Peak Oil 93
warning that geopolitical tensions are likely to result in depressing global

resource warfare. He somberly stated that this scenario could lead to “the gen-
eral destruction of human civilization and most of the ecological life-supporting
systems of the planet.”72 [emphasis added] Clearly, a fragmented multi-polar
world engaged in unilateral attempts to dominate the world’s energy reserves
would create an unstable and highly dangerous geopolitical environment.
Irrefutably, the potential outbreak of global warfare over depleting hydro-
carbons would be the most tragic outcome for humanity. Even if a nation state
or group of nation states could militarily prevail over the other industrialized
nations, the so-called winner would likely end up energy poor within a genera-
tion due to the tremendous resources in men, energy, and finances that would
be required to suppress both their competing states and the indigenous pop-
ulations whose geological history happened to retain the last viable hydrocarbon
reserves on the globe. The chaotic post war situation in Iraq clearly illustrates
the inherent fallacy of imperial strategies premised on US geostrategic domi-
nation of hydrocarbon reserves in the Middle East, Central Asia, and West
Africa.
If we are to have a multi-polar world, let us hope it is a balanced one, in
which incorrigible greed would give way to enlightened cooperative action,
with leaders committed to arrive at multilateral compromises and concessions.
Although not guaranteed of success, the only rational policy regarding global
Peak Oil is an unprecedented attempt at international cooperation and coordi-
nation. A collective approach is the only strategy that could conceivably result
in the development and implementation of both demand-side strategies and
alternative energy technologies in the post-Peak Oil world. Developing and
adhering to a multilateral, compromising approach to Peak Oil is the foremost
challenge to mankind at the dawning of the 21st century.
Cheap oil is dead. You are never going to see oil priced at $25 a
barrel again …. We are approaching the plateau of production; these
are the first signs that we are there. As I said, cheap oil is history.
— Ali Bakhtiari, head of strategic planning, Iranian National
Oil Company (NIOC), August 200473
The conclusion is clear: if we do not immediately plan to make the
switch to renewable energy — faster, and backed by far greater
investment than currently envisaged — then civilisation faces the
sharpest and perhaps most violent dislocation in recent history.
— Michael Meacher, former member of British Parliament,
UK Environment Minister, 1997 to 200374
We have only a dwindling amount of time to build lifeboats —

that is, the needed alternative infrastructure. It has been clear for
at least 30 years what characteristics this should have — organic,

small-scale, local, convivial, cooperative, slower paced, human-ori-
ented rather than machine-oriented, agrarian, diverse, democratic,
culturally rich, and ecologically sustainable.
A transition to a lower level of social-technological complexity
need not be violent, need not be chaotic, and need not entail the
loss of the values and cultural achievements of which we are most
proud as a society. And the end result could be far more humane,
enjoyable, and satisfying than life currently is for citizens of this
grandest of empires.
— Richard Heinberg, “Beyond the Peak,” December 200475
Four
Manifest Subterfuge:
Disguising the Macroeconomic and
Geostrategic Rationales for War
The [UN] sanctions exist ... for the purpose of keeping in check
Saddam Hussein’s ambitions toward developing weapons of mass
destruction …. And frankly they have worked. He has not devel-
oped any significant capability with respect to weapons of mass
destruction. He is unable to project conventional power against
his neighbors.
— Secretary of State Powell, February 24, 20011
Simply stated, there is no doubt that Saddam Hussein now has

weapons of mass destruction.
— Vice President Cheney, August 26, 20022
Our conservative estimate is that Iraq today has a stockpile of

between 100 and 500 tons of chemical weapons agent. That is
enough agent to fill 16,000 battlefield rockets. Even the low end
of 100 tons of agent would enable Saddam Hussein to cause mass
casualties across more than 100 square miles of territory, an area
nearly five times the size of Manhattan.
— Secretary of State Powell, February 5, 20033
Intelligence leaves no doubt that Iraq continues to possess and

conceal lethal weapons.
— President George W. Bush, March 17, 20034
95
We are asked … to accept ... that Saddam decided unilaterally to

destroy those weapons .… I say that such a claim is palpably
absurd.
— Prime Minister Blair, March 18, 20035
Goering: Why, of course, the people don’t want war …. That

is understood. But, after all, it is the leaders of the country who
determine the policy and it is always a simple matter to drag the
people along, whether it is a democracy or a fascist dictatorship or
a Parliament or a Communist dictatorship.
Gilbert: There is one difference. In a democracy, the people
have some say in the matter through their elected representatives,
and in the United States only Congress can declare wars.
Goering: Oh, that is all well and good, but, voice or no voice,
the people can always be brought to the bidding of the leaders.
That is easy. All you have to do is tell them they are being attacked
and denounce the pacifists for lack of patriotism and exposing the
country to danger. It works the same way in any country.
— Gustave Gilbert, a German-speaking intelligence officer
and psychologist, interviewed and recorded the observations of
Hermann Goering, Nazi Reichsmarshal and Luftwaffe chief,
during the Nuremberg War Criminal trials, April 18, 19466
Manifest Subterfuge 97
Buildup to Gulf War II: Saddam Hussein and Weapons of

Mass Destruction
T he propaganda tactics for promoting war, as bluntly revealed by an unre-

pentant Hermann Goering, are just as effective today as they were during
the 20th century. When the press becomes subservient to the desires of political
leaders, even modern democracies, such as the US and UK, are not immune
to the historical effectiveness of propaganda to bring a frightful population
“to the bidding of the leaders.”
Regarding Iraq, the effective use of propaganda techniques by the Bush
administration was especially critical, given their unique task of justifying the
US’ first-ever “preventative war.” However, well before this campaign, it is
clear that invading Iraq was a priority from the beginning. Former secretary
of the treasury Paul O’Neill recalled that, during the very first national security
meeting of the Bush administration, toppling Saddam Hussein was its focus.
The Price of Loyalty revealed that this was at the top of the national security
agenda just ten days after George W. Bush was sworn in as the 43rd president,
a full eight months before the September 11th terrorists attacks.7
Despite over 400 unfettered UN inspections before
the 2003 invasion, and hundreds more after the war, there Despite over 400 unfettered
has been no reported evidence that Iraq had reconstituted UN inspections before the
any aspects of its previous WMD program. In fact, 2003 invasion, and
researchers had carefully deconstructed most of the WMD
hundreds more after the war,
claims made by the Bush and Blair administrations before
there has been no reported
the Iraq War, but the media did not provide proper anal-
evidence that Iraq had
ysis of these counterclaims.8 On March 6, 2003, less than
reconstituted any aspects of
two weeks before the outbreak of the Iraq War, Hans Blix,
its previous WMD program.
the chief UN weapons inspector, testified to the UN
Security Council that, “No proscribed activities, or the
result of such activities, from the period of 1998-2002 have, so far, been
detected through inspections.”9 The following day International Atomic
Energy Agency (IAEA) Director General Mohamed ElBaradei informed the
UN Security Council of his finding, “After three months of intrusive inspec-
tions, we have to date found no evidence or plausible indication of the revival
of a nuclear weapons programme in Iraq.”10 [emphasis added]
Nonetheless, the “imminent threat” to national security purported by the
Bush and Blair administrations was used to justify initiating the war a few days
later. Of critical note is that had the UN weapons inspectors been able to
complete their prewar inspection in the spring of 2003, Blix would have
declared Iraq to be disarmed and free of WMD. According to Blix, “Had we
had a few months more [of inspections before the war], we would have been
able to tell both the CIA and others that there were no weapons of mass
destruction [at] all the sites that they had given us.”11 This would have ended
the 1991 UN sanctions against Iraq and allowed Saddam Hussein’s contrac-
tual agreements with TotalELF, Lukoil, and Sin-oil (French, Russian, and
Chinese) oil firms to begin exploration in Iraq — with an alternative euro-
driven oil transaction currency. Obviously this was not an acceptable outcome
to the US and UK governments and the powerful oil interests (BP, Exxon-
Mobil, TexacoChevron, and Shell Oil) who influence such political decisions.
Five months before the war, Peter Beaumont and Faisal Islam’s article in the
the Guardian noted these contentions:
Disclosure of talks between the oil executives and the INC [Iraqi
National Congress], which enjoys the support of Bush administra-
tion officials — is bound to exacerbate friction on the UN Security
Council between permanent members and veto-holders Russia,
France, and China, who fear they will be squeezed out of a post-
Saddam [Hussein] oil industry in Iraq.
Although Russia, France, and China have existing deals with
Iraq, [Iraqi National Congress founder Admad] Chalabi has made
clear that he would reward the US for removing Saddam with lucra-
tive oil contracts, telling the Washington Post recently, “American
companies will have a big shot at Iraqi oil.”12
Documents and maps released from Vice President Cheney’s spring 2001
National Energy Policy Development Group (NEPDG) supported this assertion.
On September 19, 2002, Secretary of Defense Rumsfeld stated, “No terrorist
state poses a greater or more immediate threat to the security of our people and
the stability of the world than the regime of Saddam Hussein in Iraq.”13
[emphasis added] Although Rumsfeld’s bold claim regarding the “immediate
threat” to the US came a year later, it is quite clear he wanted to attack Iraq
just hours after the 9/11 strikes, when CBS News reported that he had
requested, “best info fast. Judge whether good enough hit S.H. at same time.
Not only U.B.L.”14 (S.H. and UBL refer to Saddam Hussein and Usama bin
Laden, often spelled as Osama bin Laden.)
Furthermore, despite President Bush’s repeated claims, the CIA and the
9/11 Commission did not find any links between Saddam Hussein and Al
Qaeda, although the CIA made intense efforts before and after the invasion.
It is now obvious that Iraq did not pose an imminent threat to the United
States, nor to its neighbors in the Middle East.
The so-called war on terrorism was promoted to obfuscate the real objectives
from the global community, while domestic dissent was thwarted by incessant
claims of an ominous external threat, further traumatizing the citizenry. After
the September 11th tragedy, these policies of a world order dominated by US
military power were being implemented under the indefinable threat of “terror-
ism.” Some researchers and a former member of the British parliament have
suggested that 9/11 was a necessary precondition to create generalized societal

fear, and as such the executive branch exploited the tragedy to pursue previously
unpalatable foreign policies in various areas of US strategic interest.15, 16, 17 The
governing principles of the neoconservatives are easier to appreciate after ana-
lyzing the work of Leo Strauss, who is often described as the original advocate
of modern neoconservative ideology.
Leo Strauss 1899–1973: Philosophical Father of the

Neoconservatives
Because mankind is intrinsically wicked, he has to be governed .…
Such governance can only be established, however, when men are
united – and they can only be united against other people.
Those who are fit to rule are those who realize there is no
morality and that there is only one natural right — the right of the
superior to rule over the inferior .… The people are told what
they need to know and no more.
— Leo Strauss, thoughts on government and the wise elites’
need for secrecy, Natural Right and History and Persecution and
the Art of Writing 18
Everybody sees what you appear to be, few feel what you are, and
those few will not dare to oppose themselves to the many, who
have the majesty of the state to defend them .… Let a prince
therefore aim at conquering and maintaining the state, and the
means will always be judged honourable and praised by everyone,
for the vulgar is always taken by appearances .…
— Niccolo Machiavelli, The Prince, 151319
In order to achieve the most noble accomplishments, the leader
may have to ‘enter into evil.’ This is the chilling insight that has
made Machiavelli so feared, admired, and challenging. It is why
we are drawn to him still.
— Michael A. Ledeen, leading neoconservative at the
American Enterprise Institute (AEI), advisor to President Bush’s
political strategist Karl Rove, as quoted in his book, Machiavelli
on Modern Leadership: Why Machiavelli’s Iron Rules Are As
Timely and Important Today As Five Centuries Ago, 199920
It is widely acknowledged that the Bush administration was not honest about
the reasons it gave to the public for the invasion of Iraq. Paul Wolfowitz, for-
mer deputy secretary of defense, acknowledged that the “intelligence” used
to justify the war was always “murky” and that the main rationale for the Iraq
War, “disarming Saddam” of a supposed reconstituted WMD program, was
in essence a “bureaucratic decision.”21 Wolfowitz’s neoconservative colleague

Richard Perle admitted that the war was in violation of international law but
nonetheless stated it was the “right thing” to do.22
This philosophy of governance openly advocates an end-justifies-the-means
mentality, allowing deception, violence, and the abrogation of international law.
Many Americans have difficulty believing the Bush administration purposely
engaged in a campaign of diversion and deception to convince the public that
an invasion of Iraq was urgent and necessary. However, while the idea is dis-
concerting, it is hardly surprising, given the self-proclaimed philosophical
underpinning of neoconservative ideology.
In 1938 German political philosopher Leo Strauss arrived in the US, an
ethnic Jew and refugee from Nazi Germany. As a professor at the University
of Chicago, he specialized in philosophical analysis of the classic Greek tradition
and basic philosophical questions, including the structure of society and
whether it can be governed on rational principles. Wolfowitz, a leading advo-
cate of neoconservatism, was introduced to Straussian ideology while earning
his PhD under him at the University of Chicago.23
Shadia Drury, professor of political theory at the University of Regina in
Saskatchewan, wrote an extensive analysis of Straussian ideology in two books,
The Political Ideas of Leo Strauss 24 and Leo Strauss and the American Right.25
She deftly argued that the use of deception and manipulation in current US
policy flows directly from the doctrines espoused by Strauss, including the
philosophy that deception is the normal process in politics. Therefore secrecy
is a paramount goal of government, especially regarding foreign policy issues.
According to Drury, Strauss believed that society comprised three classes
of people, of which only the “wise elite” were capable of governing. He pro-
posed that the elites were required to engage in “perpetual deception” over
those that were to be ruled.
There are indeed three types of men: the wise, the gentlemen, and
the vulgar. The wise are the lovers of the harsh, unadulterated truth.
They are capable of looking into the abyss without fear and trem-
bling. They recognise neither God nor moral imperatives. They are
devoted above all else to their own pursuit of the “higher” pleasures.
The second type, the gentlemen, are lovers of honour and
glory. They are the most ingratiating toward the conventions of
their society — that is, the illusions of the cave. They are true
believers in God, honour, and moral imperatives. They are ready
and willing to embark on acts of great courage and self-sacrifice at
a moment’s notice.
The third type, the vulgar many, are lovers of wealth and plea-
sure. They are selfish, slothful, and indolent. They can be inspired
to rise above their brutish existence only by fear of impending

death or catastrophe.26
In Strauss’s framework, “those who are fit to rule are those who realize
there is no morality and that there is only one natural right — the right of the
superior to rule over the inferior .… The people are told what they need to
know and no more.”27 While the elite are capable of absorbing the absence of
any moral truth, Strauss thought, the masses could not be exposed to the truth
or they would fall into nihilism or anarchy. His ideology of governing via
secrecy, deception, and the imperative of a broad external threat to “inspire
the vulgar many” provides a tragic parallel to the neoconservative strategy
regarding Iraq.
Strauss was openly contemptuous of secular democracy — he stated that
religion is absolutely essential for imposing moral law on the masses (or vulgar
many). At the same time, he stressed, religion is to be reserved for the masses,
as the ruling elite need not be bound by it. He argued it would be illogical
for the rulers to be bound by religion, since the truths proclaimed by religion
are in his words “a pious fraud.”28 Hence, secular society is the least desirable
situation because it leads to individualism, liberalism, and relativism.
Ironically, while these traits are those the founders of the United States
viewed as most desirable, in the Straussian ideology these ideals only promote
dissent, which weakens society’s ability to cope with external threats. Strauss
was ambivalent as to which religion was needed to facilitate social control of
the masses, only that a religion was required.
Strauss also believed that the inherently aggressive nature of human beings
could only be restrained by a powerful nationalistic state: “Because mankind
is intrinsically wicked, he has to be governed …. Such governance can only
be established, however, when men are united — and they can only be united
against other people.”29 [emphasis added] Drury observed that the require-
ment of “perpetual war” in the Straussian political framework and an “external
threat” must exist, even if it is manufactured. She concluded with this fore-
boding analysis of how Straussian philosophy permeated the underlying
neoconservative political strategy:
In short, they all thought that man’s humanity depended on his

willingness to rush naked into battle and headlong to his death.
Only perpetual war can overturn the modern project, with its
emphasis on self-preservation and ‘creature comforts.’
This terrifying vision fits perfectly well with the desire for hon-
our and glory that the neo-conservative gentlemen covet. It also fits
very well with the religious sensibilities of gentlemen. The combi-
nation of religion and nationalism is the elixir that Strauss advocates
as the way to turn natural, relaxed, hedonistic men into devout

nationalists willing to fight and die for their God and country.
I never imagined when I wrote my first book on Strauss that the
unscrupulous elite that he elevates would ever come so close to polit-
ical power, nor that the ominous tyranny of the wise would ever
come so close to being realized in the political life of a great nation
like the United States. But fear is the greatest ally of tyranny.30
Straussian ideology regarding foreign policy, plainly Machiavellian in ori-

entation, was expanded and formally articulated by neoconservative groups,
such as the Project for a New American Century (PNAC) and the American
Enterprise Institute (AEI). Karl Rove, President Bush’s political advisor,
boasted that he read Machiavelli’s The Prince for insights into his political
strategy.31 Straussian governing philosophy requires strict secrecy, and this was
certainly the case with the preplanned invasion of Iraq.
In January 2003, the Washington Post reported that six days after the
9/11 attack, President Bush approved a 2½-page document marked Top
Secret outlining the plan for a war in Afghanistan. Interestingly, according to
“senior administration officials,” this document also contained a footnote
that “directed the Pentagon to begin military options for an invasion of Iraq.”32
[emphasis added]
In his second book on the Bush administration, Plan of Attack, Washington
Post reporter Bob Woodward revealed that President Bush privately asked
Donald Rumsfeld to create a secret war plan for Iraq on November 16, 2001.33
According to Woodward, on that same day General Franks received a formal
request from Rumsfeld to draft a “commander’s estimate,” basically the noti-
fication to prepare a specific plan to invade Iraq. Franks, occupied with the
one-month-old war in Afghanistan, was reportedly shocked and incredulous
at this request. After settling down, he remarked, “Man, I just can’t imagine
this is something we’re going to be doing anytime soon.”34
Woodward’s book and a subsequent interview with CBS News reinforced
that Bush decided to invade Iraq well before he received congressional permis-
sion on the Iraq War Resolution. In the summer of 2002 Bush approved,
without congressional authorization or notification, the secret reallocation of
$700 million designated for Afghanistan to be secretly spent on “preparatory
tasks” in the Persian Gulf region (i.e., 30 projects that included upgrading
airfields, bases, fuel pipelines, and munitions storage depots to accommodate
a massive US troop deployment).35 Setting aside the Constitutional and legal
issues raised by this abuse of power, these decisions exposed intentional obfus-
cation in the fundamental decision-making process in the executive branch.
During this time the Bush administration continued to deny that a decision had
been made regarding an invasion of Iraq, but the facts speak for themselves.
As Straussian theory requires, an “external threat” was created during the

autumn of 2002. This campaign was designed to create the requisite societal
fear so the “wise” rulers could pursue a strategy kept secret from the “vulgar
masses.” Religion has often been invoked as a divine force guiding our political
leaders in a battle of “good versus evil,” while the mantra “United We Stand”
created the necessary hyper-nationalism to drown out critical analysis of the
facts surrounding the coming war. Under the threat of mushroom clouds, our
prime nemesis, Osama bin Laden, was skillfully transformed by the Bush admin-
istration into our old-yet-new public enemy number one, Saddam Hussein.
Straussian Governance: Conspiracy Inside the Pentagon

One of the reasons I left was my sense that they were using the
intelligence from the CIA and other agencies only when it fit their
agenda. They didn’t like the intelligence they were getting, and so
they brought in people to write the stuff. They were so crazed and
so far out and so difficult to reason with — to the point of being
bizarre. Dogmatic, as if they were on a mission from God. If it
doesn’t fit their theory, they don’t want to accept it.
— Former CIA official interviewed by Seymour Hersh,
for New Yorker, May 200336
I’d love to be the historian who writes the story of how this small
group of eight or nine people made the case [for war] and won.
— W. Patrick Lang, former chief of Middle East intelligence,
Defense Intelligence Agency (DIA)37
The first groundbreaking story about the Office of Special Plans (OSP), and
the neoconservative operatives within it, was provided by investigative
reporter Seymour Hersh of the New Yorker.38 Additional information that
confirmed OSP activities was revealed in interviews with Lt. Colonel
Kwiatkowski, a former Pentagon employee and author of this book’s epilogue.
These individuals exposed how a small clique of neoconservative ideologues,
along with an Iraqi exile group previously discredited by the CIA, conspired
to provide most of the fraudulent “intelligence data” that the executive branch
publicized during the lead-up to the war. According to Hersh, proponents of
Straussian ideology were placed in key positions within the ad hoc “intelli-
gence units” that prepared information specifically for the president and vice
president in their efforts to prepare the public for war.39
Evidently during 2001–2002 the Defense Intelligence Agency (DIA) and
CIA were not providing Secretary of Defense Rumsfeld with intelligence
information that would justify invading Iraq. Our intelligence agencies sur-
mised that Iraq’s previous WMD program was dormant, and in 1998 they
determined that Saddam Hussein had no ties to Al Qaeda.40 Undeterred, in the

summer of 2002 Rumsfeld set up two unofficial and autonomous intelligence
units within the Pentagon. The smaller “cell” was a two-man operation with an
impressive sounding name, Counter-Terrorism Evaluation Group, or CTEG.41
Rumsfeld assigned Douglas Feith, the third-highest-ranking civilian in the
Department of Defense, to set it up. Feith staffed this cell with two staunch
neoconservatives, David Wurmser and F. Michael Maloof, for the somewhat
ambiguous purposes of reviewing “the vast amount of existing intelligence on
terrorist networks, think through how various terrorist organizations relate to
each other, and how they relate to different groups that support them.”42
Former intelligence professionals claimed that this secretive unit, operating
from a secure room on the third floor of the Pentagon, ultimately succeeded
in circumventing the CIA and DIA by briefing the White House directly on
dubious reports of a “relationship” between Saddam Hussein and Al Qaeda.
According to investigative journalists Robert Dreyfuss and Jason Vest, the
CTEG was successfully used “to disparage, undermine, and contradict the
CIA’s reporting, which was far more cautious and nuanced than Rumsfeld,
Wolfowitz, and Feith wanted.”43 [emphasis added]
The neoconservative operatives in this obscure intelligence cell collabo-
rated with the other Rumsfeld-inspired intelligence unit within the Pentagon,
known as the Orwellian-sounding Office of Special Plans (OSP). According
to former Pentagon employees who observed OSP activities, its sole purpose
was to promote the Iraq War by creating a worst-case scenario regarding
Iraq’s supposed “vast” and “reconstituted” WMD program. The head of this
unit was William “Bill” Luti, who earned his PhD under Leo Strauss. Not
surprisingly, Luti is an acknowledged disciple of Straussian theory.44
Based on what was witnessed and was revealed during 2003–2004, the
purpose of these two “intelligence units” was to bypass the CIA and DIA,
and provide “faith-based intelligence” to Cheney and Bush. In a twist of
bizarre humor, members of the OSP accurately referred to themselves as the
“cabal.”45 Figure 4.1 adapted from Mother Jones magazine illustrates how
these two units bypassed the CIA and DIA, while the Iraqi National Congress
(INC) simultaneously fed deceptive information to former secretary of state
Powell on Iraq’s supposed WMD program.
Since the Roman Empire, people have long suffered when leaders espoused
a governing philosophy that political order is stable only if the people are
united by fear of an external threat. Straussian governance philosophy requires
people to be united under fear and hatred. The goals of the OSP and CTEG,
apparently, were to demonstrate a broad external threat — even if such a
threat had to be invented. Luti and members of the OSP vigorously pursued
this challenge during the autumn of 2002 and succeeded brilliantly. To date, no
professional intelligence analysts in the CIA, DIA, MI5, or MI6 have provided
The Lie Factory
4.1: Flow of information

Source: Mother Jones, February 200446
credible evidence linking Saddam Hussein to Osama bin Laden, Al Qaeda, or

to the 9/11 attacks.47, 48
The main rationales for the Iraq War were woven into a propaganda cam-
paign developed by an unprecedented US government conspiracy, perpetrated
by two relatively small intelligence cells, as well as a few discredited Iraqi exiles
in the INC. Further, this campaign was facilitated by far-right news sources
such as the Weekly Standard, National Review, the Wall Street Journal’s edi-
torials, and Fox News. Much of the disinformation propagated before the war
was discernibly deceptive, but now the evidence of a Pentagon-based conspir-
acy is simply irrefutable.
The British people were also subjected to an impressive propaganda cam-

paign, but with a slightly narrower focus that suggested Iraq had simply not
disarmed and minus the claims of a “relationship” between Saddam Hussein
and Osama bin Laden. Immediately after the Iraq War began, the British
press revealed a clandestine intelligence unit, Operation Rockingham, remark-
ably similar to the Pentagon’s OSP. According to former weapons inspector
Scott Ritter, Operation Rockingham “cherry-picked” information about
WMD for Prime Minister Blair and “only put forward a small percentage of
the facts when most were ambiguous or noted no WMD …. It became part
of an effort to maintain a public mindset that Iraq was not in compliance with
the inspections. They had to sustain the allegation that Iraq still had WMD
[when] UNSCOM was showing the opposite.”49 [emphasis added]
Like the OSP, this unit acted as the interface with MI5, MI6, GCHQ, and
Defence Intelligence. As such they effectively passed on dubious information
to the Joint Intelligence Committee (JIC) in an effort to create a worst-case
scenario — using, for example, the infamous claim of Iraq’s capability to launch
a WMD attack “within 45 minutes.”
While Downing Street has not addressed the issue of the secretive Operation
Rockingham, one British Intelligence official told the Sunday Herald, “I’d
like to know if troops were sacrificed because we kept hyping up weapons of
mass destruction.”50 Like the Pentagon’s OSP unit, Operation Rockingham
successfully frightened the people into compliance and “to the bidding” of
their leader, Prime Minister Blair.
Straussian Necessity of an External Threat: Mushroom Clouds

to Inspire the Vulgar Many
Many of us are convinced that Saddam will acquire nuclear
weapons fairly soon. Just how soon we cannot gauge.
— Vice President Cheney, August 26, 200251
The problem here is that there will always be some uncertainty
about how quickly he can acquire nuclear weapons, but we don’t
want the smoking gun to be a mushroom cloud.
— National Security Advisor Rice, September 8, 200252
Facing clear evidence of peril, we cannot wait for the final proof
... the smoking gun ... that could come in the form of a mush-
room cloud.
— President George W. Bush, October 7, 200253
An Iraqi nuclear weapon might bring ‘the sight of the first mush-
room cloud on one of the major population centers on this planet.’
— General Franks, November 12, 200254
We know he’s been absolutely devoted to trying to acquire

nuclear weapons, and we believe he has, in fact, reconstituted
nuclear weapons.
— Vice President Cheney, March 16, 200355
I don’t believe anyone that I know in the administration ever said
that Iraq had nuclear weapons.
— Secretary of Defense Rumsfeld, May 14, 200356
Yeah, I did misspeak .… We never had any evidence that he had
acquired a nuclear weapon.
— Vice President Cheney, September 14, 200357
This final quote from Cheney is rather surprising considering his comments
of August 2002 and March 2003. These intervening months just before the
war were remarkable. Senior members of the executive branch and a top US
military commander appear to have made a coordinated attempt to create
massive societal fear. Repeated references to nuclear weapons, smoking gun,
and mushroom clouds were clearly aimed at instilling Strauss’s “fear of impend-
ing death or catastrophe” in the American public’s imaginations.58 However,
if one can overcome that fear and critically examine the available facts, it
appears highly doubtful that Saddam Hussein could have reconstituted an
undetected nuclear weapons program under the UN sanctions. Likewise,
Saddam Hussein — an emphatically secular leader — was unlikely to provide
any weapons to Islamic terrorists.
Despite inherent logical contradictions of an unprovoked WMD attack by
the Iraqi government, in August 2002 Cheney introduced the notion that
Saddam Hussein would acquire nuclear weapons “fairly soon.” Not coinci-
dentally, on the one-year anniversary of the September 11th attacks, Rice
famously remarked that failure to “disarm” Saddam might produce a “smoking
gun” in the form of a “mushroom cloud.” Introducing the terrifying image
of a mushroom cloud to the American citizens when their emotions were
heightened was a highly effective method for instilling generalized fear.
The coup de grâce to “inspire” the American people that an imminent
“external threat” existed from a nuclear-armed Saddam Hussein was provided
by General Franks and Rumsfeld. On November 12, 2002, Franks warned
that inaction might produce the “first mushroom cloud on one of the major
population centers on this planet.”59 Two days later Rumsfeld stated, “Within
a week, or a month, Saddam could give his WMD to al Qaeda.”60
Tragically, the subservient US media conglomerates uncritically repeated
and amplified the government’s fear-inspiring propaganda campaign. Members
of Congress who questioned the drive to war were quickly denounced. These
events vividly illustrate how the power wielded by a few government officials
can easily bring a frightful population “to the bidding of the leaders.” Just as
Hermann Goering stated, political leaders seeking war will always attack the
pacifists for “lack of patriotism and exposing the country to danger. It works
the same way in any country.”61
The following information was never discussed by the US government or
our subservient media conglomerates, as it would have exposed the fallacy of
the prime rationale for the Iraq War. First, we all hope the US government
will never have to conduct a forensic analysis of radioactive isotopes that
would remain after a rogue nuclear explosion. However, the National Nuclear
Security Administration (NNSA) and associated US military laboratories can
analyze these unique radiation signatures to determine the origin of major
sources of plutonium or uranium required in any nuclear weapon.
For example, if a nuclear warhead were stolen and detonated, the US could
determine whether the fissile material came from Britain, China, France,
India, Israel, Pakistan, Russia, or the United States. Furthermore, if Al Qaeda
were to seek a nuclear weapon, it would most likely go to where this is most
plentiful and least secure — the former states of the Soviet Union. Reports to
Congress by US intelligence agencies and non-proliferation organizations have
repeatedly stated that the real risk for a rogue group acquiring an unsecured
nuclear weapon was, and still is, a former Soviet Union-based weapon, not
from the Middle East. The second most likely nuclear proliferation threat is
Pakistan, which according to foreign media sources was engaged in a “sophis-
ticated black market” of selling nuclear WMD components to numerous
nations.62
These are well-understood risks, despite the corporate media’s lack of
reporting these facts in the run-up to the Iraq War. Incidentally, a report pre-
sented to Congress in September 2002 regarding a “Terrorist Nuclear Attack”
illustrated that US forensic capability itself “could help to deter other nations
from giving nuclear material to a terrorist group.”63 The report clearly illus-
trated that government personnel deemed any potential detonation of a
rogue nuclear device within the US as likely being of Russian origin — not
from Iraq, Iran, or North Korea. Furthermore, if such an event were to occur,
first it would be assumed by the US government that the bomb material was
stolen from Russia, and secondly, it would be unlikely that Russia would have
conducted any such attack.
Although this is a highly disconcerting subject, it is important to realize
that professionals within the US government are operating under the assump-
tion that a rogue nuclear explosion would likely be a terrorist attack and not
an attack from a hostile nation. Although a brutal and despicable individual,
Saddam Hussein is like other dictators who enjoy their power and position.
He was not interested in provoking the US to attack Iraq, and as a secular
dictator, nor was he interested in associating with fundamentalist terrorist
groups like Al Qaeda. Saddam ruled over the most secular state in the Middle
East and loathed religious zealots like Osama bin Laden.
Despite Bush’s and Cheney’s Orwellian references to Despite Bush’s and Cheney’s
Saddam Hussein’s “relationship” with bin Laden, the CIA Orwellian references to
stated that Saddam Hussein never reciprocated contacts Saddam Hussein’s “relation-
from bin Laden during the 1990s — in fact, he actually ship” with bin Laden, the CIA
rebuffed Al Qaeda’s overtures. The Congressional 9/11
stated that Saddam Hussein
investigation’s final report reiterated this, finding “no
never reciprocated contacts
credible links” between Saddam and Al Qaeda. The
from bin Laden in the early
President said the Commission was “wrong,” while the
1990s — in fact, he actually
Vice President has never offered any evidence to support
rebuffed Al Qaeda’s overtures.
his continued claims to the contrary.64 The modus operandi
of Bush and Cheney appears to be based on Goebbels’s
advice on propaganda, “Repeat a lie often enough, and it becomes the truth.”
Regardless, it is a matter of historical record that Saddam Hussein was
warned through diplomatic channels during the 1991 Operation Desert Storm
that launching a WMD attack against the UN coalition forces would result in
an overwhelming US military response, one that would have ended his regime
— if not his life. Obviously he was shrewd enough to avoid engaging in such
self-defeating tactics and refrained from using WMD against UN forces.
Thus, a cursory analysis of Saddam Hussein’s history and desire to hold
onto power, and some basic common sense, exposes that the prime rationale
for the 2003 war was always based on flawed logic, paranoia, or simply the
desire to unite the “vulgar many” under fear. Numerous countries dislike US
foreign policies, but even the most brutal dictators would likely be deterred
from providing WMD to Al Qaeda in order to preserve their own survival.
The American people must not let fear tactics overrule the facts or their abil-
ity to think critically.
US Government in the New Century: Political

Fundamentalism and Tragic Hubris
I’m the commander — see, I don’t need to explain — I do not
need to explain why I say things. That’s the interesting thing
about being president. Maybe somebody needs to explain to me
why they say something, but I don’t feel like I owe anybody an
explanation.
— President George W. Bush, as quoted in
Bob Woodward’s book, Bush at War 65
God told me to strike at al Qaeda and I struck them, and then he

instructed me to strike at Saddam, which I did, and now I am
determined to solve the problem in the Middle East. If you help
me I will act, and if not, the elections will come and I will have to
focus on them.
— President George W. Bush, as reported by former
Palestinian Prime Minister Mahmoud Abbas, 200366
All’s fair in war … and in love. Practicing deceit to fulfill your
heart’s desire might be not only legitimate, but delicious!
— Michael Ledeen, as quoted in his book, Machiavelli on Modern
Leadership: Why Machiavelli’s Iron Rules Are As Timely and
Important Today As Five Centuries Ago,1999).67
It is a disconcerting fact that fewer than two dozen men, all the way up to the
president and vice president, were able to instill massive levels of irrational
fear into the American citizenry by creating visions of nuclear or biochemical
disaster. Thus far in our new era of political fundamentalism Congress appears
to have neither the interest nor the ability to hold accountable any members
of the secretive groups that operated out of the Pentagon. The same disinforma-
tion originating from the OSP and CTEG was used to sway the congressional
votes on the Iraq War resolution — that was intentionally forced onto
Congress just a few weeks before the 2002 mid-term elections.
One of the early whistle-blowers who witnessed the prewar activities of the
OSP firsthand was US Air Force Lieutenant Colonel Kwiatkowski. She
worked in the Near East South Asia (NESA), a policy arm of the Pentagon,
from May 2002 until February of 2003. Before resigning, she began writing
forceful articles about her experiences in the Pentagon. The following inter-
view with Kwiatkowski illustrated how a small but radical group of ideologically
“pure” neoconservatives successfully bypassed the CIA and DIA.
All primary staff work was conducted by political appointees [that
is, by those with no experience in working with intelligence, but
Rumsfeld’s hand-picked aides who would give him what he
wanted] .... What I saw was aberrant, pervasive and contrary to
good order and discipline. If one is seeking the answers to why
peculiar bits of ‘intelligence’ found sanctity in a presidential
speech, or why the post-Hussein occupation has been distin-
guished by confusion and false steps, one need look no further
than the process inside the Office of the Secretary of Defense ….
The answers [to questions about why the invasion] had been
heavily crafted by the Pentagon, and to me, they were remarkably
inadequate ….
I suggested to my boss that if this was as good as it got, some
folks on the Pentagon’s E-ring may be sitting beside Hussein in
the war crimes tribunals. Hussein is not yet sitting before a war
crimes tribunal. Nor have the key decision-makers in the Pentagon

been forced to account for the odd set of circumstances that
placed us as a long-term occupying force in the world’s nastiest
rat’s nest, without a nation-building plan, without significant
international support and without an exit plan. Neither may ever
be required to answer their accusers, thanks to this administra-
tion’s military as well as publicity machine, and the disgraceful
political compromises already made by most of the Congress.68
The US’ five subservient media conglomerates dutifully and uncritically

repeated the propaganda of the Bush/Cheney administration essentially ver-
batim. The chief weapons inspector during 2002–2003, Hans Blix,69 and former
UN weapons inspector Scott Ritter,70 have both written books reflecting the
actual facts about Iraq’s supposed WMD program. Additionally, Dilip Hiro’s
book Secrets and Lies carefully listed the prewar claims versus the actual results
of the failed search for WMD within Iraq.71
According to former CIA employees, OSP members are dangerous ideo-
logues who have seriously damaged the credibility and sense of mission within
the CIA.72 Aside from the Iraq debacle, CIA officers are reportedly distraught
with the White House at the apparently politically motivated “outing” of Valerie
Plame, an undercover CIA asset involved in investigating the proliferation of
WMD technology. This unprecedented retaliatory act was detailed by her
husband, former ambassador Joseph Wilson, in The Politics of Truth. 73 He
clarified that, despite claims by the administration, Saddam Hussein had not
sought to buy uranium yellowcake from Niger, but this disclosure from a vet-
eran diplomat was met with nefarious retaliation by political operatives.
According to John Dean, a lawyer in the Nixon administration who became
famous during the Watergate scandal, Plame’s “outing” may have violated
the Espionage Act of 1917 and the Intelligence Identities and Protection Act
of 1982, both of which are serious felonies.74
During a June 2003 interview, Ray McGovern, a retired 27-year CIA vet-
eran, stated that there is an “incredible amount of unease and disarray”
between the neoconservatives and US intelligence professionals.75 According
to him, “the primary function of the Central Intelligence Agency is to seek
the truth regarding what is going on abroad and be able to report that truth
without fear or favor.”76 However, under the Bush administration the ability
of CIA employees to present data without fear of retaliatory actions has been,
in McGovern’s view, “corroded, or eroded, very much.”77
During a 2003 interview with Salon, Thomas Powers, a widely respected
authority on the US spy business, stated that the CIA was facing a “demoralized
rank and file, a lack of resources,” and was “effectively hamstrung” by the
Bush administration. Powers acknowledged that these political manipulations
Allegations about Iraqi WMD Findings

Precursor Chemicals: 3,307 tons Found: None
Tabun, nerve agent Found: None
Mustard agent Found: None
Sarin, nerve agent Found: None [A single unmarked
and presumably discarded 1980s
vintage "dud" artillery shell used as
an improvised explosive device (IED)
by Iraqi insurgents during May 2004.
Details added by author]
VX nerve agent, 1.6 tons Found: None
Anthrax spores raw material: Found: None
25,550 liters
Ricin Found: None
Botulinnum toxin Found: One vial of Sarin B, 10 years
old, in an Iraqi scientist's domestic
refrigerator
Alfotoxins Found: None
Mobile bio-weapons laboratories Found: None [Two suspected mobile
trailers found to be harmless,
possibly purchased from the UK in
1987 as atmospheric hydrogen
balloon labs for artillery aiming
purposes. Details added by author]
Bombs, rockets, and shells for poison Found: None
gas, up to 30,000 shells
L-29 unmanned aerial vehicles for Found: None
delivering biological and chemical
weapons
Nuclear weapons material Found: None [corroded parts from a
single 12-year-old centrifuge buried
under a rose bush in the backyard of
a former Iraqi scientist. Details added
by author]
Al Hussein surface-to-surface missiles with Found: None
410 mile/650 kilometer range, up to 20
4.2: Iraqi WMDs and means of delivery -- alleged vs. found

Sources: The Guardian (UK), September 25, October 3, and October 7, 2003
had compromised the CIA’s ability to protect US national security.

Regarding the OSP, Powers stated:
[Donald Rumsfeld and the OSP] wanted the war so badly that
they were doing everything they could to create pressure for it.
With the Office of Special Plans, they were essentially saying to
the CIA, ‘OK, you’re not giving us what we want, so we’re going
to create a new CIA.’78
With their mission accomplished, Rumsfeld disbanded the OSP in

September 2003, and the CTEG was disbanded in February 2004. Despite
the so-called congressional investigation into “intelligence failures,” there is
reportedly “strong resistance” by the Republicans to investigate the activities
of the Rumsfeld/Feith conspiracy.79 It is highly doubtful the US Congress or
UK Parliament will expose the truth in the near future. The publicly available
facts, and statements by former intelligence professionals, clearly illustrate
that the purposeful maneuverings of the OSP and CTEG were not “intelligence
failures” at all, but rather a remarkable success in “uniting the vulgar many”
with fear. Regardless of whether these individuals are ever held accountable,
it is clear that the main justifications for the war were based on a mixture of
deceptive premises and, in some cases, outrightly fraudulent information.
Following the Iraq War the Bush administration began to “purge” the CIA
of analysts who provided analysis that contradicted the dogmatic notions of
the neoconservatives. Jim Pavitt, a 31-year CIA veteran who retired in August
2003 as a departmental chief, said that he could not recall a time when such
“viciousness and vindictiveness” had occurred in a battle between the White
House and the agency.80 In 2004 Vince Cannistraro, former CIA head of
counter-terrorism and member of the National Security Council under Ronald
Reagan, made the following understatement, “These have been an extraordi-
nary four years for the CIA and the political pressure to come up with the
right results has been enormous, particularly from Vice-President Cheney.”81
The internal battle between the White House and the CIA erupted into
public view during the summer of 2004. The first sacrificial lamb was the
unexpected resignation in June of CIA Director George Tenet for supposedly
“personal reasons.” The newly appointed Director Porter J. Goss began to
remove anyone not deemed sufficiently “ideologically pure.” A memorandum
written by Goss was leaked in which he warned CIA employees not to “identify
with, support or champion opposition to the administration or its policies.”82
This memo coincided with resignations of many senior CIA staff; including
John McLaughlin, the deputy director and head of clandestine operations,
and Jami Miscik, the deputy director for intelligence and head of the analyt-
ical section. Michael Scheuer, the former head of the UBL unit and author of
Imperial Hubris, also resigned at this time.
Considering the ongoing wrath of “viciousness and vindictiveness” ema-
nating from the White House, it was not entirely surprising that immediately
after the November 2004 election a “purge” of the CIA was implemented.
Basically, numerous “realists” within the CIA have been removed in order to
fill these slots with political appointees — or “true believers.” This purging of
reality-based analysts with faith-based political fundamentalists will likely pro-

duce a dangerous myopia within the CIA.
In January 2005 the Washington Post revealed that the Bush administration
had decided to create a “new CIA” — without involving Congress. Apparently,
in 2002 Rumsfeld set up the Strategic Support Branch, his own clandestine
espionage unit operating out of the Pentagon. This unit had reportedly been
operating in secret for two years inside Afghanistan, Iraq, and other places that
were not disclosed.83 According to Stephen A. Cambone, the undersecretary
for intelligence and neoconservative protégé, he defined the “war on terror”
as ongoing and indefinite, and thereby saw no need to notify Congress of its
deployment orders. In other words, Rumsfeld’s newest espionage unit will
remain largely unaccountable to the Joint Chiefs, Congress, and the taxpayers.
This dangerous secrecy follows a pattern that has been evident throughout
the Bush administration.
Referring again to first-hand observations of Kwiatkowski, the deceptive
machinations underlying the Iraq War were carefully hidden from the public,
as she stated in this interview with LA Weekly:
Marc: So if, as you argue, they knew there weren’t any of these
WMD, then what exactly drove the neoconservatives to war?
Karen: The neoconservatives pride themselves on having a
global vision, a long-term strategic perspective. And there were
three reasons why they felt the US needed to topple Saddam, put
in a friendly government and occupy Iraq .... One of those reasons
is that sanctions and containment were working and everybody
pretty much knew it .... The second reason has to do with our mil-
itary-basing posture in the region. We had been very dissatisfied
with our relations with Saudi Arabia, particularly the restrictions
on our basing .… The last reason is the conversion, the switch Saddam
Hussein made in the Food for Oil program, from the dollar to the
euro. He did this, by the way, long before 9/11, in November
2000.84
In order to facilitate the goals as articulated by Kwiatkowski, on May 9,
2003, the Bush administration presented UN Security Council Resolution 1483
that proposed the cessation of sanctions against Iraq and granted US/UK
sole control of Iraq’s oil production revenue.85 Interestingly, the Bush admin-
istration blocked Blix and the UN inspectors from returning to Iraq in the
postwar period and successfully had the UN sanctions lifted regardless of
Iraq’s WMD status. Why? The Bush administration simply had decided that
it was unacceptable for any of the “foreign suitors of Iraqi oil” to gain con-
trol of an estimated 40 billion barrels of Iraqi oil — or for that oil be sold in
euros by the French and perhaps later by the Russians.
Had the UN inspectors declared Iraq free of WMDs, the oil lease contracts
and exploration rights held by the French, Russians, and Chinese could have
been legally initiated. Lifting the UN sanctions would have also allowed for-
eign investment to begin rebuilding and exporting Iraq’s vast reserves, while
simultaneously impeding the ability of major US/UK oil companies to gain
lease contracts for Iraqi oil, given Saddam Hussein’s loathing of the US/UK
post–1991 sanction policies toward Iraq. Although hardly covered in the US
media, it was briefly reported that the Bush administration’s lawyers were
studying international law in an effort to nullify these contracts while Iraq was
governed by the US-appointed Coalition Provisional Authority (CPA). While
this type of subterfuge at the highest levels of government was nothing new,
there was a surprisingly intense reaction from the international community,
manifested in the failure of the US to acquire the UN’s authorization for
invading Iraq.
March 19, 2003: An Oil Currency War to Enforce Dollar

Hegemony within OPEC
Oil is Allah’s gift to the Arab People.
— Optimistic Arab saying
There will be no democracy for the Arab People until the oil runs out.
— Cynical Arab saying
You can’t distinguish between al Qaeda and Saddam when you
talk about the war on terror.
— President George W. Bush, September 200286
In the real world … the one factor underpinning American pros-
perity is keeping the dollar the World Reserve Currency. This can
only be done if the oil producing states keep oil priced in dollars,
and all their currency reserves in dollar assets. If anything put the
final nail in Saddam Hussein’s coffin, it was his move to start sell-
ing oil for euros.
— Richard Benson, “Oil, the Dollar, and US Prosperity,”
www.prudentbear.com, August 200387
There were only two credible reasons for invading Iraq: control over
oil and preservation of the dollar as the world’s reserve currency.
— John Chapman, “The Real Reasons Bush Went to War,”
the Guardian (UK), July 200488
In December 2002, I wrote an Internet essay hypothesizing that one of the

real reasons for the upcoming war to topple Saddam Hussein was the Bush
administration’s desire to install a puppet government in Iraq — and to

immediately revert Iraq’s oil exports to a dollar standard.89 This reconversion
was not the sole issue per se, but preventing any further momentum toward
a petroeuro is likely an unspoken component of neoconservative strategy for
US global domination. Notably, when the euro was launched in 1999, Iran
expressed interest in switching to a petroeuro, but the euro’s subsequent
decline in 2000 temporarily reduced momentum. Undeterred, Saddam
Hussein was the first OPEC member to make the switch. While deceiving the
American people into the Iraq War, this administration sent a message to
other OPEC producers —You are either with us or against us.
Given neoconservative doctrine with regard to thwarting any nation, or
group of nations, from “even aspiring” to challenge the US’ role in global
affairs, it is quite realistic to presume that Saddam Hussein sealed his fate
when he decided to switch to the petroeuro in late 2000. At that point,
another manufactured Gulf War become inevitable under the Bush adminis-
tration. To be sure, Paul O’Neill’s and Richard Clarke’s books exposed that
one of Bush’s primary foreign policy objectives within his first month in office
was to topple Saddam Hussein.
Aside from the reserve currency and the Saudi/Iraq/Iran oil issues, every-
thing was peripheral and of marginal consequence to this administration. The
dollar-euro threat is powerful enough that the US risked domestic and inter-
national economic backlash in the short-term to stave off the long-term
dollar crash that would result from a collective OPEC switch from dollars to
euros. The Bush administration planned to reverse the various trends men-
tioned above by seizing the world’s richest oil-producing regions. Robert
Dreyfuss outlined the development of these strategic goals in his 2003 Project
Censored award-winning essay “The Thirty-Year Itch.”
The administration believes you have to control resources in order to
have access to them,’ says Chas Freeman, who served as US ambas-
sador to Saudi Arabia under the first President Bush. ‘They are
taken with the idea that the end of the Cold War left the United
States able to impose its will globally — and that those who have
the ability to shape events with power have the duty to do so. It’s
ideology.90 [emphasis added]
This information about Iraq’s oil currency switch appeared in the US cor-
porate media for a single 24-hour news cycle on October 30, 2000.91 This
newsworthy item never again showed up in the US media in the 2½ years
leading up to the Iraq War. Likewise, the Bush administration has never spoken
about it. Regardless, this quasi state secret can be found in a Radio Free Europe
article discussing Saddam Hussein’s switching his oil sales to the euros effec-
tive November 6, 2000:
Baghdad’s switch from the dollar to the euro for oil trading is
intended to rebuke Washington’s hard line on sanctions and
encourage Europeans to challenge it. But the political message
will cost Iraq millions in lost revenue. RFE/RL correspondent
Charles Recknagel looks at what Baghdad will gain and lose, and
the impact of the decision to go with the European currency.92
At the time of the switch many analysts were surprised that Saddam Hussein
was willing to give up approximately $400 million (£270 million) in annual
oil revenue for what appeared to be a political statement. However, the steady
depreciation of the dollar against the euro since late 2001 meant that Iraq
had profited handsomely from the switch in their transaction and reserve cur-
rencies. Indeed, the Observer surprisingly divulged these facts one month
before the war in an article aptly titled “Iraq Nets Handsome Profit by
Dumping Dollar for Euro.”93 Although the switch appeared to be censored
within the US corporate broadcast media, this UK article revealed that the
euro had gained 25 percent against the dollar following Iraq’s decision:
A bizarre political statement by Saddam Hussein has earned Iraq
a windfall of hundreds of millions of euros. In October 2000 Iraq
insisted upon dumping the US dollar — ‘the currency of the
enemy’ — for the more multilateral euro.94
This UK news item by Islam Faisal was the only mainstream prewar story
that specifically addressed the financial windfall of Iraq’s oil currency switch
to the euro. Due to the euro’s steady appreciation relative to the dollar from
2001 to early 2003, Iraq’s UN reserve fund swelled from around $10 billion
to €26 billion.95
One week later a follow-up article appeared, just three weeks before the
Iraq War began, entitled “When Will We Buy Oil in Euros?” According to Fadhil
Chalabi of the Center for Global Energy Studies, Saddam Hussein’s switch to
the euro was “a political move [designed] to show that the euro could be a
substitute for the dollar in denominating the oil price.”96 This article ended
with a rhetorical question that historians will likely study in the coming years,
“So is the euro the missing link between the ‘axis of evil’ and the ‘axis of
weasel’? It is greatly appreciated in the former and was invented in the latter.”97
This strikingly honest news story revealed what appears to be an ongoing
secret withheld from US citizens by the corporate media — but well known
by Internet readers: the critical, but obfuscated, fact, “that two-thirds of [Iraqi
oil] is being snapped up by US companies, can only be paid for in euros.”98
[emphasis added] Under the Oil for Food program, the US typically purchased
around 65 percent of Iraq’s total oil exports, which from 2001 to early 2003
was approximately 2.5 billion out of a total production of 3.3 billion barrels.
Despite months of debate in the mass media

Despite months of debate in the
about fictitious threats from Iraq’s “vast stockpile”
mass media about fictitious threats
of WMD and deceptive references suggesting Iraqi
from Iraq’s “vast stockpile” of WMD
involvement in 9/11, the US corporate media
and deceptive references suggesting
completely omitted from the information flow the
Iraqi involvement in 9/11, the US
simple fact that, from 2001 up until the 2003 inva-
media completely omitted the sion, US petroleum conglomerates were paying for
simple fact that, from 2001 up until Iraq’s oil in euros — not dollars.
the 2003 invasion, US petroleum What would be the effect if most OPEC mem-
conglomerates were paying for Iraq’s bers made a sudden (collective) switch to euros, as
oil in euros — not dollars. opposed to a gradual transition? While highly
unlikely, this would create monumental turmoil in
the global financial markets. According to a former US government analyst:
The effect of an OPEC switch to the euro would be that oil-

consuming nations would have to flush dollars out of their (central
bank) reserve funds and replace these with euros. The dollar would
crash anywhere from 20–40% in value and the consequences would
be those one could expect from any currency collapse and massive
inflation (think Argentina currency crisis, for example). You’d
have foreign funds stream out of the US stock markets and dollar
denominated assets, there’d surely be a run on the banks much
like the 1930s, the current account deficit would become unser-
viceable, the budget deficit would go into default, and so on. This
could result in your basic 3rd world economic crisis.99
Although the above scenario is highly unlikely, and most assuredly unde-
sirable to the global economy, under certain economic conditions or significant
geopolitical tensions, it is plausible. The US economy is intimately tied to the
dollar’s role as reserve currency. This does not mean that the US couldn’t
function otherwise, but means that the transition would have to be gradual
to avoid precipitous economic dislocations — and the ultimate result would
probably be the US and the EU switching roles in the global economy.
Referring again to Spiro’s analysis of petrodollar recycling:
So long as OPEC oil was priced in US dollars, and so long as

OPEC invested the dollars in US government instruments, the
US government enjoyed a double loan. The first part of the loan
was for oil. The government could print dollars to pay for oil, and
the American economy did not have to produce goods and services
in exchange for the oil until OPEC used the dollars for goods and
services. Obviously, the strategy could not work if dollars were not
a means of exchange for oil.
The second part of the loan was from all other economies that
had to pay dollars for oil but could not print currency. Those
economies had to trade their goods and services for dollars in
order to pay OPEC. Again, so long as OPEC held the dollars
rather than spending them, the US received a loan. It was there-
fore important to keep OPEC oil priced in dollars at the same time
that the government officials continued to recruit Arab funds.100
Avoiding the Iraq War would have required a more honorable US adminis-
tration that could have convened a meeting of the G–8 industrialized nations
in an effort to negotiate a graduated oil-pricing option that included the dollar
and the euro. Of course, such an accord now seems inevitable by 2010.
Unfortunately the Bush administration chose a military option instead of
a multilateral conference on monetary reform and appears completely unable
to advocate any energy policy except one that encourages more consumption.
After toppling Saddam Hussein, the US clearly intends to keep a large and
permanent military force in Iraq. Indeed, there never was an exit strategy
because the military is needed to protect the newly installed regime and to
send a message to other OPEC producers that they might receive regime
change if they convert their oil payments to euros. The geopolitical tensions
between the US and other industrialized nations have been further exacer-
bated in the aftermath of the Iraq War, as Saddam Hussein’s contracts with
French, Russian, and Chinese firms appear to have been nullified.
It may surprise many Americans that the 2003 Iraq War was the third US-
sponsored regime change in Iraq since WW II.101 Therefore, we should not
naïvely believe that the Bush administration intends to establish democratic
rule in Iraq, assuming it is possible. As Americans, we engaged in wishful
thinking that somehow the US military was capable of invading Iraq and
“installing” democracy. In contrast, we are an empire trying to reaffirm our
position as the world’s only superpower, thus altruism is not our goal. It is
simply to install a pliant puppet-regime that will align itself with US corpo-
rate interests, mainly to revert to petrodollar recycling and award Iraq’s oil
contracts only to US and UK companies, thereby nullifying the contracts
revealed by Cheney’s Energy Task Force as “foreign suitors of Iraqi oil.”
The US economy has acquired significant structural imbalances, including
a massive $665 billion trade account deficit in 2004 (almost 6 percent of
GDP), a $7.6 trillion deficit (65 percent of GDP), and the recent return to
annual budget deficits in the hundreds of billions. These imbalances are exac-
erbated by the Bush administration’s ideologically driven tax and budget
policies that have produced a $413 billion budget deficit in 2004, and pro-
jected an unprecedented ten consecutive years of deficits totaling a massive
$5.9 trillion by 2014.102 These factors would collapse the currency of any
nation under the “old rules.” The dollar is still predominant despite these
structural imbalances, but for reasons rarely discussed in public.
The “safe harbor” status of the US dollar since 1945 rests on it being the
World Reserve Currency. In conjunction with the oil industry’s historical
roots in Texas in the early 20th century, it has traditionally assumed the role
of the main currency for international oil transactions. The dollar’s monopoly
began to breakdown in the early 1970s due in part to the debts of the
Vietnam War, with its associated drain of the US’ gold reserves, and the
emergence of reinvigorated European and Japanese economies. Secret, uni-
lateral US agreements with Saudi Arabia in 1974 thwarted movement toward
a basket of multiple currencies for international oil trades. This has produced
a fundamentally unbalanced global economy.
For the past 30 years the US Federal Reserve has printed hundreds of billions
of oil-backed petrodollars, which US consumers provide to other nations by
purchasing imported goods. Then those nations use these dollars to purchase
oil/energy from OPEC producers. These billions of surplus petrodollars are
recycled from OPEC and invested back into the US via Treasury bills or other
dollar-denominated assets, such as US stocks, bonds, and real estate. The
structural imbalances in the US economy are sustainable as long as
• nations continue to demand and purchase oil for their energy/
survival needs,
• the world’s monopoly currency for global oil transactions remain
the US dollar, and
• the three internationally traded “crude oil markers” remain denom-
inated in US dollars.
These underlying factors of dollar supremacy, along with the “safe harbor”
reputation of US investments, propelled the US to economic and military
hegemony in the post–WW II period. However, the introduction of the euro
is a significant new factor, and it appears to be the primary threat to US eco-
nomic domination.
US policy-makers are undoubtedly aware of the EU’s impressive expan-
sion plans that will by default shift more economic power to Europe. In late
2002 it was agreed that the EU would expand in May 2004 with ten addi-
tional member states, thereby creating a 25-nation economic block, the
EU-25. This successful integration resulted in an aggregate GDP of $9.6 tril-
lion and 450 million people, directly competing with the US economy ($10.5
trillion GDP, 280 million people). Significantly, even before enlarging, the
EU purchased more of OPEC’s oil exports than did the US.
Facing these geopolitical potentialities with the attending macroeconomic
threat of a powerful euro, in conjunction with the global energy challenges,
I hypothesized in December 2002 that the Bush administration sought to

topple Saddam Hussein in 2003. Such a strategy would be pursued as a pre-
emptive attempt to prevent the initiation of Iraqi oil lease contracts with various
foreign nations, and the reconversion of Iraq’s oil export transaction currency
to the dollar. Regarding Iraq, the facts speak for themselves.
Just as hypothesized, after toppling the Saddam Hussein regime, the Bush
administration quickly reconverted Iraq’s oil transaction currency to the dol-
lar. On April 28, 2003, msnbc.com published the first and only article in the
mainstream US media since the autumn of 2000 that specifically addressed
Iraq’s oil export switch to the euro, the Iraq War, and underlying petrodollar
issues. The following excerpts are from Howard Fineman’s article “In Round
2, It’s the Dollar Versus the Euro” (implying that the Iraq War was Round 1):
A new world is being created. Ironically, the most troublesome
clash of civilizations in it may not be the one the academics expected:
not Islamic fundamentalists vs. the West in the first instance, but
the United States against Europe.
To oversimplify, but only slightly, it’s the dollar vs. the euro ….
The Europeans and the United Nations want the inspections
regime to resume because as long as it is in place, the UN Oil for
Food program remains in effect. Not only does France benefit
directly — its banks hold the deposits and its companies have been
involved in the oil sales — the entire EU does as well, if for no other
reason than many of the recent sales were counted not in dollars but
in euros.
Sometime in the next few weeks, push will come to shove.
There are storage tanks full of Iraqi crude waiting in Turkish ports
…. There may come a time when the smart thing to do is turn the
whole Iraq situation over to the UN. This is not that time.
Meanwhile, if the rest of the world tries to block any and all Iraq
oil sales, it’s possible that American companies will find a way to
become the customer of first and last resort ….
And we’ll pay in dollars.103[emphasis added]
Although Fineman addressed this subject somewhat obliquely, his final
sentence is quite candid. Indeed, my original thesis from the Internet essay
regarding the macroeconomic strategy of the Bush administration was con-
firmed a few months after the Iraq War had begun.
On June 5, 2003, an article in Financial Times briefly mentioned that the
first “postwar” Iraqi oil sales returning to the international markets were once
again denominated in US dollars — not euros, thus confirming my original
hypothesis that the US would immediate seek to reconvert Iraqi oil exports
to the dollar.
The tender, for which bids are due by June 10, switches the trans-
action 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.104
Not surprisingly, the US corporate media has not run a single news story
on the reconversion of Iraq’s oil exports from petroeuros to petrodollars. The
swiftness with which the Bush administration achieved this tactical goal was
impressive. This hidden fact helped illuminate one of the crucial, yet over-
looked, macroeconomic rationales for the 2003 Iraq War.
Another goal of the neoconservatives was to use the “war on terror” as the
publicly expressed premise in an attempt to dissolve OPEC’s decision-making
process, thus ultimately frustrating the cartel’s inevitable switch to pricing oil
in euros. How would the Bush administration break up the cartel’s price con-
trols in a post-Saddam Iraq? First is the redenomination of Iraq’s oil exports
to the dollar standard. Additionally, investigative journalist Greg Palast dis-
covered that some advisors to the Bush administration recommended
initiating massive Iraqi oil production far in excess of OPEC quotas, thereby
disrupting the cartel’s pricing leverage.105 Regardless of the outcome of this
aspect of prewar discussions, it is irrefutable that the US has established 14
new military bases in Iraq in an effort to gain strategic control of Iraq’s oil.
In the buildup to the war, Nayyer Ali offered a succinct analysis of why
Iraq’s underutilized oil reserves would not be a “profit-maker” for the US
government, but they would achieve the more important goal of providing
the economic leverage to potentially dissolve OPEC’s price controls, thus ful-
filling the US’ long-sought goal of disbanding the OPEC cartel:
Despite this vast pool of oil, Iraq has never produced at a level
proportionate to the reserve base. Since the Gulf War, Iraq’s pro-
duction has been limited by sanctions and allowed sales under the
Oil for Food program and what else can be smuggled out …. If
Iraq were reintegrated into the world economy, it could allow
massive investment in its oil sector and boost output to 2.5 billion
barrels per year, or about 7 million barrels a day.
What would be the consequences of this? There are two obvi-
ous things.
First would be the collapse of OPEC, whose strategy of limit-
ing production to maximize price will have finally reached its limit
…. This would lead to the second major consequence, which is a
collapse in the price of oil to the 10-dollar range per barrel.
The Iraq War is not a moneymaker. But it could be an OPEC

breaker. That however is a long-term outcome that will require
Iraq to be successfully reconstituted into a functioning state in
which massive oil sector investment can take place.106
The American people were oblivious to the potential economic risks

regarding the Iraq War. The Bush administration believed that by toppling
Saddam Hussein they would remove the juggernaut, thus allowing the US to
control Iraq’s huge oil reserves and finally break up and dissolve the pricing
power of the ten remaining OPEC producers. However, the US occupation
of Iraq may be exacerbating tensions within OPEC, providing further impe-
tus toward a petroeuro.
Only time will tell, but from a purely monetary and economic perspective,
it would be natural for some OPEC members and non-OPEC oil exporters,
such as Russia, to protect their investments and debt obligations by pricing
oil in the euro, given its higher valuation. Governments in many oil-producing
states will naturally attempt to maintain social stability in their countries by
allocating oil profits for domestic infrastructure improvements, which will
become increasingly difficult if the dollar remains lower relative to the euro.
Operation Ajax to Operation Iraqi Freedom: 50 Years of

History Lessons Not Heeded
In 1953 the United States played a significant role in orchestrat-
ing the overthrow of Iran’s popular prime minister, Mohammad
Mossadegh. The Eisenhower administration believed its actions
were justified for strategic reasons. But the coup was clearly a set-
back for Iran’s political development. And it is easy to see now
why many Iranians continue to resent this intervention by
America in their internal affairs .... Neither Iran nor we can forget
the past. It has scarred us both. But the question both countries
now face is whether to allow the past to freeze the future or to
find a way to plant the seeds of a new relationship that will enable
us to harvest shared advantages in years to come, not more
tragedies.
— Secretary of State Albright, speech given at the American-
Iranian Council, Washington, DC, March 17, 2000107
Operation Ajax was the CIA’s first “dirty tricks” campaign to destabilize a
Middle Eastern government — the US overthrew a secular democracy in Iran
and installed a totalitarian regime, essentially in order to protect Western cor-
porate oil profits.
Important history lessons following the 1953 coup of Iran are revealed in
Stephen Kinzer’s excellent book, All the Shah’s Men: An American Coup and
the Roots of Middle East Terror.108 Kinzer, a veteran foreign correspondent for
the New York Times, interviewed numerous Iranians about the overthrow of
Prime Minister Mossadegh. The sordid history of foreign interference helps
explain why Iran is governed today by theocratic mullahs instead of secular
leadership as practiced under its brief period of democratic governance.
During the 1940s the Anglo-Iranian Oil Company reaped over 80 percent
of the profits from Iran’s oil exports. For example, in 1947 the British oil
company reported an after-tax profit of $40 million but gave Iran only $7
million and failed to live up to its earlier agreements to spend some of the
profits to improve the deplorable conditions at the main oil fields in Abadan.109
The widespread abuses and arrogance of the British-controlled company had
increased the level of social discontent within Iranian society.
These sentiments were shared by an Iranian politician in his early 60s,
Mohammed Mossadegh, a staunch nationalist and anti-communist. He insisted
that Iran be allowed to audit the accounting books from the Anglo-Iranian
Oil Company (later to become BP). This was a matter of due diligence to
Mossadegh, who believed that Iran was not getting sufficient financial returns
from exporting its vital oil resources. Observing this brewing crisis, the US
government stepped into the fray.
In 1949 George McGhee of the US State Department reviewed the finan-
cial reports of the Anglo-Iranian Oil Company and noted that it sold its oil
for between 10 and 30 times the production cost, concluding that the com-
pany was “exceptionally profitable.” McGhee sought to prevent a looming
disaster by warning the British that this company had become “genuinely
hated in Iran” and suggested it was time to begin sharing the oil wealth in a
more equitable profit-sharing arrangement.110 In a striking example of arro-
gance, the British told McGhee they would train more Iranians for
supervisory positions, but they refused to offer any financial disclosures to the
Iranian government, nor would they offer to split the oil profits. The British
remarkably claimed, “One penny more and the company goes broke.”111
British intransigence ignited Mossadegh’s candidacy. On April 28, 1951,
the Iranian parliament, or Majlis, elected him as prime minister by a vote of 79
to 12.112 His one condition for accepting this position was the fateful decision
that made him a national hero to the people of Iran, but despised by British
oil interests.
Following the British refusal to a more equitable distribution of oil profits,
in 1951 Mossadegh fulfilled his promise to nationalize Iran’s oil resources.
He then offered Anglo-Iranian Oil Company a 50/50 split on the oil proceeds,
but the British rebuked it. British Prime Minister Arden organized a blockade
of Iran, froze its financial assets, and claimed that the nationalization of Iran’s
oil was illegal. However, the World Court upheld Mossadegh’s action. In 1951,
Time named Mossadegh Man of the Year, describing him as “the Iranian
George Washington” but also as an exasperating, “defiant man [who] dissolved
one of the remaining pillars of a great empire.”113
Undeterred by this turn of events or Mossadegh’s popularity with the
Iranian people, Churchill asked Truman to help overthrow Mossadegh and
regain British control over Iran’s oil export revenue. Truman declined and
attempted to foster diplomatic mediation. However, the Dulles brothers had
already conceived a plot when Eisenhower became president in January 1953.
(Allen Dulles was the CIA Director, and according to Kinzer, John Dulles
was a lawyer who represented various US/UK oil companies.)
In February 1953 Allen Dulles sent Eisenhower a preposterous intelli-
gence estimate suggesting that a “Communist takeover is becoming more
and more of a possibility” within Iran.114 Eisenhower then agreed to a covert
operation code-named Ajax, after which the CIA successfully overthrew
Mossadegh in August 1953. The CIA then installed Mohammed Shah, a
member of the Iranian monarchy who later became despised as a US puppet.
The Shah used the brutal SAVAK secret police force to maintain his grip on
power. Due to widespread political imprisonments, torture, and killings, his
rule ultimately radicalized Iranian society. This blowback resulted in the ousting
of the Shah to the US and the Iranian Revolution of 1979. Based on Kinzer’s
research, it is clear that many Iranians were very pro-US before the covert
actions by the CIA:
‘Why did you Americans do that terrible thing?’ a relative of
Mossadegh demands of Kinzer. ‘We always loved America. To us,
America was the great country, the perfect country, the country
that helped us while other countries were exploiting us. But after
that moment, no one in Iran ever trusted the United States again.
I can tell you for sure that if you had not done that thing, you
would never have had that problem of hostages being taken in
your embassy in Tehran. All your trouble started in 1953. Why,
why did you do it?’115
The answer to her question can be summarized in one word — greed,
stemming from powerful oil interests that enacted unwarranted influence on
British and American foreign policies. Not much has changed in the past 50
years; the Western participants in the Middle East are essentially the same, but
the US is now the principal provocateur. The main differences today are that the
propaganda used to justify regime change is now based on a “terrorist threat” as
opposed to a “communist threat,” and that the main actors are more desperate
due to the imminent arrival of Peak Oil, which has resulted in overt military
operations as opposed to the previous tactics of quiet, covert operations.
Regrettably, many Iranians have not forgiven the US government for what
it did to their country 50 years ago. The ramifications of this 1953 plot and
subsequent tyrannical rule by the Shah greatly agitated Iranian society, ulti-
mately fostering the spread of a radical Islamic fundamentalism, which continues
to fracture US-Iranian relations. Even on the 50th anniversary of the coup
(August 2003), the conservative Islamic mullahs in Iran did not acknowledge
Mossadegh’s secular legacy. However, according to reporter Dan de Kuce of
the Guardian, for many Iranians that coup was a tragedy from which their
country has never recovered. On this anniversary he noted, “Perhaps because
Mossadegh represents a future denied, his memory has approached myth.”116
Undoubtedly, Bush’s declaration of Iran as part of an “axis of evil” has
even further damaged the US-Iran relationship, while paradoxically appear-
ing to facilitate Iran’s trade relationships with the EU, Russia, and China.
Obviously, therefore, any future US military or covert action against Iran
would likely be entirely unilateral, as even the British government has rejected
overt “regime change” in Iran.
The Iraq Conundrum: Tactical Victory but Strategic Failure

In military campaigns I have heard of awkward speed but have
never seen any skill in lengthy campaigns. No country has ever
profited from protracted warfare. Those who do not thoroughly
comprehend the dangers inherent in employing the army are inca-
pable of truly knowing the potential advantages of military actions.
— Sun-tzu, The Art of War, 400–320 BC117
A guerrilla war is not a war of technology versus peasantry. Rather,
it is a contest of endurance and national will. The side with the
greatest moral commitment (ideological, religious, or patriotic) will
hold the ground at the end of the conflict. Battlefield victory can
be almost irrelevant, since victory is often determined by morale,
obstinacy and survival.
— General Nawroz, US Army (retired), Foreign Military
Studies Office Analysis: Soviet Invasion of Afghanistan118
You are going to be the proud owner of 25 million people …. You
will own all their hopes, aspirations, and problems. You’ll own it
all …. So you need to understand that this is not going to be a
cakewalk in the woods .… You need to understand not just a mil-
itary timeline but other things that are going to be facing you.
— Colin Powell advising President George W. Bush about
the need for a broad international coalition before the Iraq War,
as quoted in Bob Woodward’s book, Plan of Attack, 2004119
We are going to fight them and impose our will on them and we
will capture or ... kill them until we have imposed law and order
on this country. We dominate the scene and we will continue to
impose our will on this country.
— Paul Bremer, pro-consul of the Coalition Provisional
Authority (CPA), speaking in Baghdad, July 2003.120
Clearly, the US military was tactically successful in its goal of quickly toppling
the Saddam Hussein government while preventing major damage to Iraq’s oil
infrastructure. However, diplomatically and strategically the Bush adminis-
tration was destined to fail before the invasion began. It is obvious the
governments of the EU, Russia, and to a lesser degree China do not, and will
not, endorse the neoconservative agenda of US global domination, which by
default requires that neither the EU nor its euro be allowed to gain a
foothold in the oil currency market. Equally, it does not allow France, Russia,
or China to implement their oil exploration and production sharing contracts
within Iraq, thereby challenging US hegemony in the Persian Gulf.
The neoconservatives determined the only US strategy that could prevent
such events was a military invasion of Iraq that toppled Saddam Hussein’s
government, thereby allowing the installation of a puppet regime that would
align itself with the interests of the US corporate–military–industrial–petroleum
conglomerate.
What the Bush administration and neoconservative strategists failed to
realize was that their open declaration of US strategic plans for global domi-
nation would naturally create an equal but opposite reaction from other
industrialized powers. This was symbolized by an unusual geostrategic align-
ment between the EU and Russia. China’s role has been somewhat enigmatic,
but they did not approve of the invasion either. Whether or not this align-
ment solidifies in the near-term will likely become evident if a new “Iranian
crisis” should occur during Bush’s second term in office.
First, it is important to clarify the objectives
underlying the various prewar maneuvers, which
None of these nations who opposed
appeared to be haphazard, but have since created
the Iraq War wish to destroy America.
the desired effect. None of these nations who
France and Germany simply want
opposed the Iraq War wish to destroy America.
Washington to reduce its intrusive
The Europeans certainly, but also the Russians
mingling in European affairs, while
and even the Chinese do not dislike the US
nearly enough. France and Germany simply want allowing the euro to follow its natural
Washington to reduce its intrusive mingling in trajectory in the global financial

European affairs, while allowing the euro to fol- markets.
low its natural trajectory in the global financial
markets.
Most nations, particularly Russia, wish to reverse the current US military

encroachment in the Middle East and Central Asia regions. As for China, it
wants to reduce US influence in the Far East, and like Russia, sees US military
bases as an encroachment into their backyard. The Chinese government likely
desires that US alliances with South Korea and Japan become more neutral
from a military perspective. Also, China certainly does not appreciate the cur-
rent US encirclement policy being pursued via military basing in states to its
east and naval maneuvers.
In general, these nations, along with most of the world, simply desire a
multilateralist America more inclined to operate in tandem with the global
community. From a cynical perspective, they would prefer a US more willing
to share the spoils and less driven to bully its way through international relations.
The Iraq invasion has resulted in unprecedented levels of US isolation and a
reduction of political leverage.
This was achieved by denying the neoconservatives UN authorization to
use military force against Iraq, while simultaneously functioning to weaken
the US’ tactical position. Even though the initial military operations were a
resounding success, the diplomatic obstacles that were placed in the way pro-
vided for an unstable and now rather unclear aftermath. This was all
accomplished without apparent direct antagonism, but rather with shrewd
diplomacy. Assuming these nations wish to avoid American domination, they
will continue to separate themselves from the dollar. This broad separation
during 2003–2004 at least raises the possibility of a coordinated maneuver to
reduce dollar hegemony.
One key question involves how much inherent weakness in the American
economy is perceived by these world leaders. The finance ministers of the
European Central Bank (ECB), International Monetary Fund (IMF), and Bank
of International Settlement (BIS) have all gone on record with rather scathing
criticism of the Bush administration’s tax and economic policies.121, 122
Likewise, Russia, China, and a few other Far Eastern nations have expressed
their skepticism through their own recent fiscal policy decisions.123, 124 This
raises the question; did these nations hold a general expectation that the US
economy was, or is, heading for a major downfall regardless, thereby elimi-
nating much of the presumed motivation to avoid antagonizing the US?
One of the principle exacerbating issues with Iraq’s conundrum is its
unemployment rate, estimated to be a stunning 67 percent.125 Paradoxically,
the supposed flood of reconstruction jobs are almost exclusively reserved to
non-Iraq/foreign firms, mostly of US origin. The privatization of Iraqi assets
is only one component in a long list of colossal failures in the occupation of
Iraq.
Another failure was Paul Bremer’s decision to fire all 400,000 members of
the Iraqi military in the summer of 2003. Did he expect these trained soldiers
who suddenly lost their incomes and their pensions to sit quietly at home and
wait for “democracy”? Naturally, the Iraqis are doing the same thing they did
during the 1920s when they perceived their colonial British occupiers to be
plundering their nation’s wealth — resist.126 For many Iraqis, American troops
are today’s colonial occupiers. Naomi Klein’s powerful article, “Baghdad Year
Zero,” revealed the sentiments inside Iraq — utter frustration and a loss of
dignity. Her article included interviews with Iraqis, including Haider al-
Abadi, minister of communication, who summarized the problems: “We
know that there are terrorists in the country, but previously they were not
successful, they were isolated. Now because the whole country is unhappy,
and a lot of people don’t have jobs … these terrorists are finding listening
ears.127
In June 2004 the Bush administration “transferred Iraq’s sovereignty” by
installing Ayad Allawi as the interim leader, the choice of US/UK govern-
ments and the CIA, with no democratic input from the Iraqi people. As an
Iraqi exile he spent many years in Britain, including a long history with the
CIA-supported Iraqi National Accord. According to a Guardian article, in
the 1970s he had “close links” to Saddam Hussein’s Mukhabarat intelligence
agency and was referred to as a “manipulator and by some accounts a
brute.”128 The Guardian concluded that Allawi “is a symbol of all that has
gone wrong in Iraq.”129
The international blowback stemming from the doctrine of militant impe-
rialism is bolstered by reports of widespread civilian deaths following US
military operations within Iraq. Although the following Reuters article did
not gain mainstream media follow-up, renowned public health scientists have
dramatically illustrated the tragic fallacy of “spreading democracy” via mili-
tary force and occupation:
‘Making conservative assumptions, we think that about 100,000
excess deaths, or more have happened since the 2003 invasion of
Iraq,’ researchers from the Johns Hopkins Bloomberg School of
Public Health in Baltimore, Maryland, said in a report published
online by The [UK] Lancet medical journal.
‘Violence accounted for most of the excess death and air
strikes from [US-led] coalition forces accounted for the most vio-
lent deaths .… The risk of death from violence in the period after
the invasion was 58 times higher than in the period before the
war,’ Les Roberts and his colleagues said in the report which com-
pared Iraqi deaths during 14.6 months before the invasion and
the 17.8 months after it.
‘Most individuals reportedly killed by coalition forces were
women and children,’ Roberts added.130
No Exit Strategy and Imperial Overstretch

We are the strongest nation in the world today. I do not believe
we should ever apply that political, economic, [and] military power
unilaterally. If we’d followed that rule on Vietnam, we wouldn’t
have been there. None of our allies supported us; not Japan, not
Germany, not Britain or France. If we can’t persuade nations of
comparable values of the merit of our cause, we’d better reexam-
ine our reasoning.
— Robert McNamara, former US Secretary of Defense,
1961–1968, as quoted in the 2003 award-winning
documentary film, The Fog of War 131
The creation of a well-functioning local secret police [in Iraq],

that in effect is a branch of the CIA, is part of the general handover
strategy. If you are in control of the secret police in a country then
you don’t really have to worry too much about who the local
council appoints to collect the garbage.
The presence of a powerful secret police, loyal to the Americans,
will mean that the new Iraqi political regime will not stray outside
the parameters that the US wants to set. To begin with, the new
Iraqi government will reign but not rule.
— John Pike, expert on classified military budgets,
Washington-based Global Security organization,
April 2004132
Camp Victory North [is] a sprawling base near Baghdad International

Airport .… Over the past year, KBR contractors have built a small
American city where about 14,000 troops are living, many hun-
kered down inside sturdy, wooden, air-conditioned bungalows
called SEA (for Southeast Asia) huts, replicas of those used by
troops in Vietnam. There’s a Burger King, a gym, the country’s
biggest PX — and, of course, a separate compound for KBR
workers, who handle both construction and logistical support.
Although Camp Victory North remains a work in progress today,
when complete, the complex will be twice the size of Camp
Bondsteel in Kosovo — currently one of the largest overseas posts
built since the Vietnam War.
Such a heavy footprint seems counterproductive, given the
growing antipathy felt by most Iraqis toward the U.S. military
occupation. Yet Camp Victory North appears to be a harbinger of
America’s future in Iraq. Over the past year, the Pentagon has
reportedly been building up to 14 ‘enduring’ bases across the

country — long-term encampments that could house as many as
100,000 troops indefinitely.
— Joshua Hammer, “Digging in: If the US Government
Doesn’t Plan to Occupy Iraq for Any Longer than Necessary,
Why Is It Spending Billions of Dollars to Build ‘Enduring’
Bases?” Mother Jones, March/April 2005133
At the wise age of 85, Robert McNamara, the controversial secretary of defense
during the Vietnam War, reflected on those turbulent events and advised that
if your allies do not support you, be prepared to “reexamine your reasoning.”
Regardless of the Iraqi people’s quest for self-determination, the neoconser-
vatives plan to keep 100,000 or more US troops stationed permanently inside
Iraq. The evidence is clear: US contractors were given $4.5 billion to rapidly
build 14 large military bases inside Iraq, which the Pentagon refers to in their
Orwellian terms as “enduring camps.” The neoconservative policy paper pub-
lished in September 2000, “Rebuilding America’s Defenses,” explicitly stated
their goals regarding new military bases regardless of whether Saddam Hussein
remained in power: “While the unresolved conflict with Iraq provides the
immediate justification, the need for a substantial American force presence in
the Gulf transcends the issue of the regime of Saddam Hussein.”134 The Project
for a New American Century further advocated this doctrine: “And even
should US-Iranian relations improve, retaining forward-based forces in the
region would still be an essential element in US security strategy given the
longstanding American interests in the region.”135
Despite proclamations of progress in Iraq, the escalating levels of violence,
massive civilian deaths, and destruction of property (including the complete
destruction of Falluja and a significant portion of Najif), the slogans of
“spreading democracy” appear to many Iraqis and informed observers as both
farcical and hypocritical. Perhaps US policy-makers should heed the warning
of another individual tested in times of war, Winston Churchill: “Never,
never, never believe any war will be smooth and easy,” and that statesman
who gives into “war fever [becomes] the slave of unforeseeable and uncon-
trollable events.”136
Have we forgotten the history lessons provided by the most recent attempted
colonial occupation of central Asia? December 24, 1979, can be viewed as
one of the pivotal events that initiated the end of the Soviet Empire. On that
Christmas Eve, Soviet soldiers entered Afghanistan to crush what they regarded
as anti-Soviet, Islamist “terrorists” who were interfering with its nominally
Marxist-Leninist government. Soviet political leaders and military comman-
ders expected that operations in Afghanistan would be over in a “matter of
months.”
Not surprisingly the unpredictable reality of warfare and its outcomes

were once again recorded in the history books. Ten years later, the last of the
demoralized soldiers from the Soviet Union withdrew from a completely dev-
astated Afghanistan. While there are different variables, the Soviet experience
there provided some unfortunate parallels to what the US military and policy-
makers are facing in the occupation of Iraq. The facts on the ground in Iraq
today suggest that the US-led invasion has produced unforeseeable and
uncontrollable events that are replete in the history of modern warfare.
The unraveling inside Iraq was apparent within months of the invasion. In
2003 it was repeatedly claimed that, once Saddam Hussein was captured or
killed, the attacks on US troops would dissipate, and the mysteriously miss-
ing “vast stockpiles” of WMD material, including evidence of a reconstituted
nuclear weapon program, would be found. In reality, after Saddam Hussein’s
capture in December 2003, attacks by insurgents increased, no WMD stockpiles
were found, and the original rationale for war was transferred to a desperate
and Orwellian claim of “spreading democracy” — by using military force.
The June 2004 transfer of “sovereignty” fooled no one. According to the
Asia Times, most Shi’ite voters in the January 2005 election “thought they
were voting for the US to leave, for good.”137 Considering that polls show 80
percent of the Iraqi people want US troops and associated contractors to
leave immediately, a real democracy in Iraq would not likely sign any SOFA
(Status of Force Agreement) that allows permanent US basing in Iraq.138 As
of early 2005 this politically explosive issue of the legal status of US garrisons
inside Iraq remains unresolved, but the Pentagon seems determined to keep
120,000 troops there “until 2007” even if a new Iraqi government demanded
withdrawal.139
Presumably a democratic Iraq would also have some say in economic
issues and naturally seek to keep much of Iraq’s oil industry nationalized in
an effort to retain the critical profits, thereby facilitating the reconstruction
of its infrastructure, healthcare, and education systems. However, this is the
exact opposite of what the Bush administration and its major campaign con-
tributors vigorously pursued under the tenure of Paul Bremer, former
pro-consul of the Coalition Provisional Authority (CPA).140
Therein lies the paradox for the United States: in a true democracy Iraq’s
leader would be expected to do what is in the best interest of the majority of
Iraqi citizens, regardless of whether they are Shi’ite, Sunni, or Kurdish. From
a purely objective perspective, it would have been economically advantageous
for a sovereign Iraqi government to request oil sales in the currency that pro-
vided the most purchasing power for rebuilding its country — which, given
valuations now and into the foreseeable future, implies the euro.
Fatefully, US military personnel are currently facing the same bleak situa-
tion that Soviet forces faced in their 10-year occupation of Afghanistan. US
policy-makers must begin taking into account the harsh reality on the ground
in Iraq, which includes the emergence of a vast resistance movement, ongoing
guerilla warfare in most population centers, and the complete loss of “moral
legitimacy” in the fallout of the Abu Gharib prison scandal.
Without a fundamental change in US leadership and global strategy, his-
torians may ultimately regard March 19, 2003, as a tragic event that ended
the admiration and prominence of America. The only way to prevent this would
require the US government to immediately change current foreign policies,
energy policies, and domestic fiscal policies. The US military’s “imperial over-
stretch” and associated budget and trade deficits clearly preclude the pursuit
of continued occupation of Iraq without the support of the international
community.
Contributors to this book believe that unless drastic actions are taken
immediately to reverse the policies of the neoconservatives, the ultimate out-
come of Operation Iraqi Freedom may be the same as Operation Ajax — an
oppressive US-puppet government that radicalizes the population and produces
a rigid, quasi-theocratic government that becomes staunchly anti-Western.
The imperial conquest of Iraq may turn what was previously the most secular
society of the Middle East oil-producing states into a modern-day Islamic
theocracy.
This analysis was echoed during a meeting at the New American
Foundation in Washington. Brent Scowcroft, national security advisor under
President George H.W. Bush, and Zbigniew Brzezinski, President Carter’s
national security advisor, both stated in January 2005 that the Iraq crisis
required a completely new strategy. Scowcroft recommended that Iraq be
turned over to NATO or the UN, because they would not be “so hostilely
viewed” by Iraqis. Brzezinski bluntly stated, “I do not think we can stay in
Iraq in the fashion we’re in now. If it cannot be changed drastically, it should
be terminated.”141 He also said it would take 500,000 troops, $500 billion,
and the resumption of a (US) military draft to ensure “adequate security” in
Iraq. I concur with Brzezinski’s analysis: the most “optimistic outcome” in Iraq
at this point will be a Shi’ite-dominated theocracy.142 At present, only enlight-
ened US leadership willing to engage in concessions with the other industrialized
nations, along with a multilateral handover to the UN and NATO, could pos-
sibly mitigate the US quagmire in Iraq. Considering Bush’s unique inability
to admit to making mistakes, this compromise appears
rather doubtful. The only way Washington can
The only way Washington can safely extract itself and safely extract itself and the US
the US troops from Iraq is by multilateral compromise on troops from Iraq is by
a broad scale. This would likely involve negotiations con- multilateral compromise on a
cerning some of the prewar oil exploration contracts and broad scale.
a carefully crafted compromise regarding the petrodollar
versus petroeuro currency issue. To begin salvaging the Iraq crisis, the US
government will likely need to concede several prewar oil exploration and
lease contracts to the French, Russian, and Chinese oil companies. In exchange
these countries’ governments would need to formally commit significant
financial and technical resources to a large UN-sponsored alternative energy
consortium, discussed in subsequent chapters.
Some will describe these recommendations as strategic capitulation, but
pragmatic compromise is required at this junction, given the US debt levels
and near-universal antagonistic feelings toward the US military presence in
Iraq. The facts before, during, and after the Iraq War show that the real victims
of this tragic hubris are the US and UK soldiers and Iraqi civilians — who
have all suffered terribly under misguided geostrategic policies and the unten-
able dream of a US global empire.
It is the absolute right of the State to supervise the formation of
public opinion.
If you tell a lie big enough and keep repeating it, people will
eventually come to believe it.
The lie can be maintained only for such time as the State can
shield the people from the political, economic and/or military
consequences of the lie. It thus becomes vitally important for the
State to use all of its powers to repress dissent, for the truth is the
mortal enemy of the lie, and thus by extension, the truth is the
greatest enemy of the State.
— Joseph Goebbels, German Minister for Public
Enlightenment and Propaganda, 1933–1945
If tyranny and oppression come to this land, it will be in the guise
of fighting a foreign enemy.
— James Madison, United States Congressman
Five
Dollar Dilemma: Why Petrodollar

Hegemony Is Unsustainable
‘In the future the euro is (going to be) taking a place in the inter-
national markets in general as the money of exchange.’ Asked if a
switch to pricing oil in euros was possible, ‘Of course, in the oil
market and in any market. It’s a stable and a strong currency, the
role of the euro is going to be increased step by step. It’s normal.’
— Loyola de Palacio, European Energy Commissioner,
June 20031
135
Prewar Momentum toward a Petroeuro

The [Iraqi] cabinet has decided to assign a committee of economists
with the task of seriously studying the possibility of using the euro
or any other currency instead of the dollar in the commercial
transactions of our foreign contracts. The dollar is one of the levers
of our enemy’s influence and power on both regional and inter-
national levels.
— The Iraqi News Agency, quoting a statement by the
cabinet after a meeting chaired by President Saddam Hussein,
September 14, 20002
On Sept. 24, 2000, the regime of Saddam Hussein stunned the
world after a routine cabinet meeting by announcing that it would
no longer accept dollars for oil being sold under the UN Oil for
Food program. All oil sales were to be paid for in euros. A gov-
ernment statement said the move was to confront the “daily
American-Zionist aggression,” an apparent reference to support
for UN sanctions. The Iraqi move did little to hurt the US econ-
omy. It paid off for Iraq when the euro appreciated by 30%.
— Robert Block, the Wall Street Journal, April 15, 20033
The European Parliament … calls on the EU, in dialogue with the
OPEC and non-OPEC countries, to prepare the way for payment
for oil in euros.
— European Parliament resolution on the Communication
from the Commission on the European Union’s oil supply,
June 14, 20014
In May 1999, the EU and Russia began discussing the adoption of the euro
for oil and gas sales.5 While discussions at that time did not result in formal
policy changes, by 2004 Russia had agreed to sell its natural gas to Germany
priced in the euro and is considering the possibility of a petroeuro pricing
arrangement with the EU nations.
EU leaders on Thursday made an audacious bid to lure Russia
away from its reliance on the greenback, calling on Moscow to start
accepting euros instead of dollars for its exports, dangling the attrac-
tive carrot of a boom in investment and trade .… Russia currently
receives dollars for its European oil and gas exports, but the EU
wants to switch to euros instead. A joint communique has been
signed by both sides agreeing to discuss the issue in further detail.6
Dollar hegemony and, by extension, petrodollar recycling are not unstain-
able given the economic and political forces created early in this new century.
Dollar Dilemma 137
The euro has become accepted as a global competitor to the US dollar for
rather straightforward reasons: the US trade and budget deficits are inferior
to the EU’s; the US savings rate is abysmally low when compared to the EU;
and the enlarged EU represents an economy almost as large as that of the US.
Lastly, in general, the European Central Bank (ECB) pursues monetary policies
that control the expansion of the money supply, whereas the Federal Reserve
continues to print dollars with wild abandonment. Subsequently, the euro is
valued higher than the dollar.
Given the continuing devaluation of the dollar, pressure is building within
OPEC to switch to the euro. The central impediment is that all three inter-
nationally traded crude oil pricing “markers” are currently denominated in
dollars. Despite this technical obstacle, news stories before the Iraq War por-
trayed an active debate regarding the plausibility of a euro-denominated oil
transaction system.
In 2002 Iran introduced a proposal to receive payments for crude oil sales
to Europe in euros instead of US dollars. According to Iranian sources, this
decision was “based primarily on economics, but politics are still likely to be
a factor in any decision … as Iran uses the opportunity to hit back at the US
government, which recently labeled it part of an ‘axis of evil.’”7 An Iranian
parliamentary representative was quoted as saying “There is a very good
chance MPs will agree to this idea …. Now that the euro is stronger, it is
more logical.”8
Interestingly, Venezuela’s ambassador to Russia, Francisco Mieres-Lopez,
floated the idea of switching to the euro as their oil currency standard approxi-
mately one year before the April 2002 coup attempt against Hugo Chavez.9
Although the coup collapsed after two days with Chavez being restored to
power, various reports suggested that the CIA, and a rather embarrassed Bush
administration, had met with civilian and military coup plotters and had likely
supported Chavez’s overthrow.10
Following the 2003 Iraq War, several articles appeared on European,
Canadian, and Asian media websites that illustrated active discussion within
OPEC concerning the possibility of pricing oil in a basket of currencies,
including the dollar and the euro. While present on the Internet, these stories
about a potential petroeuro were again conspicuously missing from the five
corporate-controlled US media conglomerates.
OPEC Statements Regarding a Petroeuro

In the long-term, perhaps one question that comes to mind is
could a dual system operate simultaneously? Could one pricing
system apply to the Western Hemisphere in dollars and for the rest
of the world in euros .... Should the euro challenge the dollar in
strength, which essentially could include it in the denomination of
the oil bill, it could be that a system may emerge which benefits
more countries in the long-term.
— Javad Yarjani, Head of OPEC’s Petroleum Market
Analysis Department, in a speech to Spanish officials,
April 200211
In April 2002 Javad Yarjani gave a speech entirely devoted to the dollar and
the euro in the international oil trade business. He candidly provided insights into
the conditions that would create additional momentum within OPEC to
include the euro as an alternative transaction currency in the international “oil
bill.”
Yarjani’s words warrant careful consideration given that two of the vari-
ables required for a currency switch have taken place since 2002. Too many
US economic pundits have imprudently dismissed the idea of the petroeuro;
however, as Yarjani said:
The question that comes to mind is whether the euro will establish
itself in world financial markets, thus challenging the supremacy
of the US dollar, and consequently trigger a change in the dollar’s
dominance in oil markets. As we all know, the mighty dollar has
reigned supreme since 1945 .… Having said that … in the long
run the euro is not at such a disadvantage versus the dollar when
one compares the relative sizes of the economies involved, espe-
cially given the EU enlargement plans. Moreover, the Euro-zone has
a bigger share of global trade than the and while the has a huge cur-
rent account deficit, the euro area has a more, or balanced, external
accounts position [sic] … looking at the statistics of crude oil exports,
one notes that the Euro-zone is an even larger importer of oil and
petroleum products than the US.
From the EU’s point of view, it is clear that Europe would prefer
to see payments for oil shift from the dollar to the euro, which
effectively removes the currency risk .… There is also very strong
trade links between OPEC Member Countries (MCs) and the
Euro-zone, with more than 45 percent of total merchandise
imports of OPEC MCs coming from the countries of the Euro-
zone .… Of major importance to the ultimate success of the euro,
in terms of the oil pricing, will be if Europe’s two major oil producers
— the United Kingdom and Norway join the single currency .… This
might create a momentum to shift the oil pricing system to euros.
In the short-term, OPEC MCs, with possibly a few exceptions,
are expected to continue to accept payment in dollars …. In the
long-term, perhaps one question that comes to mind is could a
Dollar Dilemma 139
dual system operate simultaneously? Could one pricing system apply

to the Western Hemisphere in dollars and for the rest of the world in
euros? …. Should the euro challenge the dollar in strength, which
essentially could include it in the denomination of the oil bill, it
could be that a system may emerge which benefits more countries
in the long-term .... Time may be on your side.12 [emphasis
added]
Indeed, OPEC’s move toward the euro will likely continue, considering
the EU’s successful expansion in May 2004. The inclusion of ten additional
member states resulted in an aggregate GDP increase from approximately $7
trillion to $9.6 trillion. The EU is now an oil-consuming purchasing population
33 percent larger than the US’, and it is projected that over half of OPEC
crude oil is now exported to the EU–25. This excludes other potential EU/euro
entrants, such as the UK, Norway, Denmark, and Sweden. Additionally, since
late 2002 the euro has been trading above the US dollar, with predictions that
the dollar will continue its downward trend relative to the euro in 2005 and
beyond. Current US trade and budget deficits will not be quickly reversed,
especially given the ideological tax cuts passed by the Bush administration.
OPEC and US Dollar Devaluation

[Dr. Mojarrad implied] the switch to the euro, which as done dur-
ing the last few months had helped [Iran] to negate the effects of
a depreciating dollar and falling international oil prices. He said
that if the country had continued its receipts in dollars, it would
have meant large losses, which would have translated into domes-
tic inflation.
This was because large volumes of its imports are … sourced
from Europe. The Iranian central bank was keen to avert that sit-
uation and had consequently adopted the euro-denominated
payments to ensure that the losses were minimised. The country
had also resorted to managing its reserves to minimize the effects
of the depreciating dollar.
— C. Shivkumar, the Hindu Business Line, June 200313
Oil exporters have sharply reduced their exposure to the dollar
over the past three years, according to data from the Bank for
International Settlements. Members of [OPEC] have cut the pro-
portion of deposits held in dollars from 75 per cent in the third
quarter of 2001 to 61.5 percent [by the 3rd quarter of 2004].
Middle Eastern central banks have reportedly switched
reserves from dollars to euros and sterling to avoid incurring losses
as the dollar has fallen and prepare for a shift away from pricing oil
exports in dollars alone. [emphasis added]
— Steve Johnson and Javier Blas, Financial Times,
December 200414
A particularly distinctive analysis of OPEC oil-pricing trends was provided by
James Turk, founder of www.goldmoney.com. Using data from the US
Department of Commerce’s report, “US International Trade in Goods and
Services,” he calculated the euro’s average exchange rate with the dollar from
2001 to 2003 in relation to oil prices. While certainly not conclusive, his anal-
ysis implied that OPEC may be, at least tacitly, pricing oil in the euro due to
its relative stability. The following table is from Turk’s article.
Column (4) illustrates that from 2001 to 2003 the price of imported oil
rose from $21.40 to $26.97. This 26-percent increase is commensurate with
the dollar’s decline relative to the euro over the same period. This analysis’s
most fascinating aspect is that column (6) showed the price of crude oil in
terms of the euro had remained essentially unchanged during this time. Based
on this simple chart, it appears that OPEC may have used an implicit policy
to price crude oil around €24 per barrel during 2001 to 2003. Perhaps this
is a coincidence, or perhaps a conspiracy within OPEC to maintain their pur-
chasing power given the dollar’s decline. However, as Turk stated:
It does not seem logical that this result is pure coincidence. It is
more likely the result of purposeful design, namely, that OPEC is
mindful of the dollar’s decline and increases the dollar price of its
crude oil by an amount that offsets the loss in purchasing power
OPEC’s members would otherwise incur. In short, OPEC is pro-
tecting its purchasing power as the dollar declines.16
US Imports of Crude oil

(1) (2) (3) (4) (5) (6)
Year Quantity Value Unit price Average Unit price

(thousands (thousands (US daily US$ per (euros)
of barrels) of US dollars) € exchange
dollars) rate
2001 3,471,066 74,292,894 $21.40 0.8952 €23.91

2002 3,418,021 77,283,329 $22.61 0.9454 €23.92
2003 3,673,596 99,094,675 $26.97 1.1321 €23.82
5.1: US imports of crude oil — 2001–2003

Source: James Turk,"OPEC Has Already Turned to the Euro."15
Dollar Dilemma 141
Figure 5.1 also shows that US imports of crude oil rose by $25 billion
from 2001 to 2003, adding to the US trade deficit. In 2004 the US trade
deficit was $665 billion, a staggering increase over 2003’s trade deficit of
$489 billion. In 2003 crude oil imports represented 20.2 percent of the
deficit. If other energy-related petroleum products are included, this grows
to 26.5 percent.17 Moreover, these trends are accelerating. Through November
2004 US oil imports were already $119 billion, a whopping rise of $20 billion
over 2003. The huge price increase of imported oil contributed in large part
to the $176 billion rise in the US trade deficit from 2003 to 2004.
Turk’s analysis has important implications, as it shows that a weakening
dollar has actually increased the US trade deficit due to our excessive energy
consumption. As long as the US continues to consume enormous levels of
petroleum imports, it is not plausible that a weakened dollar will significantly
reduce its trade deficit. Secondly, the dollar’s supremacy for oil pricing is now
at risk. In other words, for the first time since World War II, US consumers are
no longer immune to effects of currency risk regarding international oil/
energy purchases.
This information provides further evidence that momentum away from
the dollar since 2002 reflects the world’s growing dissatisfaction with the
Bush administration’s ideologically driven economic and tax policies. Despite
the quasi-mystical claims from “economic fundamentalists” such as Vice
President Cheney, who after being informed by former US Treasury Secretary
O’Neill that a growing budget deficit for 2003 was threatening the US econ-
omy, cut him off and proclaimed, “Reagan proved that deficits don’t matter.”18
Based on an analysis of the dollar’s steep declines in the wake of huge tax cuts
from 2001 and 2003 — obviously US deficits do matter.
Likewise, many US economic commentators and the media punditry in
general seem to fall into the non sequitur trap of assuming the benefits of both
an appreciated and a depreciated US dollar without accounting for the draw-
backs of either. One cannot assume the benefits of a weak dollar (trade advantage,
modest inflation) while retaining those of a strong dollar (asset values, buy-
ing power). One must acknowledge the drawbacks of a declining dollar —
capital flight and reduced consumption — alongside the benefits. The idea that
a cheaper dollar significantly helps US trade exports is more mythical than
realistic. The reason is simple: considering that trade now accounts for less than
10 percent of the American economy, declines in the US dollar are quite marginal
from a macro perspective and do not result in comparable declines in imports.
In 2004 several surprising stories appeared in the foreign media that
addressed the complex issues of OPEC’s momentum toward a potential
petroeuro, giving further credence to Turk’s theory that OPEC may be tacitly
pricing oil in the euro. The following commentary from February 2004 rein-
forced this assertion:
The average price for the Organization of Petroleum Exporting

Countries’ basket of seven benchmark crudes slipped by 8¢ to
$30.44/bbl Thursday.
‘The value of the OPEC basket has been above the $22–28 tar-
get range for 108 trading days over the past 8 months,’ Horsnell
noted. ‘Over the same period, the value of the OPEC basket in
euros has stayed within a 22–28 euros band on all but 2 trading
days, and on those 2 days it was below the band.’
He said, ‘This is of course just a rather bizarre statistical coin-
cidence. It certainly does not imply that the target band has been
secretly switched into euros or that the dollar has lost its primacy
in the oil market.’19
Whether this observation was a “bizarre statistical coincidence” or pur-
poseful design, it is clear that OPEC members are trying to maintain their
purchasing power in the face of a devalued dollar. The question is, can OPEC
be motivated to continue pricing oil exclusively in dollars if under threat from
neoconservative unilateralism, or will they gradually move toward a formal
euro pricing mechanism? The likely answer to that question was addressed in
the following excerpt from a Toronto newspaper, the Globe and Mail, in
January 2004:
OPEC is considering a move away from using the US dollar —
and to the euro — to set its price targets for crude oil, the highest-
profile manifestation of the debilitating effect of depreciation on
the greenback’s standing as the currency of international commerce.
Several members of the Organization of Petroleum Exporting
Countries are seeking formal talks on using the euro, as well as the
US dollar, when determining price targets for crude, a senior oil
minister within the cartel said Monday. ‘There are countries that
are proposing this,’ Venezuela’s Oil Minister Rafael Ramirez said
in Caracas. ‘It’s out there, under discussion.’
Mr. Ramirez did not specify which OPEC members are pushing
the proposal, but much of the impetus is believed to come from
Persian Russian Gulf producers.20
As a follow-up to Turk’s analysis, I conducted a similar currency comparison
of the average price of crude oil for 2004 (through November 2004, using
the most current data).
Based on this estimation from 2003 to (November) 2004, the average US
price of imported oil increased by 27 percent (from $26.97 to $34.27 per
barrel), which is greater than the dollar’s 17-percent drop in value relative to
the euro during this period (a drop of 20 percent by December 2004). Note
that the average price of imported oil for the first 11 months of 2004 was
Dollar Dilemma 143
2004 US Imports of Crude oil

Year * Quantity Value Unit Average Unit
(*through (thousands (thousands price daily US$ price
November) of barrels) of US (US per € (euros)
dollars) dollars) exchange rate
2004 3,499,471 119,939,861 $34.27 1.3007 €26.35
5.2: US imports of crude oil — 2004 Source: United States Census21
€26.35 per barrel, representing a 30-percent lower price relative to the aver-
age price in dollars. Despite its agreement in 2000 for $22 to $28 per barrel
pricing band, OPEC may be attempting to retain its purchasing power by
using an undeclared euro pricing band of approximately €24 to €28. In
essence, it appears the euro might have gained primacy in the oil market due
to its relative stability over the dollar.
Additionally, the November 2004 Center of American Progress’s study of
the dollar, euro, and price of crude oil illustrated that oil prices and the dollar’s
valuation are now moving in the opposite direction. The economist who anal-
ysed this reached the same conclusion previously noted:
To compensate for this loss of buying power, [oil producers] may
have raised the dollar price for oil. As a result, while oil prices in
dollars rose by 162 percent from their low point in January 2002,
they climbed by less than half that rate measured in euros, 77 percent.
At that rate, oil prices would have only risen to $34 per barrel in
October 2004, instead of the actual $52, without changes in the
dollar’s value.22[emphasis added]
Since 2002–2003, American energy consumers have felt the effects of
higher oil prices far more than EU consumers. This is the opposite of what one
would expect if OPEC were pricing oil trades solely on the US dollar. While
it is very doubtful that all ten OPEC countries (excluding Iraq) would volun-
tarily choose to abandon the dollar completely, it is increasingly likely that
they, along with Russia, will continue to pursue methods to retain their hold-
ings by shifting currencies in their central banks, increasing the price within
the pricing band, or formally denominating oil sales in a basket of currencies.
OPEC contemplated this last option early as the 1970s, following the col-
lapse of the Bretton Woods Agreement, and ongoing macroeconomic trends
will result in a formal announcement to price oil in a basket of currencies.23
The dollar’s accelerating decline makes this inevitable. This is yet another rea-
son why reducing excessive consumption and subsequently the level of
imported energy is in the long-term economic and national security interests
of the US.
International Blowback Against the Dollar?

The Saudis are holding the line on oil prices in OPEC and should
they, for example, go along with the rest of the OPEC people in
demanding that oil be priced in euros, that would deal a very
heavy blow to the American economy.
— Yosef Ibrahim, Managing Director of the Strategic Energy
Investment Group in Dubai and member of the US Council on
Foreign Relations, as reported in the Observer (UK),
February 200324
There is no pressing need to replace the dollar with the Euro but
those countries that lose out when the dollar is weak might want
to have an alternative to a 100% exposure to US dollars. However,
the complex system of trading and pricing that is already in place
is not going to be revolutionized on a whim. Anti-American sen-
timent might equally be a spur to change, especially if some of the
major producers and exporters begin to see the US as an unsafe pair
of hands with rogue unilateral policies. Threatening a switch might
become a novel way of limiting the worst excesses of neo-conservatism.
[emphasis added]
— Allison Mitchell, “OPEC and the Euro,” February 200425
“Down with America .… Euro yes! Dollar no!”
— Chants of an anti-war street protest in Nigeria, as witnessed
by Robert Block, reporter for the Wall Street Journal, 200326
This broad movement away from the dollar does not appear to be based
purely on the structural imbalances of the US economy, as it has carried a trade
account deficit every year since 1989. Massive deficit spending was tolerated
in the early years of the Reagan administration — but of course, the US was
still the world’s largest creditor then. It is now the world’s largest debtor.
Tragically, the arrogance of the current Bush administration with its
strange avocation for unilateral warfare, along with the dismissal of various
international accords and apparent disregard for international law, have cre-
ated tremendous international blowback. This rapid deterioration of US
international stature is apparent in global surveys of both “friendly” and
“hostile” nations.27 The consequences of this blowback is likely manifested
with the systemic drawback from the dollar. During 2003 governments in
Asia, Russia, and Canada all significantly reduced their dollar holdings.28, 29, 30
Despite the lack of media coverage, these dramatic movements away from the
US dollar on the eve of the Iraq War were widespread. Joseph Quinlan, a
global economist with John Hopkins University, summarized these risks just
before the outbreak of the war:
Dollar Dilemma 145
“Today if you have the US acting [in Iraq] against world opinion, there
could be an even faster pullback out of dollar-denominated assets …. How
we go to war influences the rate of decline of the dollar.”31
Unlike 1991’s Desert Storm, the early tactical “vic-
tory” in Iraq has not led to any increases in the dollar’s Unlike 1991’s Desert Storm,
value. In fact, the war accelerated its downward trend — the early tactical “victory” in
especially among the OPEC oil producers. History has Iraq has not led to any
shown that opposing geopolitical alliances will form increases in the dollar’s value.
when an empire begins excessive military adventurism,
and the openly stated neoconservative goal of US global
domination will naturally be resisted by other powerful nations. The following
quote summarized the risks inherent to neoconservative doctrine:
One of the dirty little secrets of today’s international order is that
the rest of the globe could topple the United States from its hege-
monic state whenever they so choose with a concerted abandonment
of the dollar standard. This is America’s preeminent, inescapable
Achilles Heel for now and the foreseeable future.
That such a course hasn’t been pursued to date bears more rela-
tion to the fact that other Westernized, highly developed nations
haven’t any interest to undergo the great disruptions which would
follow — but it could assuredly take place in the event that the
consensus view coalesces of the United States as any sort of ‘rogue’
nation — in other words, if the dangers of American global hege-
mony are ever perceived as a greater liability than the dangers of
toppling the international order. The Bush administration and the
neoconservative movement have set out on a multiple-front course
to ensure that this cannot take place, in brief by a graduated asser-
tion of military hegemony atop the existent economic hegemony.
— Anonymous former US government employee32
In April 2003 Bloomberg News reported that Indonesia, a small non-OPEC
oil exporter with a Muslim majority, was evaluating a petroeuro. As the article
below illustrated, the political fallout from the Iraq invasion was not limited
to Europe.
Pertamina, Indonesia’s state oil company, dropped a bombshell

recently. It’s considering dropping the US dollar for the euro in
its oil and gas trades.
Other Asian countries may not be far behind any move in
Indonesia to dump the dollar. The reasons for this are economic
and political, and they could trigger a realignment that under-
mines US bond and stock markets over time.33
Additional articles have suggested that other countries such as Malaysia

may drop the dollar in favor of the euro. Incidentally, the final “axis of evil”
country, North Korea, officially dropped the dollar and began using euros for
trade, effective December 7, 2002.34 Unlike OPEC producers, North Korea’s
switch will have negligible economic impact, but it illustrated the geopolitical
fallout of Bush’s harsh rhetoric. In fact, it appears that a disconcerting “anti-
dollar” movement could be spreading in Asia and perhaps Africa. Indeed, in
2003 a Wall Street Journal reporter witnessed an unusual anti-war protest in
Nigeria, an OPEC member that could become another target in the “war on
terror” if the euro were adopted as their oil export currency.
“European countries,” preached Shiek Ibrahim Umar Kabo, the head
of Nigeria’s Council of Muslim Scholars, “have refused to be fooled
by America” and support the war. “We should therefore encourage
transactions with the euro and stop patronizing the American dollar.”
The sheik’s advice was met with cries of “Down with America.”
The enthusiasm spilled out into the streets with the faithful shout-
ing, “Euro yes! Dollar no!”
Shiek Ibrahim said the dollar boycott was, in his opinion, “the
most effective means of peaceful protest available to bring the US
back to its senses.” He insisted that the ploy could slow down the
American economy and “may even lead to its collapse.”35
Certainly one of the most troubling pieces of news regarding the dollar/euro
issues and the political fallout from the Iraq War relates to Russia. In mid-October
2003, after meeting with German Chancellor Schroeder, Russian President
Putin mentioned that Russian oil sales could be redenominated in euros.
“We do not rule out that it is possible. That would be interesting
for our European partners,” Putin said.
A move by Russia, as the world’s second largest oil exporter,
to trade oil in euros, could provoke a chain reaction among other
oil producers currently mulling a switch and would further boost
the euro’s gradually growing share of global currency reserves.36
Yosef Ibrahim, the managing director of the Strategic Energy Investment
Group in Dubai and a member of the US Council on Foreign Relations,
stated that Saddam Hussein’s switch to the euro for Iraqi oil trades ‘was
another reason [why the US attacked] . There is a great political dimension to
this. Slowly more power and muscle is moving from the United States to the EU,
and that’s mainly because of what happened in Iraq.’37[emphasis added]
Further evidence that Russia is gravitating toward a petroeuro system was
provided by Lukoil vice president Leonid Fedun, who stated that the transaction
cost for the switch would be minimal at just 0.08 percent.38 Fedun said,
Dollar Dilemma 147
‘There is no problem .... If the state decides to do this, then we will support
this initiative. From the point of view of the [Russian] economy, there’s no
difference.’39
This Moscow Times article included comments from Yevgeny Gavrilenkov,
chief economist at Troika Dialog, stating that debate is growing on a move
toward the euro as Russia mulls siding with the EU: “Such an idea is really
possible. Why not? More than half of Russia’s oil trade is with Europe. But
there will be great opposition to this from the United States.”40
The proposition that Russia, the second-largest oil exporter in the world,
switching to the euro will be met with “great opposition” from the US is an
understatement. Nevertheless, according to the same article, from a purely mon-
etary and trade perspective this Russian switch appears logical. Obviously the US
government would prefer that Russia sell its oil in dollars or a dual currency
arrangement, as opposed to a single currency, petroeuro oil-trading system.
The Saudi Question: The Sword of Damocles
Damocles — in classical mythology, courtier at the court of
Dionysius I. He so persistently praised the power and happiness of
Dionysius that the tyrant, in order to show the precariousness of
rank and power, gave a banquet and had a sword suspended above
the head of Damocles by a single hair. Hence the expression “the
sword of Damocles” to mean an ever-present peril.
— Columbia Encyclopedia, Sixth Edition, 2005.
Though it was less concerned with the secrecy of Arab invest-
ments, the CIA concurred that OPEC money continued to have
a great potential for disrupting markets if an Arab government
became displeased with US policy. [The CIA report stated]
‘Temporary dislocation of international financial markets would
ensue, if the Saudi Arabian government ever chose to use its accu-
mulated wealth as a political weapon.’ [emphasis added]
— CIA memo “Saudi Arabian Foreign Investment”, marked
“Secret, Not Releasable to Foreign Nationals,” reviewed for
declassification in May 1985, as noted in David Spiro’s book, The
Hidden Hand of American Hegemony 41
Saudi Arabia’s Prince Muhammad Bin-Turki Bin-Abdallah Bin-
Abd-al-Rahman said … rather than resorting to an [oil] embargo
… he argues that a more effective punishment for the United States,
Israel’s principal source of financial and political support, would be
to change the currency in which oil is traded from the dollar to the euro,
something that Iraq has already done. This option, he said, is a
strategic and rational one, compared with cutting off production,
and it is purely commercial. The Arab countries have the right to

choose the currency, just as it is the right of consumer countries
to choose to deal with oil-exporting countries. [emphasis added]
— “Protest by Switching Oil Trade from Dollar to Euro,”
Oil and Gas International, (US), April 15, 200242
In the aftermath of the September 11, 2001 attacks, several little-noticed news
stories appeared in which former FBI counterterrorism agents publicly stated
that investigations into Al Qaeda-financed terrorism had been systematically
thwarted under both the Clinton and George W. Bush administrations.43 The
FBI showed the principal financiers of Osama bin Laden to be wealthy mem-
bers of the Saudi elite. The first foreign leader to meet with Bush after 9/11
was French President Chirac, who handed him a detailed French report of
Osama bin Laden’s financial network. It was “The Economic Network of the
bin Laden Family” by Jean-Charles Brisard.44
According to Brisard, who interviewed FBI agent John P. O’Neill just two
months before the 9/11 attacks, FBI investigations of Osama bin Laden’s
network were thwarted due to bin Laden’s close ties to “high-ranking per-
sonalities and families of the Saudi Kingdom.”45 Following the 1998 East
African Embassy bombings, O’Neill became the FBI’s foremost Osama bin
Laden hunter, and he reportedly told Brisard that “All of the answers, all of
the clues allowing us to dismantle Osama bin Laden’s organization, can be
found in Saudi Arabia,” emphasizing the “inability of American diplomacy to
get anything out of King Fahd” concerning terrorist networks. The reason?
There was only one: corporate oil interests.46 [emphasis added] Other FBI
agents, including Robert Wright and Sibel Edmonds, also claimed that their
blocked investigations showed the principal financiers of Osama bin Laden
were often in the Saudi elite.47
Since at least 1996, the evidence suggests that the Radical Fundamentalist
Unit and its associated UBL (Usama bin Laden) unit at the FBI headquarters
systematically blocked various FBI field agents from pursuing links between
Islamist terrorists and their Saudi financiers.48 The question remains: why did
successive US administrations block FBI investiga-
Since at least 1996, the evidence tions into bin Laden? Perhaps because, in essence,
suggests that the Radical Saudi Arabia is the principal enabler of the petrodollar
Fundamentalist Unit and its associ- recycling system — thus it holds the sword of
ated UBL (Usama bin Laden) unit at Damocles over dollar supremacy.
the FBI headquarters systematically As the CIA memo warned, OPEC money flows,
blocked various FBI field agents from and in particular the Saudi Arabian government,
pursuing links between Islamist could use its “accumulated wealth as a political
terrorists and their Saudi financiers. weapon [if it] became displeased with US policy.”49
A Saudi strategy of showing its displeasure at the
Dollar Dilemma 149
US would likely be conducted economically, not via the often-mentioned, but

illogical, claim of an oil embargo. We learned from the oil shocks of the 1970s
that oil is a tangible asset and its price depends on overall supply, not necessarily
determined by a particular supplier. A more likely “anti-US” strategy could
include pulling the monetary plug on the petrodollar system. Statements by
the former US ambassador to Saudi Arabia hint that some may question why
they should be “so kind” to the US in pricing oil exclusively in the dollar.
One of the major things the Saudis have historically done, in part
out of friendship with the United States, is to insist that oil con-
tinues to be priced in dollars. Therefore, the US Treasury can
print money and buy oil, which is an advantage no other country
has. With the emergence of other currencies and with strains in
the relationship, I wonder whether there will not again be, as there
have been in the past, people in Saudi Arabia who raise the question
of why they should be so kind to the United States.50
It is doubtful that US Congress members at this committee meeting

missed the subtle warning that was carefully articulated about petrodollars
versus petroeuros. In December 2004 the Bank of International Settlements
(BIS) stated that, in spite of oil prices increasing 85 percent from 2001 to 2004,
overall OPEC bank deposits barely rose. The BIS report noted this unusual
phenomenon, “Oil reserves have not been channeled into the international
banking system in the most recent cycle.”51
In January 2005, an article on a Middle East Finance and Economy website
was succinctly entitled, “Saudi Sees Stronger Euro Role.”52 This one-paragraph
story hinted that Saudi Arabia’s central bank expects the euro to “play a
greater role in currency reserves in the future.” In somewhat cryptic language,
it reported that Hamad Saud Al Sayyari, the governor of the Saudi Arabian
Monetary Agency, implied it did not matter which currency oil is priced in,
but he wanted stability in prices.53
If true, this nuanced statement may confirm an active discussion within
Saudi Arabia regarding a potential switch to a petroeuro. If the regime made
such a transition, the neoconservatives would likely transfer the “war on terror”
directly to Saudi Arabia. Equally foreboding are significant monetary shifts in
reserve funds away from the dollar toward the euro in various industrialized
nations. Economist Hazel Henderson outlined the potential outcomes of the
current US strategy of global domination. She cited US military overreach
and a domestic failure to effectively switch to renewable energy sources, among
other factors, concluding:
The result of this scenario? The USA could no longer run its huge
current account trade deficits or continue to wage open-ended
global war on terrorism or evil. The USA ceases pursuing unilat-

eralist policies. A new US administration begins to return to its
multilateralist tradition, ceases its obstruction and rejoins the UN
and pursues more realistic international cooperation.54
If OPEC and other governments continue to perceive the euro as a highly

appreciated and more stable currency due to the EU’s balanced budget and
trade accounts, why would the US dollar retain its World Reserve status if,
and when, US deficits cause significant disruption to the value of the dollar?
Statements by the ECB and some OPEC members about a petroeuro indi-
cate the possible outcome. I suspect that by 2010 we will witness a graduated
approach entailing a replay of the 1974 Saudi agreement that established the
petrodollar recycling phenomenon — but this time, a basket of currencies
including the dollar and euro.
Iran’s Oil Bourse: Introducing a Euro-denominated Oil Marker

The decision-making in connection to the continuation of [oil]
transactions in dollars is being considered in a committee set up
by the Central Bank of Iran.
— Seyyed Mehdi-Mir-Moezzi, Managing Director of the
National Iranian Oil Co., August 200255
Iran is to launch an oil trading market for Middle East and OPEC
producers that could threaten the supremacy of London’s
International Petroleum Exchange. A contract to design and
establish a new platform for crude, natural gas and petrochemical
trades is expected to be signed with an international consortium
within days …. Some industry experts have warned the Iranians
and other OPEC producers that Western exchanges are controlled by
big financial and oil corporations, which have a vested interest in
market volatility. [emphasis added]
— Terry Macalister, “Iran Takes on West’s Control of Oil
Trading,” the Guardian, (UK), June 200456
Newsweek has learned that the CIA and DIA have war-gamed the
likely consequences of a US pre-emptive strike on Iran’s nuclear
facilities. No one liked the outcome. As an Air Force source tells
it, ‘The war games were unsuccessful at preventing the conflict from
escalating.’ [emphasis added]
— “War-Gaming the Mullahs,” Newsweek, September 200457
In my interviews [with former high-level intelligence officials], I
was repeatedly told that the next strategic target was Iran. Everyone
Dollar Dilemma 151
is saying, ‘You can’t be serious about targeting Iran. Look at Iraq,’

the former [CIA] intelligence official told me. But the [Bush
administration officials] say, ‘We’ve got some lessons learned —
not militarily, but how we did it politically. We’re not going to rely
on agency pissants.’ No loose ends, and that’s why the C.I.A. is
out of there.
— Seymour Hersh, “The Coming Wars,” New Yorker,
January 200558
Current geopolitical tensions between the United States and Iran extend
beyond the publicly stated concerns about Iran’s nuclear intentions, and
likely include a proposed Iranian petroeuro system for international oil trades.
The Iranians are about to commit a far greater “offense” than Saddam
Hussein’s conversion to the euro for Iraq’s oil exports in the fall of 2000. In
2006, the Tehran government plans to begin competing with New York’s
Mercantile Exchange (NYMEX) and London’s International Petroleum
Exchange (IPE) in international oil trades — using a euro-based international
oil-trading mechanism.
One of the more difficult technical obstacles to a euro-based oil-transaction
system has been the lack of a euro-denominated oil pricing standard, or oil
“marker” as it is known in the industry. The current oil markers are US dollar-
denominated: the West Texas Intermediate crude (WTI), UK Brent crude,
and UAE Dubai crude.
In June 2004 a significant news development occurred when Iran announced
its intentions to create an Iranian oil Bourse. (The word “bourse” means a
stock exchange for securities trading, and is derived from the Paris stock
exchange, the Federation Internationale des Bourses de Valeurs.) This
announcement portended competition between the Iranian oil Bourse and
the Atlanta-based InterContinental Exchange (X.IEX), which owns
London’s IPE and the NYMEX.
Since 1979 the US sanctions against Iran, similar to those against Iraq,
have blocked US petroleum interests from conducting business deals there.
One article noted that “Washington may frown on any involvement by the
US-owned IPE” in the Iranian oil-trading platform.59 Obviously a successful
euro-denominated alternative for international oil trades would challenge the
domination that financial centers in London and New York currently enjoy, a
factor not overlooked in the following article:
The Tehran oil bourse is scheduled to open in 2005, according to

its architect, Mohammad Javad Asemipour, who is a personal
adviser to the Iranian energy minister …. [Mr Asemipour] played
down the dangers that the new exchange could eventually pose
for the IPE or NYMEX, saying he hoped they might be able to

cooperate in some way.
The IPE, bought in 2001 by a consortium that includes BP,
Goldman Sachs, and Morgan Stanley, was unwilling to discuss the
Iranian move yesterday. ‘We would not have any comment to
make on it at this stage,’ said an IPE spokeswoman.60
The macroeconomic implications of a successful Iranian Bourse are note-

worthy. Considering Iran’s switch to the euro for oil payments from its EU
and Asian Clearing Union (ACU) customers in mid-2003, it is logical to
assume that their proposed Bourse will usher in a fourth crude oil marker —
denominated in the euro.61 That would remove the main technical obstacle
for a broad-based petroeuro system for international oil trades. Acknowledging
that many of the oil contracts for Iran and Saudi Arabia are linked to the UK’s
Brent crude marker, the Iranian Bourse could create a significant shift in the
flow of international commerce into the Middle East.62
It is unclear if this Bourse will be successful, or if it could prompt an overt
US military intervention — thereby signaling the second phase of petrodollar
warfare in the Middle East. Regardless, the emergence of an oil exchange
market in the Middle East is not entirely surprising given the peak and decline
of oil exports from the US and UK, in comparison to the remaining oil
reserves in Iran, Iraq, and Saudi Arabia.
According to Mohammad Javad Asemipour, an adviser to Iran’s energy
ministry and the individual responsible for this new oil exchange, “[it] should
be trading crude, natural gas, and petrochemicals by the start of the new Iranian
year, which falls on March 21, 2005.”63 He also stated that Saudi Arabia and
various non-OPEC oil producers from the Caspian region would eventually
participate in the exchange. (Note: In December 2004 Iran announced its
petroleum exchange will become operational by March 2006, implying a
one-year delay).64
These foreign news items suggest that, sometime between 2005 and early
2006, international buyers will have a hypothetical choice of buying a barrel
of oil for either $50 on the NYMEX/IPE or for €37 to €40 on the Iranian
Bourse, (assuming the euro maintains its current 20 to 25 percent appreciated
value relative to the dollar — and that covert “interventions” are not under-
taken to disrupt the oil exchange). A successful Iranian oil-trading platform
will introduce petrodollar versus petroeuro currency hedging and fundamen-
tally new dynamics to the biggest market in the world, global oil and gas
trades.
These facts further illustrate why petrodollar recycling is unsustainable.
The proposed Iranian Bourse signifies that without some sort of intervention,
the euro will soon establish a firm foothold in the international oil trade.
Dollar Dilemma 153
Given US debt levels and the stated neoconservative project of US global

domination, Tehran’s objective constitutes an obvious encroachment on US
dollar supremacy in this market. News reports in the autumn of 2004 revealed
active “war gaming” within the Bush administration concerning Iran.
Deep in the Pentagon, admirals and generals are updating plans for
possible US military action in Syria and Iran. The Defense Department
unit responsible for military planning for the two troublesome countries
is ‘busier than ever,’ an administration official says. Some Bush
advisers characterize the work as merely an effort to revise routine
plans the Pentagon maintains for all contingencies in light of the
Iraq War. More skittish bureaucrats say the updates are accompanied
by a revived campaign by administration conservatives and neocons
for more hard-line US policies toward the countries ….
Administration hawks are pinning their hopes on regime change
in Tehran — by covert means, preferably, but by force of arms if neces-
sary. Papers on the idea have circulated inside the administration,
mostly labeled ‘draft’ or ‘working draft’ to evade congressional
subpoena powers and the Freedom of Information Act. Informed
sources say the memos echo the administration’s abortive Iraq strat-
egy: oust the existing regime, swiftly install a pro-US government
in its place (extracting the new regime’s promise to renounce any
nuclear ambitions) and get out. This daredevil scheme horrifies US
military leaders, and there’s no evidence that it has won any backers
at the cabinet level.’65 [emphasis added]
These Pentagon leaks indicate that a second Bush term could produce a
confrontation with Iran. Then Secretary of State Powell had moderated neo-
conservative military designs for attacking Iran, but when Powell left after
Bush’s first term, this moderating force dissipated. Of course if Senator Kerry
had been elected president in January 2005, he might have pursued a similar
military strategy. However, most commentators thought Kerry would have
more likely pursued multilateral negotiations on the Iranian/EU/OPEC issues.
The immediate concern for Americans and the world is whether the neo-
conservatives will attempt to intervene covertly and/or overtly in Iran during
Bush’s second term in an effort to prevent a euro-denominated crude-oil
pricing mechanism. Commentators in India are correct in their assessment
that a US intervention in Iran would likely prove disastrous for America, mak-
ing international terrorism issues worse, not to mention potential retaliatory
effects on the US economy.
The giving up on the terror war while Iran invasion plans are
drawn up makes no sense, especially since the previous invasion
and current occupation of Iraq has further fuelled Al-Qaeda terror-

ism after 9/11 …. It is obvious that sucked into Iraq, the US has
limited military manpower left to combat the Al-Qaeda elsewhere
in the Middle East and South Central Asia … and NATO is so
seriously cross with America that it hesitates to provide troops in
Iraq, and no other country is willing to bail out America outside
its immediate allies like Britain, Italy, Australia, and Japan.
There is a better way, as the constructive engagement of
Libya’s Colonel Muammar Gaddafi has shown .… Iran is obvi-
ously a more complex case than Libya, because power resides in
the clergy, and Iran has not been entirely transparent about its
nuclear programme, but the sensible way is to take it gently, and
nudge it to moderation. Regime change will only worsen global
Islamist terror.66
Clearly there are numerous risks regarding neoconservative strategy

toward Iran. First, unlike Iraq, Iran has a robust military capability. Secondly,
a repeat of any ‘shock and awe’ tactics is not advisable given that Iran has
installed sophisticated anti-ship missiles on the island of Abu Musa, therefore
controlling the critical Strait of Hormuz.67 In the case of a US attack, any
shutdown of the Strait of Hormuz — which Persian Gulf-bound oil tankers
must navigate — could easily trigger a market panic with oil prices skyrock-
eting to $100 per barrel or more. World oil production is reportedly to be
now flat out with no spare capacity, and a major interruption would escalate
oil prices to a level that would set off global economic turmoil with an unpre-
dictable outcome.
A successful Iranian Bourse will solidify the
A successful Iranian Bourse will solidify petroeuro as an alternative oil transaction cur-
the petroeuro as an alternative oil rency, thereby ending the petrodollar’s status as
transaction currency, thereby ending
the monopoly oil currency. Therefore, a gradu-
the petrodollar’s status as the monopoly
ated approach is needed to avoid precipitous US
economic turmoil. Multilateral compromise
oil currency.
with the EU and OPEC on oil currency is cer-
tainly preferable to a CIA-attempted coup —
such as another Operation Ajax Part II. Even worse would be a desperate
overt “Operation Iranian Freedom,” at which US military leaders would be
rightly horrified.
The December 2004 Atlantic Monthly included detailed PowerPoint
slides used during high-level US military war games against Iran.68 These ses-
sions were led by Sam Gardiner, a retired Air Force colonel who for more
than two decades ran war games at the National War College and other mil-
itary institutions. Of the three scenarios simulated, Option No. 3 involved a
Dollar Dilemma 155
ground invasion of Iran and a forced “regime change.” This operation was
projected to last 30 days, but it had been “modeled carefully on the real
assault on Iraq, and all five advisers were appalled by it.”69
The hard lessons unfolding in Iraq were viewed by the war-game partici-
pants as a forewarning should the Bush administration pursue its goal of
“regime change” in Iran. Gardiner summarized the war games: “After all this
effort, I am left with two simple sentences for policy-makers: You have no mil-
itary solution for the issues of Iran. And you have to make diplomacy work.”70
[emphasis added]
The geopolitical stakes for the Bush administration were raised dramati-
cally on October 31, 2004, when Iran and China signed a huge oil and gas
trade agreement valued at $70 billion or £38 billion.71 The nullification of
previous oil contracts by the US-administered Coalition Provisional Authority
(CPA) after the Iraq invasion likely created political tensions between the U.S
and China over oil supply. The Chinese government may fear the same fate
awaits their oil investments in Iran if the US were able to topple the Tehran
government. However, the neoconservative strategy of “regime change” in
Iran now appears uncertain. Despite the US’ desires to enforce petrodollar
hegemony, the geopolitical risks of a US attack on Iran’s nuclear facilities
would surely create a serious crisis between Washington and Beijing.
Without doubt, a unilateral American attack on Iran would further isolate
the US government, and it is conceivable that such an overt military operation
could provoke some developed nations to abandon the dollar en masse
and/or create additional pressure within OPEC or Russia or both toward a
petroeuro system. Another risk factor was outlined by Michael Ruppert, who
warned of the potential monetary response that China could undertake in the
event of an unprovoked US attack on Iran: “The moment China starts sell-
ing dollars the rest of the world will crash down the doors of the bank to get
rid of theirs as quickly as possible. The run on the dollar will be short, bloody,
and catastrophic.”72
The reasons for any such drastic reaction by other governments are
straightforward: the global community is dependent on the oil and gas
energy supplies found in the Persian Gulf. Industrialized nations would likely
move in tandem on the currency exchange markets to thwart the neoconser-
vatives’ desperate strategy to dominate the world’s largest hydrocarbon
energy supply. Any such efforts that resulted in a dollar currency crisis would
be undertaken — not to cripple the US dollar and economy as punishment
toward the American people — but rather to thwart further unilateral warfare
and its potentially destructive effects on the current oil production and ship-
ping infrastructure in the Persian Gulf. Logically, the most appropriate US
strategy is compromise with the EU and OPEC toward a dual-currency system
for international oil trades.
Despite the impressive power of the US military and the ability of US intel-
ligence agencies to facilitate “interventions,” it would be perilous for the US
to intervene in Iran, given the dire situation in Iraq. The Monterey Institute of
International Studies provided an extensive analysis of the possible consequences
of a preemptive attack on Iran’s nuclear facilities, including this warning:
Considering the extensive financial and national policy investment
Iran has committed to its nuclear projects, it is almost certain that
an attack by Israel or the United States would result in immediate
retaliation.
An attack on Iranian nuclear facilities … could have various
adverse effects on US interests in the Middle East and the world.
Most important, in the absence of evidence of an Iranian illegal
nuclear program, an attack on Iran’s nuclear facilities by the US
or Israel would be likely to strengthen Iran’s international stature
and reduce the threat of international sanctions against Iran. Such
an event is more likely to embolden and expand Iran’s nuclear
aspirations and capabilities in the long term … one thing is for
certain, it would not be just another Osirak.’73 [italics in original]
Pentagon sources confirmed that the Bush administration could under-
take a desperate military strategy to thwart Iran’s nuclear ambitions while
simultaneously attempting to prevent the Iranian Bourse from initiating a
euro-based system for oil trades. However, both China and the EU will certainly
move to protect their own interests in preserving the free flow of Iran’s oil
exports and thwart any US-sponsored UN Security resolution advocating the
use of military operations, thereby forcing any US actions to be totally unilateral.
Realistically, the postwar debacle in Iraq has shown that a similar strategy
toward Iran would likely lead to a catastrophic failure.
Alternatively, perhaps a more enlightened US administration could under-
take multilateral negotiations with the EU and OPEC regarding a dual
oil-currency system, in conjunction with global monetary reform. Either way,
US policy-makers will soon face two difficult choices: monetary compromise
or continued petrodollar warfare.
The final three pivotal conditions for creating OPEC’s transition to euros
will occur (1) if and when Norway’s Brent crude marker is re-dominated in
euros, (2) if and when the UK adopts the euro, and (3) whether or not Iran’s
proposed Bourse is successful and utilizes the euro as its oil transaction cur-
rency. In the meantime, the UK remains uncomfortably juxtaposed between
the financial interests of the US banking nexus (New York/Washington) and
the EU financial centers (Paris/Frankfurt).
The UK’s Prime Minister Blair has lobbied to adopt the euro, seemingly
by 2010. After that, there will likely be a concerted effort to quickly establish
Dollar Dilemma 157
the euro as an international reserve currency. In view of the UK’s uncomfort-

able juxtaposition between the financial interests of the US and the EU, the
realization of this hypothesis would represent a monumental realignment of
the transatlantic relationship.
America’s Achilles Heel: Lessons from the Suez Crisis of 1956

One day, some time soon, one way or another, the House of Saud
is coming down.
— Robert Baer, Former US Central Intelligence Agency
analyst, Atlantic Monthly, May, 200274
The US approach has been unilateralist here as everywhere else: it
does what it likes as it likes, a policy that is now showing its lim-
its. Bush needs badly to change course, which Tony Blair should
be urging on him. The UN process needs to be respected and
reinforced, not least to reassure the markets, and better systems of
economic governance need to be put in place. The US’ military
capacity may allow unilateralism; its soft economic underbelly, we
are discovering, does not.
— Will Hutton, “Why Bush Is Sunk Without Europe,”
Guardian, January 200375
A multilateral approach to these core problems is the only way to
proceed. The US is strong enough to dominate the world militar-
ily. Economically it is in decline, less and less competitive, and
increasingly in debt. The Bush people’s intention appears to be to
override economic realities with military ones, as if there were no
risk of economic retribution. They should be mindful of Britain’s
humiliating retreat from Suez in 1956, a retreat forced on it by the
United States as a condition for propping up the failing British
pound.
— Peter Dale Scott, author and professor at the University of
California Berkley, May 200376
The petrodollar recycling system is now under pressure from a competing
currency, exacerbated by political tensions arising from the Iraq War and from
US neoconservative ideology. The Bush administration probably believed
that the occupation of Iraq and the installation of large and permanent US
military bases in Iraq would thwart remaining OPEC producers from even
considering switching the denomination of their oil sales from dollars to
euros. It would appear that any attempt by OPEC members in the Middle
East or Latin America to do so shall be met with either overt US military
actions or covert US intelligence agency interventions.
Regrettably, Bush and his neoconservative advisers chose to apply a mili-

tary option to a US economic problem that ultimately requires a multilateral
treaty. Under the guise of the perpetual “war on terror” the Bush administra-
tion deceived the American people about the unspoken, but very real,
economic reasons for the invasion of Iraq. While doing so, this administration
sent an authoritarian message to other OPEC members: “You are either with
us or against us.”
However, the blowback against US foreign policies, including nuanced
statements by foreign observers, reveals that blowback against the dollar and
the ongoing tragic quagmire in Iraq have exposed the limitations of the uni-
lateral hard power politics of US military interventions that lack international
support. The lesson is clear: the US cannot unilaterally overthrow sovereign
nations at will under the pretext of an expanding “war on terror” without
considering the potential economic retaliation from the world community by
abandoning the dollar.
Current US geostrategy of achieving global
Current US geostrategy of
dominance has not surprisingly resulted in unprece-
achieving global dominance has
dented levels of international blowback against
America. Despite the early tactical victory of toppling
not surprisingly resulted in unprece-
the regime of Saddam Hussein and restoring the
dented levels of international
petrodollar system in Iraq, the strategic outcome of
blowback against America.
a US military occupation in Iraq has exposed the
tragic hubris behind neoconservative doctrine.
If Washington continues to pursue this doctrine, it would not be surpris-
ing if covert operations were pursued in an attempt to overthrow the Iranian
government and thwart the emergence of the Iranian Bourse. Then again, the
pursuit of these unilateral covert or overt strategies would likely result in dis-
aster for the US. It is hard not to argue that the “war on terror” has scared
foreign investors willing to carry American debt.77 This blowback extends not
only to the elite money handlers who have publicly stated that the US dollar
is not secure, but also to the widespread anger against the invasion and ongo-
ing war in Iraq. The Pentagon itself officially noted that anti-American
sentiments created in the Arab world have reached unprecedented levels. In
effect, the US has lost the “hearts and minds” of the Arab world.78
There are important historical parallels in which currency warfare proved
decisive in thwarting military operations in the Middle East. In July 1956
Egyptian President Nasser, a staunch nationalist, took over the Suez Canal
Company, 44 percent of which was British-held, and nationalized the Suez
Canal.79 Despite public opposition to the use of force, the British, French, and
Israelis developed a plan in secret at Sèvres, France, in which the Israeli army
would invade Egypt, and then under the guise of intervention, British and
French troops would retake the canal. On November 5, 1956, the Israelis
Dollar Dilemma 159
attacked, and a joint Anglo-French force landed at Port Said. British and
French paratroopers attacked Canal Zone 5, killing approximately 1000
Egyptians, mostly civilians.
This invasion of the Suez Canal caught President Eisenhower by surprise.
He was furious when he learned this invasion had been arranged by the
British and French governments. Subsequently, Eisenhower suspended aid to
Israel and thwarted the British military operations by refusing to loan money
to Britain, blocking its application for a loan from the IMF, and threatening
to sell US holdings of the British pound.80 Due to US pressures, a fiscal crisis
erupted in the UK as the value of the pound sterling plummeted. Diplomatically
isolated, the foreign troops were withdrawn from the Suez Canal. Shortly
thereafter, British Prime Minister Eden resigned in disgrace. Devastating cur-
rency devaluation ended the Suez Crisis and marked the final episode of
British imperialism in the 20th century.
Perhaps US leaders who espouse the neoconservative strategy of global
dominance should take heed in the history lessons provided by the 1956 Suez
Crisis. The events before, during, and after the 2003 Iraq War suggest that
the global community will not tolerate an imperialist US empire that ignores
international law while engaging in unilateral military operations against
sovereign nations that do not pose an imminent security threat to the US.
The obvious danger to US power and prestige is that neoconservative strat-
egy has created geopolitical tensions that could result in several oil-producing
states acting collectively to pull the monetary plug on the US empire by moving
to a monopoly petroeuro system. This would be a devastating development.
Regardless, news reports of the internal discussions within OPEC suggest
that the emergence of a petroeuro is probably inevitable.81
While neither the industrialized nations nor OPEC wish to drop the sword
of Damocles on the dollar, considering the resulting economic dislocations,
such actions would take place as a desperate effort to thwart additional bel-
ligerent US military conflicts in the Persian Gulf region. Attempting to
hinder US imperialism here is conceivable considering that the euro has
become a viable alternative as a World Reserve Currency — and petrocur-
rency. Furthermore, as the global community quietly awakes to the realities
of Peak Oil, the industrialized nations will attempt to prevent any further uni-
lateral US actions to “restructure” the Middle East via destructive force. The
risks of disrupting the global oil supply or physically damaging the associated
oil pumping and shipping infrastructure are simply too ominous.
Any such decision by the Bush administration to intervene overtly or
covertly in Iran could result in the realization of the “rogue nation hypothesis”
— a collective abandonment of the dollar to thwart US imperialism.
Although unlikely, if this fateful event were to occur, it would create the his-
torical irony of a new Suez Crisis scenario similar to President Eisenhower’s
actions that ended British imperialism 50 years ago. Certainly from the per-
spective of OPEC and the industrialized nations, preserving the critical oil
production infrastructure in Iran, Saudi Arabia, and elsewhere would likely
outweigh the allegiance to the dollar’s supremacy and the desire for stability
within the current international economic order. Additionally, from China’s
viewpoint, its huge oil and gas deals established in October 2004 effectively
drew a line in the sand around Iran. Hence it is doubtful that American mili-
tary operations can be conducted against Iran without fear of China divesting
itself of US debt instruments.
Recognizing our structural debt levels, overstretched military, and inter-
national isolation, could the US economy withstand a massive divestiture of
dollar-denominated assets? The answer is obvious. Consequently, if US policy-
makers continue pursuing unilateral, unprovoked wars in an effort to gain
military control over the world’s energy supplies while toppling sovereign
governments, the US should not expect the industrialized nations or the
global community to continue purchasing its debt, thereby funding this type
of military imperialism.
The final two chapters offer numerous suggestions for domestic reform
within the US media and political arenas, both of which are required to pursue
the recommendations in the last chapter. These include various multilateral
policy alternatives in an effort to foster a more balanced global economy and
bold suggestions concerning international energy reform.
Breaking US hegemony in the Arab world by using oil revenues
to promote the currency of an alternative, and more friendly,
power might be a sensible move. It would make US interference
in Arab affairs less effective.
Perhaps a new bipolar economic system, between the US and
EU is set to emerge in the early part of the twenty-first century,
and Arab nations can play a vital part in creating this new world
order by switching oil payments from the dollar to the euro. In
the process Arab nations will create a world order far more in line
with their own interests. At the moment the US has it all its own
way, something the EU is strong enough to correct.
— Peter J. Cooper, Middle East Finance and Economy,
AME Info, October 200082
Facts are stubborn things; and whatever may be our wishes,
our inclinations, or the dictates of our passions, they cannot alter
the state of facts and evidence.
— John Adams, 2nd US President, 1770
Six
Saving the American Experiment
We hold these Truths to be self-evident, that all Men are created

equal, that they are endowed by their Creator with certain
unalienable Rights, that among these are Life, Liberty and the
Pursuit of Happiness …. That to secure these Rights, Governments
are instituted among Men, deriving their just Powers from the
Consent of the Governed, that whenever any Form of
Government becomes destructive of these Ends, it is the Right of
the People to alter or to abolish it, and to institute new
Government, laying its Foundation on such Principles, and orga-
nizing its Powers in such Form, as to them shall seem most likely
to effect their Safety and Happiness.
— Thomas Jefferson, Declaration of Independence, 1776
We believe no more in {France’s Napoleon} Bonaparte’s fighting
merely for the liberties of the seas than in Great Britain’s fighting
for the liberties of mankind. The object is the same, to draw to
themselves the power, the wealth and the resources of other
nations.
Those willing to give up a little liberty for a little security deserve
neither security nor liberty.
— Benjamin Franklin, US Founding Father
161
US Media Consolidation: Threat to Our Republic

There’s really five companies that control 90 percent of what we
read, see and hear. It’s not healthy.
— Ted Turner, vice chairman of AOL Time Warner and
founder of CNN, April 24, 20031
If media moguls control media content and media distribution,
then they have a lock on the extent and range of diverse views and
information. That kind of grip on commercial and political power
is potentially dangerous for any democracy.
— Chuck Lewis, executive director of the Centre
for Public Integrity, March 20, 20042
Most of the media was on the bandwagon or intimidated. Cheney
himself called the president of the corporation that owned one of
the networks to complain about an errant commentator. Political
aides directed by Karl Rove ceaselessly called the editors and pro-
ducers with veiled threats about the access that was not granted in
any case. The press would not bite the hand that would not feed it.
— Sidney Blumenthal, the Guardian (UK), June 24, 20043
This government lies …. I think we have a government that abso-
lutely is ignoring the truth and a press that is ignoring the truth.
— Helen Thomas, 57-year-veteran correspondent for United
Press International, quoted during a speech on the George W.
Bush administration, July 8, 2004.4
All journalists make mistakes .… But the falsehoods reproduced
by the media before the invasion of Iraq were massive and conse-
quential: it is hard to see how Britain could have gone to war if
the press had done its job.
— George Monbiot, the Guardian (UK), July 20, 20045
The CIA owns everyone of any significance in the major media.
— Former CIA Director William Colby6
T homas Jefferson rightly insisted that a free press is vital — it is the best,
and often the only, mechanism for protecting democracy. Americans
seem largely unaware of the issues outlined in this book because the mass
media has been reduced to a few mega-media conglomerates responsible for
approximately 90 percent of the information flow within the US. Naturally
this level of consolidation in the press has resulted in filtering of TV and radio
broadcast news, as well as printed media. Since 1980 deregulation of media
ownership has resulted in independent US news sources shrinking from 50 in
Saving the American Experiment 163
1983 to roughly 10 sources in 1997.7 By 2004 the major broadcast media

had been further reduced to only five conglomerates. Mark Crispin Miller,
media critic and professor of media studies at New York University, provided
a listing of the five conglomerates in Censored 2004
• AOL Time Warner: CNN and related networks; Home Box Office;
Warner Brothers movie and television studio, WB television net-
work and affiliated record labels; AOL Internet service; and Time
Inc. magazines, such as Time, Fortune, Sports Illustrated, People,
and Entertainment Weekly.
• News Corporation: Fox broadcast television network and cable
news channel, 20th Century Fox movie studio, New York Post and
several foreign newspapers and television networks in Europe and
Australia. Conglomerate also includes extensive radio network of
34 owned and operated stations, 9 duopolies, 188 affiliated sta-
tions, several book publishers, sports franchises, and satellite
companies, such as Hughes Electronics Corporation.
• Walt Disney Company: ABC television network, ESPN cable
sports network, 10 stations/226 local affiliates, 62 radio stations/
4600 affiliates, several publishing companies, and Internet portals.
As well as Disney amusement parks and related resorts, Miramax
and Hollywood Pictures, etc.
• Viacom: CBS and UPN television networks; Infinity radio net-
work, with nearly 200 stations; cable television networks MTV,
Showtime, and BET; Paramount movie and television studios;
and Blockbuster Video movie rental chain, etc.
• Vivendi Universal: Large Internet portal in the US and Europe,
cable and Satellite TV, Universal Studios, Music, Film, Telecom,
and non-media corporations, etc.8
In the case of the Iraq War, the corporate-owned US media failed to provide
coverage of basic information that was widely available elsewhere. A cursory
analysis of European, Indian, Asian, Latin American, and Canadian media
reporting provided a considerably more informative and objective analysis of
the issues surrounding the war.
Foreign media sources, such as the UK’s Observer, discussed Iraq and
related petroeuro issues before the war, but the US media completely failed
to mention this noteworthy item — preferring instead, incessant coverage
about alleged WMD threats and imaginary links between Saddam Hussein,
9/11, and the Al Qaeda network.
FOX News played a key role in forming domestic opinion, as it parroted
— uncritically — the prewar claims of the Bush/Cheney administration. This
trend did not go unnoticed in other countries; British Broadcasting Corporation

(BBC) Director-General Greg Dyke expressed grave concerns about the
impartiality of both TV and radio broadcast media in the US. He warned pol-
icy-makers that corporate control and the adoption of an American- style media
would be detrimental to the health of Britain’s democracy.
Personally, I was shocked while in the United States by how
unquestioning the broadcast news media were during this war. If
Iraq proved anything, it was that the BBC cannot afford to mix
patriotism and journalism. This is happening in the United States
and, if it continues, will undermine the credibility of the US elec-
tronic news media. For the health of our democracy, it’s vital we
don’t follow the path of many American networks.9
Although Dyke’s opinion regarding media bias and censorship in the US
might surprise uninformed Americans, it is a concern well known to those
who advocate media reform. While it is comforting to believe that we still
have a free media, when compared to news coverage in other industrialized
nations, the disparity of information available to American viewers and listen-
ers provides evidence that a free and open media in the US is a myth, not
reality. In the first worldwide press freedom index, the US was ranked 17th by
an international journalists group, Reporters Without Borders. All top ten
rankings were European, with the exception of Canada (ranked 5th).10 The
US’ stifling corporate influence was reiterated by PBS commentator Bill
Moyers upon his retirement after 30 years in TV journalism. He warned of
the transformation he witnessed:
You don’t get rewarded in commercial broadcasting for trying to
tell the truth about the institutions of power in this country .… I
think my peers in commercial television are talented and devoted
journalists, but they’ve chosen to work in a corporate mainstream
that trims their talent to fit the corporate nature of American life.
And you do not get rewarded for telling the hard truths about
America in a profit-seeking environment ….
We have got to nurture the spirit of independent journalism in
this country, or we’ll not save capitalism from its own excesses,
and we’ll not save democracy from its own inertia.11
Today, Americans must rely almost exclusively on Internet-based news
sources to learn about important stories that ultimately have far greater impact
on our lives than the latest sex/murder/drug scandals that serve as our daily
infotainment from the five conglomerates. Truthfully, in the US, the Internet
is currently the last, and only, bastion of free speech and unfiltered news.
Frankly, this book could not have been written if the research were solely
based on information provided by the US corporate media. The crucial research
revealed in this book was provided mostly by European, Asian, and Canadian
news sources, and some independent US outlets. Despite a year of debate in
which the American people learned plenty of details about Saddam Hussein’s
1980s WMD program and the brutality of his regime, the US corporate
media never discussed the crucial economic issues about Iraq’s oil transaction
switch to the euro, nor was sufficient coverage provided on Iraq’s numerous
international oil agreements.
Had the US broadcast and print media been diligent in their reporting of
foreign news stories in the lead-up to the war, perhaps the reasons why nations
such as France, Germany, Russia, and China did not support the Iraq War
would have been debated in our society. Undeniably, until the US media con-
glomerates are reformed into more independent and free media outlets, the
American people will continue to be at risk for extensive manipulation by their
political leaders on a broad range of important subjects that require public
knowledge and debate, most especially those decisions that involve sending
young American soldiers into harm’s way.
Our liberty depends on the freedom of the press, and that cannot
be limited without being lost.
Campaign Finance Structure and Corporate Personhood:

Elements of Proto-Fascism
Few men have virtue to withstand the highest bidder.
— George Washington, US President 1789–1797
I hope we shall crush in its birth the aristocracy of our moneyed
corporations, which dare already to challenge our government to
a trial of strength and bid defiance of the laws of our country.
Every special interest is entitled to justice full, fair and complete

... but not one is entitled to a vote in Congress, to a voice on the
bench or to representation in any public office.
— Theodore Roosevelt, US President 1901–1909
The liberty of a democracy is not safe if the people tolerate the

growth of private power to a point where it becomes stronger
than their democratic State itself. That, in its essence, is Fascism -
ownership of government by an individual, by a Group or by any
controlling private owner.
— Franklin D. Roosevelt, US President 1933–1945
In the councils of government, we must guard against the acquisition

of unwarranted influence, whether sought or unsought, by the
military-industrial complex. The potential for the disastrous rise of
misplaced power exists and will persist. We must never let the weight
of this combination endanger our liberties or democratic processes.
— Dwight Eisenhower, US President 1953–1961
From Washington’s warning of political corruption in the 18th century to

Eisenhower’s warnings of “unwarranted influence;” the observations of gen-
erals turned presidents are just as relevant. For decades the links between the
US government and the major military–industrial–petroleum conglomerates
have grown into a nearly seamless revolving door: former US Congress members
and even former presidents leave office and become lobbyists for some of the
largest of these conglomerates, creating a proto-fascist military–industrial
–petroleum–congressional complex.12 Alarming enough is the emergence from
this complex of “no-bid” multi-billion-dollar contracts; even more troubling is
the correlation between political campaign contributions and postwar contract
awards. In 2003 the Center for Public Integrity report, “Winning Contractors:
US Contractors Reap the Windfalls of Postwar Reconstruction,” stated:
Companies awarded $8 billion in contracts to rebuild Iraq and
Afghanistan have been major campaign donors to President Bush,
and their executives have had important political and military con-
nections, according to a study released Thursday. The study of
more than 70 US companies and individual contractors turned up
more than $500,000 in donations to the president’s 2000 campaign,
more than they gave collectively to any other politician over the
past dozen years.13
Defense spending for the “endless war” against an obscure group of non-
state actors has morphed into a feeding frenzy of the public treasury. Forgotten
and useless Cold War era projects have suddenly been approved for billions in
funding under the fraudulent guise of being necessary for the new “war on
terror,” despite the commonsense observation that many of these projects
will be utterly useless against terrorism (i.e., Cold War weapon programs such
as the $13 billion Crusader artillery piece14).
One glaring example is the absurd promotion of a National Missile Defense
(NMD) system. The Bush administration attempted to justify constructing an
$800 billion to $1.2 trillion missile defense system as an appropriate response
to what was in effect a complex kamikaze attack using hijacked commercial
jets.15 The bizarre justifications for this massive project were Orwellian non-
answers using fear-invoking language, suffering from the same illogic used to
“justify” the preemptive war in Iraq.
Mr. Russert: What about the debate over missile defense? Many
Democrats are saying this now proves that our focus should be on
terrorism and counterterrorism and preparedness, and that the
primary threat is not something the missile defense could take
care of.
Vice Pres. Cheney: Well, I just fundamentally disagree. I mean,
there’s no question but what there’s a threat on the terrorist
front, and we’ve got to deal with that. We’ve been working it.
We’ll continue to work it. But this does not, in any way, diminish
the threat with respect to ballistic missiles down the road. A bal-
listic missile equipped with a weapon of mass destruction, a nuke,
for example, a nuclear weapon would be far more devastating than
what we just went through. If one of those was to hit one of our
cities or to hit a major base overseas where US forces are
deployed, the casualty list would be higher. The consequences
would be even greater than the terrible tragedy we’ve just been
through.
— Meet the Press with Tim Russert, September 16, 200116
First, it is not plausible for any terrorist group — a non-state-supported

actor — to have access to the billions of dollars required to amass the essential
technical staff to design, build, test, or otherwise construct a nuclear warhead
in conjunction with an Intercontinental Ballistic Missile (ICBM) program.
Obviously such an undertaking requires the full support of a nation’s govern-
ment, treasury, and military.
Secondly, given that the US satellite system has the capability to detect
and pinpoint any ballistic missile launch against us, why would any nation fol-
low such a self-defeating/suicidal course of action? Why spend tens of billions
to build an ICBM and then invite your own destruction by using it?
Obviously a “terrorist-based” ICBM is a ridiculous scenario, yet immediately
after September 11th, the Bush administration and certain members of
Congress repeatedly suggested that those terrorist attacks reinforced the need
for a national missile defense system.
Remarkably, the Pentagon now manages 93 percent of the international
relations budget, whereas the Department of State controls only 7 percent.17
Furthermore, private sector military suppliers now
Remarkably, the Pentagon now include the major campaign contributors for both
manages 93 percent of the political parties. These military contractors in Iraq
international relations budget, include Halliburton, Kellogg Brown and Root, Vinnell,
whereas the Department of State Military Professional Resources, DynCorp, Science
controls only 7 percent.
17 Applications Corporation, BDM (now TRW), Armor
Holdings, Cubic, DFI, and International Charter.
They are not subject to congressional oversight, nor do they have any loyalty
to taxpayers, despite being subsidized by billions of tax dollars.
It appears to be nearly impossible for US politicians to cancel any significant
defense project without suffering losses to their re-election campaign coffers.
Politicians seeking campaign contributions continue to feed the military–
industrial–petroleum–banking complex — despite these behaviors being ultimately
self-defeating to the US’ economic welfare and harmful to its international
reputation.
Some believe that the Iraq War was justified so that the US can continue
to enjoy “cheap” gasoline. Americans think that their gasoline prices are far
lower than elsewhere, partly because they believe their gasoline taxes are
“lower.” This false construct does not withstand careful analysis. When the
indirect/hidden taxation for our empire of military bases is included, the fully
loaded price of gasoline for a US consumer equals or exceeds the prices in other
industrialized nations. In 1998 the International Center for Technology
Assessment computed that Americans indirectly pay a minimum of $5.60 per
gallon, and potentially much higher based on current tax subsidies to US
energy companies, defense department expenses, environmental costs, and
other externalities.18 In 2003 the conservative National Defense Council
Foundation’s study debunked this powerful myth of “cheap” gas. The truth
is much more complex, stemming from the real taxpayer cost of the US’
empire of bases. Their study, which revealed the true cost to be over $5.20
per gallon reported:
• Almost $49.1 billion in annual defense outlays to maintain the
capability to defend the flow of Persian Gulf Oil — the equivalent
of adding $1.17 to the price of a gallon of gasoline
• The loss of 828,400 jobs in the US economy
• The loss of $159.9 billion in GNP annually
• The loss of $13.4 billion in federal and state revenues annually
• Total economic penalties of from $297.2 to $304.9 billion
annually19
The root cause exascerbating these problems lies in the deeply flawed concept
of “corporate personhood.” Unequal Protection: The Rise of Corporate Dominace
and the Theft of Human Rights, by Thom Hartmann, performed a tremen-
dous public service by carefully explaining the full ramifications of corporate
personhood and it adverse effects on the state of the union.20 Corporations
gained personhood through aggressive court maneuvers by the former rail-
road industry, culminating in the 1886 Supreme Court case Santa Clara
County v. Southern Pacific.21 Until then, only “We the People” were protected
by the Bill of Rights, and the government the people elected could regulate
corporations as they deemed necessary.
However, armed with the Constitutional rights of personhood, corporations
have steadily gained ways to weaken government restraints on their behavior
via campaign contributions under their “right” to freedom of speech.
Ironically, this concept is entirely based on the Fourteenth Amendment,
which was about protecting ex-slaves, but has been twisted to give artificial
entities the legal equivalent of rights and privileges of natural persons — but
without accountability.
This decades-long process has inextricably led to what I perceive as
American proto-fascism. In 1944 the New York Times asked Vice President
Wallace to “write a piece answering the following questions: What is a fascist?
How many fascists have we? How dangerous are they?” His answers appeared
in the April 9, 1944, issue. Draw your own conclusions and compare his anal-
ysis to the situation we find ourselves in today.
The dangerous American fascist is the man who wants to do in the
United States in an American way what Hitler did in Germany in
a Prussian way. The American fascist would prefer not to use violence.
His method is to poison the channels of public information. With
a fascist the problem is never how best to present the truth to the
public but how best to use the news to deceive the public into giv-
ing the fascist and his group more money or more power ….
The American fascists are most easily recognized by their
deliberate perversion of truth and fact. Their newspapers and pro-
paganda carefully cultivate every fissure of disunity, every crack in
the common front against fascism. They use every opportunity to
impugn democracy .… They claim to be super-patriots, but they
would destroy every liberty guaranteed by the Constitution. They
demand free enterprise, but are the spokesmen for monopoly and
vested interest. Their final objective toward which all their deceit
is directed is to capture political power so that, using the power of
the state and the power of the market simultaneously, they may
keep the common man in eternal subjection.22
Corporations do not receive a ballot, but with their own interests, they
have political positions on certain issues. So instead of having one vote per
individual, they make massive donations to politicians. The scale of these
donations/bribes far outweigh all personal donors and, not surprisingly, corrupt
the democratic process away from the expressed interests of voters, especially
on issues directly relevant to the corporate donors’ trading interests.
Environmental, energy, tax, and foreign policies represent the principle abuses
that run contrary to the interests of the common citizenry — and contradictory
to basic US principles. During each election cycle most Congress members

raise more than $1 million from business interests, and this influence on the
political process is getting worse. According to the nonpartisan Political
Money Line campaign finance tracking service, in 2004 lobbyists set a new
record of spending more than $2 billion to promote their positions to the
president and Congress.23 (Lobbyist spending in 2003 was $1.9 billion, $1.7
billion in 2002, $1.5 billion in 2001 and $1.5 billion in 2000).
Most troubling is a new, and profoundly grotesque, example of how cor-
porate influence has placed our entire democratic process at risk. Private
corporations such as Diebold, ES&S, and Sequoia run our state and federal
elections with electronic voting machines that indefensibly do not allow any
viable paper audit capability — despite the fact that Diebold makes millions
of similar machines, such as ATMs, that produce a
It is shocking to learn that every paper trail. The recent unexplained divergence of exit-
other Western nation uses voting sys-
poll data that curiously coincides with the proliferation
tems that can be audited, whereas
of “e-voting” machines is highly disconcerting.24 It
is shocking to learn that every other Western nation
the US uses an unauditable and
uses voting systems that can be audited, whereas the
fundamentally flawed system.
US uses an unauditable and fundamentally flawed
system.
In contrast, Germany’s elections are still counted by hand because of the
fascism of the Third Reich. Mussolini said that fascism should more appropri-
ately be called “corporatism” because it is the merger of corporate and
governmental power. It is no wonder that present-day Germans don’t let cor-
porations count their votes. The US has been letting corporations and their
computers count its votes — potentially confounding the 2000, 2002, and
2004 elections in many states.
Computer scientists at Johns Hopkins University reviewed the proprietary
source code used in Diebold e-voting machines and concluded, “Our analysis
shows that this system is far below even the most minimal security standards appli-
cable in other contexts .… We conclude that this system is unsuitable for use in a
general election.”25 [emphasis added] A later test by a private computer informa-
tion security firm produced similar results. During their tests of a simulated
election, the users were able to remotely dial up the voting tabulator computer
using a laptop — and transparently access the vote totals — without the legit-
imate users ever knowing they had manipulated the election.26 Concerned
computer security experts have posted websites showing how easy and trans-
parent it would be to hack into a US election.27 I can not think of anything
more fascist (using Mussolini’s definition) than having partisan corporations
secretly count the votes and run our national election machinery — while
simultaneously blocking any public scrutiny under the guise of “trade secrets.”
Why do Americans allow fraud-prone voting with these e-voting machines?
The cumulative effects of corporate personhood have become disastrous

for the US by irreconcilably corrupting its political process and thwarting its
ability to make the necessary reforms before the onset of global Peak Oil.
Meanwhile the ruling elites are pursing a desperate struggle to maintain global
hegemony by creating unsustainable national debt and economic conditions
that will eventually bankrupt the nation. In his book, The Sorrows of Empire,
Chalmers Johnson stated that America has started down the path “already
taken by its erstwhile adversary in the Cold War, the former Soviet Union.”28
He claimed that the US’ refusal to dismantle its empire of military bases follow-
ing the demise of the Soviet Union, combined with a clearly inappropriate
response to September 11th, created worldwide blowback and made our
decline virtually inevitable. Johnson offered these sobering words:
The US still has a strong civil society that could, at least in theory,
overcome the entrenched interests of the armed forces and the
military-industrial complex. I fear, however, that the US has
indeed crossed the Rubicon and that there is no way to restore
Constitutional government short of a revolutionary rehabilitation
of American democracy. Without root and branch reform, Nemesis
awaits. She is the goddess of revenge, the punisher of pride and
arrogance, and the United States is on course for a rendezvous
with her.29
From founders such as James Madison to generals such as George

Washington and Dwight Eisenhower, enlightened US leadership has repeatedly
warned of the dangers to democracy posed by the merging of the state and
unlimited corporate power. Failure to heed this wisdom will indeed ensure
our rendezvous with Nemesis.
But besides the danger of a direct mixture of Religion & civil

Government, there is an evil, which ought to be guarded against
in the indefinite accumulation of property from the capacity of
holding it in perpetuity by … corporations. The power of all cor-
porations ought to be limited in this respect. The growing wealth
acquired by them never fails to be a source of abuses.
— James Madison, US President 1809–1817
Corporations have been enthroned and an era of corruption in

high places will follow, and the money power of the country will
endeavor to prolong its reign by working upon the prejudices of
the people until all wealth is aggregated in a few hands and the
Republic is destroyed.
— Abraham Lincoln, US President 1861–1865
US Occupation of Iraq: The Unraveling of

Neoconservative Geostrategy
Sixty years of western nations excusing and accommodating the
lack of freedom in the Middle East did nothing to make us safe,
because in the long run, stability cannot be purchased at the
expense of liberty. As long as the Middle East remains a place
where freedom does not flourish, it will remain a place of stagna-
tion, resentment, and violence, ready for export.
— President George W. Bush, November 6, 200330
Arabs want democracy. They hate their corrupt regimes more
than they hate the United States. But, they are not going to listen
attentively to the speech of the American president, first, because
the consecutive American administrations, in the past 50 years,
supported those regimes ... and because all true democracies in
the world came as a result of internal struggle, not due to foreign
intervention, particularly American.
— Abdul Bari Atwan, editor-in-chief, London-based Arabic
daily Al-Quds Al-Arabi, November 200331
No individual, or group, has ever commissioned Mr. Bush to safe-
guard their rights. And basically, keeping in mind the dark record
of the United States in suppressing the democratic movements
around the globe, he is not in a position to talk about such issues.
— Iranian Foreign Ministry spokesman Hamid-Reza Asefi32
How can we believe that the one who is biased in favor of Israel
… can bring acceptable democratic projects to the people of the
region?
— Imad Fawzi al-Shueibi, Syrian political analyst33
If they want to export democracy through wars, we do not want
it. Let them keep it to themselves.
— Ali Rida, 37 year-old worker, Damascus, Syria34
Perhaps 50 years ago the people of the Middle East might have believed
President Bush’s November 2003 speech about the need for democracy in
that volatile region, but as the above reactions to his speech attest, it is unreal-
istic to expect the people in the Middle East to accept the notion that the US
is suddenly interested in “spreading democracy,” especially through warfare.
The highpoint of US leadership in the Middle East was in 1956 when
President Eisenhower ordered the British, French, and Israelis to end their
aggressive military action in the Suez against Egypt. To the Middle East, this
was a very welcome symbol of America’s anti-colonial position and a reflection

of human decency. However, over the following half century, the US trans-
formed itself from a heroic, anti-colonial power into a colossal villain, described
by the Iranian mullahs as the Great Satan.
US interference in foreign governments regarding Western oil interests in
the Persian Gulf, along with the overtly biased treatment of Israel, has con-
tributed to anti-American sentiments in the region. Much of the current
“anti-Americanism” in the Middle East is based on the perceived hypocrisy of
US foreign policies. While claiming to stand for democracy, US leaders have
a long history of selling weaponry and propping up “stable,” but oppressive
and anti-democratic, regimes including Saddam Hussein during the 1980s.
As Ayman al-Zawahiri, an Egyptian terrorist and Osama bin Laden’s chief
deputy, stated on a Council of Foreign Relations (CFR) website:
America claims to be the champion and protector of human rights,
democracy, and liberties, while at the same time forcing on Muslims
oppressive and corrupt political regimes. [America] is responsible
for everything that happens in Egypt and responsible for human
rights violations there, and in other countries as well.35
While al-Zawahiri is undoubtedly a fanatical Islamic militant, it is unfortu-
nate that his claim concerning US support of oppressive Middle East regimes,
such as Egypt, Saudi Arabia, Iran, and Iraq, is well documented in history.
Most Americans have very little appreciation of the history of colonialism in
this area. However, this region’s people have very acute memories of foreign
interference and oppression throughout the past century. Given this unsavory
history, the neoconservative geostrategy of “democratic imperialism” in the
Middle East is much more likely viewed by most of its people as “militant
imperialism.”
The invasion and occupation of Iraq to “disarm” Saddam Hussein’s
nonexistent WMD have exacerbated these sentiments, especially considering
the level of destruction during the military occupation of Iraq. An Iraqi insur-
gent in Falluja, Khairullah Ibrahim Abbas, summarized the conundrum
facing US policy-makers: “At the beginning we thought the Americans came
for humanitarian reasons, but now we see they came for destruction.”36
Tragically for American troops serving in present-day Iraq, it seems that neo-
conservative strategists collectively ignored the history lessons provided by
former colonial occupiers. During the 1920s Iraqi Sunnis and Shi’ites joined
forces to rebel against their British occupiers. In the 1950s the French learned
hard lessons about their colonial occupation of Algeria, and in the 1980s the
Soviet Union paid a very heavy price for their devastating occupation of
Afghanistan. The US military is not immune to the blowback that stems from
colonial occupation.
In addition, we must note that the emergence of US military bases in

Saudi Arabia after the 1991 Gulf War created hostility toward both the Saudi
regime and US government. Osama bin Laden claimed this was one of the
core reasons for his acts of terrorism against the US. Do we want to perpet-
uate animosity from the Iraqi citizenry over similar perceptions of US
imperialism? The stated neoconservative plan of establishing permanent bases
in Iraq must be abandoned if the US wishes to create any semblance of demo-
cratic rule in Iraq. In fact, gaining a commitment from the international
community to help restore stability in Iraq will likely require that the US mil-
itary vacate the 14 bases that were established during the occupation.
There is little reason to believe that US bases in Iraq will be any more wel-
come by the Iraqi people than by the Saudis. It is highly likely that these
bases, even if somewhat secluded from the major population areas, will be
viewed by the average Iraqi as a constant imperial irritant. The history lessons
of Mesopotamia are unambiguous — foreign troops are considered occupiers
— and will be not be welcomed.
Therefore, Washington needs to negotiate a very small American footprint
and pursue realistic options that include multinational UN peacekeeping
forces that rotate out of Iraq as conditions allow, with Americans comprising
hopefully less than 20 percent. Moreover, US peacekeeping deployments
should be limited to Iraq’s northern areas where the Kurdish population is
generally receptive to the presence of US troops.
Foreign soldiers wearing the distinct light-blue helmets or berets worn by
UN peacekeepers will be much better tolerated by the world community,
including the average Iraqi citizen. The UN’s command of such a force
would be correctly perceived by the Iraqis as a temporary measure, and many
lives — both American and Iraqi — might be spared if such a policy were
implemented. In addition, monetary reform regarding an OPEC dual dollar-
euro oil pricing mechanism should be negotiated with the UN and European
Central Bank, thereby providing the EU nations with sufficient financial
motivation to commit both troops and vital resources in a multinational
effort to stabilize and rebuild Iraq’s infrastructure. Although these suggestions
will be rejected by the US military–industrial–petroleum–banking conglom-
erate, an objective analysis shows the US is running out of options in postwar
Iraq.
In an interview with Prospect magazine, Emmanuel Todd, French author
of After the Empire: The Breakdown of the American Order (Après l’Empire)
prophesized the decline of American hegemony.37 Todd provided insights
into the widespread global concerns of US foreign and monetary policies. He
argued that while the global community is fully cognizant of US military
superiority, it does not mask our economic vulnerabilities, which are most
apparent in the dollar’s steady devaluation since 2002. Todd implied that the
cumulative economic and geopolitical stresses created by the neoconservatives’

drive for global supremacy will ultimately undermine US national finances.
Until recently, [the US] was the most important factor in main-
taining international order. But now it is a factor for instability.
The industrial core of the US has been hollowed out. The American
trade deficit amounts to $435bn a year. The country needs $1.5bn
a day in foreign capital. The US is no longer self-sufficient. Europe,
with its strength in exports, is .. . As far as the balance sheet and
financial flows are concerned, the US has long been a drain on the
whole world. The Europeans can no longer react to this in a
friendly manner; they must counter America with industrial and
financial methods.38
Similar commentary has also appeared in Asian media sources, suggesting
that the Chinese government is making a concentrated effort to create bonds
and other financial vehicles to facilitate credit expansion in the region, which
will soon reduce their purchase of US Treasuries. Additionally, the European
Central Bank (ECB) is also creating monetary debt vehicles in an effort to
absorb the eventual influx of surplus petroeuros — should Russia convert to
a petroeuro system.
Imprudently, domestic observers continue to assume that the US economy
will remain the only engine for global economic growth into the foreseeable
future, assuming that European and Asian countries will be either unable or
unwilling to reduce their dependency on the US consumer demand, given the
potential economic disruptions that would occur if they pursue alternative
economic strategies. This assumption on behalf of the current US policy-
makers may turn out to be one of the fatal flaws inherent to neoconservative
geostrategy.
The Bush administration believes it can continue to create divisions within
the EU and Asia, but this may not be the case. Either way, the Bush adminis-
tration overplayed its hand and exposed the weakness of US hegemonic status
in the aftermath of the Iraq invasion. Before the war, the neoconservative
strategists failed to recognize the effectiveness of soft power within the United
Nations, and following the war and its aftermath of an increasingly chaotic
occupation of Iraq, they clearly overestimated the abilities of hard power.
This has exposed the limits of US hegemony to the world community.
One of the reasons the US was such a successful hegemonic power for the
first 50 years after WW II was the general perception, with the exception of
the Vietnam War, that America was an often self-restrained superpower.
Indeed, hegemonic power is most effective and long-lasting when it is kept
in reserve, always creating the perception that it is actively limiting itself even
when displaying its strength.
Neoconservatives abandoned the postwar strategy of multilateral restraint

and pursued hard power politics. Apparently Colin Powell tried to warn
President Bush about invading Iraq, telling him, “It’s nice to say that you can
do it unilaterally, except you can’t. A successful military plan would require
we need allies …. International support has to be garnered.”39 The Bush
administration did not heed this advice. They recklessly forfeited US hege-
mony by violating international law and exposing the inherent weaknesses of
unilateral military action. To many observers, the US military’s chaotic occu-
pation of Iraq now symbolizes imperial overstretch and has created deep
divisions amongst the US’ traditional allies. Indeed, the full cost of the Iraq
War is not yet known, but the history of empires is unambiguous: they always
end with military overextension and subsequent economic decline.
Regrettably, the following analysis concerns a scenario that could poten-
tially trigger a major US monetary crisis. This assessment of Osama bin
Laden’s reported interest in certain US mainland targets is meant not to cre-
ate anxiety, but rather to reinforce the necessity of a strong US/EU partnership
— and the desirability of dollar-euro parity valuation and a dual-currency
OPEC transaction option.
Osama bin Laden’s Offensive: Economics Not Religion

Therefore, I am telling you, and God is my witness, whether
America escalates or de-escalates the conflict, we will reply to it in
kind, God willing. God is my witness, the youth of Islam are
preparing things that will fill your hearts with fear. They will target
key sectors of your economy until you stop your injustice and aggres-
sion or until the more short-lived of us die. [emphasis added]
— Statement by Usama bin Laden, October 6, 200240
Bin Laden dwelled on al-Qaida’s economic strategy against the
United States in portions of an 18-minute video aired Friday on
the Arab television station al-Jazeera …. [Bin Laden] credited the
religiously inspired Arab volunteers who he fought with against
the Soviets in Afghanistan with having “bled Russia for 10 years,
until it went bankrupt and was forced to withdraw in defeat.” He
suggested the same strategy would work against the United States.
“So we are continuing this policy in bleeding America to the point
of bankruptcy.”
— “Bin Laden Says He Wants to Bankrupt America,”
Chicago Sun-Times, November 2, 200441
On September 11, 2001, Al Qaeda terrorists attacked a major economic sym-

bol of US financial power in New York — the World Trade Towers. On
August 2, 2004, the Office of Homeland Security instigated heightened security

alerts at five US specific locations. Bizarrely, the following day the media
revealed that these “urgent” warnings were based upon evidence collected
“two or three years” ago and that there was “no evidence of recent surveil-
lance” by members of Al Qaeda.42 Not surprisingly, various commentators
suggested political motivations behind these dated “terror alerts” as they
occurred just after the Democratic National Convention. Regardless of the
political aspects, this alert provided valuable insight into several identified tar-
gets as part of bin Laden’s “offensive” against the US economy:
• International Monetary Fund in Washington
• World Bank headquarters in Washington
• New York Stock Exchange in New York
• Citigroup Center in New York
• Prudential Financial building in Newark, New Jersey43
Based on this list, Osama bin Laden is evidently not interested in attacking
US civilians in shopping malls, schools, apartment buildings, vacation areas
like Disneyland, or historic monuments like the Statue of Liberty, but rather
Al Qaeda had specifically targeted the centers of US financial power. This strategy
is not surprising considering that, as a young man, bin Laden studied eco-
nomics. His stated grievances are based on specific US foreign policies —
most of which relate to the projection of military power in the Persian Gulf
and central Asian regions, including the financial/military subsidy of Israel,
Egypt, Saudi Arabia, Qatar, and Kuwait.
Supporting assertions that bin Laden and his small band of followers are
motivated by US foreign policies can be found in Imperial Hubris: Why the West
is Losing the War on Terror.44 It provided an exceptionally candid appraisal of
bin Laden’s grievances and those of much of the Muslim world, which the
author stated have been specifically and consistently repeated as relating to
US foreign policies. This “anonymous” author was later identified as Michael
Scheuer, a 17-year-veteran of the CIA, and former chief of the Usama bin
Laden Unit, Counterterrorist Center, 1997–1999. Scheuer makes the important
point that al Qaeda’s intentions follow Clausewitz’s principle of attacking
one’s foe at their “center of gravity.”45 In late 2002 Abu-Ubayd al-Qurashi,
an Al Qaeda operative, wrote an essay clearly stating that Al Qaeda’s goal is
to “direct all available force against the [US’] center of gravity during the
great offensive.”46 Moreover, this essay indicated that Al Qaeda had identified
America’s center of gravity as its economy.
A conviction has formed among the mujahedin that American
public opinion is not the center of gravity in America. The Zionist
lobbies, and with them the security agencies, have long been able
to bridle all the media that control the formation of public opinion
in America. This time it is clearly apparent that the American econ-
omy is the American center of gravity ….
This is what Shaykh Usama Bin Laden has said quite explicitly.
Supporting this penetrating strategic view is that the Disunited
States of America are a mixture of nationalities, ethnic groups, and
races united only by the “American Dream,” or to put it more
correctly, worship of the dollar, which they openly call “the Almighty
Dollar.” [emphasis added]
— Abu-Ubayd al-Qurashi, “A Lesson in War,” Al-Ansar (Al
Qaeda’s Internet website), December 19, 200247
Statements by Osama bin Laden in conjunction with the August 2004

“terror warning” of previously “cased” targets exposed his political goals as
having a strong economic component. Targeting the massive World Trade
Center Towers and the Pentagon coincide with his stated goals, both figura-
tively and literally. Therefore, it is logical to deduce that Al Qaeda may seek
to create a panic on the US dollar by attacking certain financial centers.
Perhaps that strategy presumes that a currency collapse and subsequently
crippled economy could no longer finance a global military empire, nor could
Washington continue to provide annual multi-billion subsidies in money and
advanced US weaponry to Israel, Saudi Arabia, Egypt, Qatar, and Kuwait.
Why else would Osama bin Laden specifically case or target the east coast’s five
principle financial centers?
Based on this analysis, the risks of not achieving a compromise on the
global monetary system could create very adverse effects on US national secu-
rity. Could Al Qaeda eventually succeed in a terrorist attack upon US financial
centers in an effort to create a dollar crash and global monetary crisis? Could
events unfold and cause a domestic uprising against the Saudi monarchy that
results in “regime change”? Either of these events could result in a massive
divestiture of Saudi assets from the US, a currency collapse, potentially lead-
ing to a formal accord creating a monopoly petroeuro system within OPEC —
as opposed to the preferred dual-currency oil transaction standard.
Considering that these risk factors will only become more salient in the
post-Peak Oil environment, Washington policy-makers should begin negoti-
ations with the EU and OPEC regarding the plausibility of a dollar-euro
trading band with $1.00 to €1.00 parity valuations, along with a formal dual-
currency oil transaction standard. In theory, such an arrangement would
protect the dollar from a potentially catastrophic devaluation; provide the
European community with a stabilized oil bill, and build the foundation for
a strong economic partnership between the US and the EU.
Realistic Campaign against International Terrorism:

INTERPOL and the International Criminal Court (ICC)
Al-Qaida’s numbers were grossly exaggerated by the Bush adminis-
tration and US media. Hardcore al-Qaida members never numbered
more than 200–300. Claims that there were 5,000–20,000 al-Qaida
fighters in Afghanistan were nonsense. These wild exaggerations
came from lumping Taliban tribal warriors with some 5,000 Islamic
resistance fighters from Kashmir, Uzbekistan, Tajikistan, the
Philippines and Chinese-ruled Eastern Turkistan, none of whom
were part of al-Qaida.
— Eric Margolis, “Anti-US militants showing up all over,”
Toronto Star, June 200248
Senior FBI officials believe there are now no more than 200 hard-
core Al-Qaeda members worldwide. “Al-Qaeda itself, we know, is
less than 200,” said an FBI official, referring to those who have
sworn allegiance to Osama bin Laden, the alleged mastermind
behind the Sept. 11 terrorist attacks …. That figure — far fewer
than recent press reports have suggested are in the US alone — is
based on evidence gathered by the FBI and CIA. It includes Al-
Qaeda members who are now in custody at Guantanamo Bay.
[The FBI official stated,] “There was a recent report suggesting that
Al-Qaeda is about 5,000 strong. It is nowhere near 5,000 strong.”
[emphasis added]
— Rebecca Carr, “Only 200 Hard-core Qaeda Members,”
Palm Beach Post, July 200249
The terrorist attack on the United States could have been treated
as a crime against humanity rather than an act of war. Treating it
as a crime would have been more appropriate. Crimes require
police work, not military action …. The war on terrorism as pur-
sued by the Bush administration cannot be won. On the contrary,
it may bring about a permanent state of war. Terrorists will never
disappear. They will continue to provide a pretext for the pursuit
of American supremacy. That pursuit, in turn, will continue to
generate resistance. Further, by turning the hunt for terrorists
into a war, we are bound to create innocent victims. The more
innocent victims there are, the greater the resentment and the bet-
ter the chances that some victims will turn into perpetrators.
— George Soros, “The Bubble of American Supremacy,”
Atlantic Monthly, December 200350
According to international polls, much of the world community perceives the

Bush administration’s “war on terrorism” not as a legitimate response to
international terrorism, but as a cynical strategy to pursue global domination
by seizing control over the world’s largest oil supply. This current geostrategy
has weakened the US’ security in the fight against terrorism and created inter-
national blowback against the US after the ill-fated Iraq invasion. A
completely revamped US strategy is warranted if the fight against interna-
tional terrorism is to be seen as a legitimate campaign in the eyes of the world
community.
To facilitate global cooperation, a clear distinction must be established
between international terrorist groups, such as Al Qaeda, and non-international
groups whose political grievances are geographically specific. For example, the
Irish Republican Army (IRA) of the 1970s and 1980s engaged in terrorist tac-
tics, but like today’s Hamas and Hezbollah, they limited their activities to
specific regional/political conflicts. Additionally, and despite the claims of
certain political leaders, it is critically important to realize that the US and UK
governments have failed to report on the actual size of the Al Qaeda terror-
ist network. Although buried by our subservient media, the number of
dedicated Al Qaeda members who have shown allegiance to Osama bin
Laden is reportedly very small. According to senior FBI officials, as of 2002
there were only about 200 hard-core Al Qaeda members still at large.
In comparison, Al Capone’s infamous Chicago
Al Capone’s infamous Chicago mafia had two to three times as many members as Al
mafia had two to three times as
Qaeda. However, the FBI did not bomb Sicily in the
many members as Al Qaeda.
1930s during our “war against organized crime.”
Likewise we cannot stop Al Qaeda with bombs or
However, the FBI did not bomb
“regime change.” The Orwellian ambiguity of the
Sicily in the 1930s during our
current global “war on terrorism” should be replaced
“war against organized crime.”
with a more defined, and winnable, “Campaign against
Al Qaeda.” While the 200 members represent a
threat that must be eliminated via intelligence operations, evidence strongly
suggests that Al Qaeda is not a global menace that supposedly operates in 60
countries but is actually very small and now disorganized.
A powerful three-part BBC documentary series, Power of Nightmares,
argued that while Osama bin Laden is a threat, much of what we have been
told about a centralized, international terrorist threat “is a fantasy that has
been exaggerated and distorted by politicians. It is a dark illusion that has
spread unquestioned through governments around the world, the security
services and the international media.”52 Is it possible that the “war on terror”
is being used as the Straussian mechanism to forcefully exaggerate an external
threat — thereby masking geostrategic maneuvers regarding domination over
the globe’s oil supplies? Is it merely coincidental that the US’ expanding “war
on terror” is directly correlated to areas where hydrocarbons reserves or

pipelines exist?
Rarely discussed in Western media is Osama bin Laden’s resentment based
on what he perceives as the “transfer of wealth” from the corrupt Saudi monar-
chy to the US. He stated that oil should be priced at $144 per barrel — which
he may view as a form of punitive reparation for the world’s 1.2 billion
Muslims. A careful analysis by author Michael Mann suggested that bin Laden
may accurately be described as a violent “anti-Imperialist militant Islamist.”53
In Imperial Hubris, Michael Scheuer deftly argued that bin Laden perceived
his acts of terrorism as part of a “defensive jihad” against US policies:54
Bin Laden’s center of gravity … lies in the list of current US poli-
cies toward the Muslim world because that status quo enrages
Muslims around the globe — no matter their view of al Qaeda’s
martial actions — and gives bin Laden’s efforts to instigate a
worldwide anti-US defensive jihad virtually unlimited room for
growth …. Until those [foreign] policies change, the United
States has no option but increasingly fierce military response to
the forces marshaled by bin Laden, an option that will prolong
America’s survival but at as yet undreamed of costs on blood,
money and civil liberties.55
According to Scheuer, we should dispense with the absurd notion that
Osama bin Laden “hates our freedoms.” Bin Laden hates our ongoing foreign
policies, most especially the positioning of US troops on the Arabian Peninsula,
the birthplace of Islam, which he views as offensive to Islam. Scheuer contended
that Al Qaeda-sponsored terrorists attacks will not end unless either the US
pursues a total genocidal war against numerous Muslim countries in the
region — killing millions in the process — or US policy-makers change foreign
policies and align them with US principles, not the interests of the military–
industrial–petroleum–banking conglomerate.
The US military, like all others, is a very blunt instrument that is well
equipped and trained to destroy physical assets and defeat foreign military
forces. Not surprisingly, it is simply not suited for hunting down terrorists, nor
should it be used for such. Indeed, the presence of US troops and the “collat-
eral damage” that occurs with large-scale military operations only serve to
create more hatred and individuals sympathetic to bin Laden. In truth, defeat-
ing Al Qaeda-sponsored terrorism will require not only changes in US foreign
policy, but also considerable international cooperation via joint intelligence/
police operations between the US, EU, Africa, central Asia, and the Middle
East. Recognizing the limitations of the US military’s hard power, and its
potential economic blowback, the most logical alternative is the realignment
of US foreign policies in these areas with true American ideals.
A more logical approach would consist of a highly empowered INTER-

POL operation, working in conjunction with the International Criminal
Court (ICC).56 Such a recalibrated global strategy should produce the least
amount of blowback in a worldwide anti-terrorism campaign.
We must acknowledge that terrorism will exist as long as man walks the
earth, so we must live in dignity, not in fear. Reducing ignorance and oppres-
sion that breeds fear and hatred will reduce future recruits for terrorist
groups. We must frame international terrorism not as an abstract war, but as
a specific crime against humanity. Western nations need to adjust their per-
ceptions accordingly and work diligently together within the international
framework to round up these few criminals. The campaign against worldwide
terrorism is not a war between nation states; it is a war of ideas over foreign
policies and the self-determination of nations. The US ultimately won the
Cold War because it won the hearts and minds of those who were oppressed
under the former political system of the Soviet empire. Likewise, if Americans
truly practiced the values in the Declaration of Independence, Constitution,
and Bill of Rights, the US would have the world’s respect and admiration, not
the world’s fear and loathing.
Rising above the current anti-Americanism will require a complete
restructuring of current campaign finance laws in an effort to remove the
unwarranted political power of the military–industrial–petroleum–banking
conglomerate, an honest and balanced foreign policy regarding Israel, non-
interference in the internal politics of oil producing states, and a viable
national energy strategy that permits the end to support for Middle Eastern
repressive regimes. The key to any semblance of peace and global stability in
the 21st century will revolve around multilateral accords designed to reduce
hydrocarbon consumption, and a US policy of sustained energy reform —
thereby allowing more enlightened foreign policies — just as the founding
fathers envisioned.
Realigning US Foreign Policies: Rebuilding Good Will
Towards America
Despite an initial outpouring of public sympathy for America fol-
lowing the September 11, 2001, terrorist attacks, discontent with
the United States has grown around the world over the past two
years. Images of the US have been tarnished in all types of
nations: among longtime NATO allies, in developing countries, in
Eastern Europe, and, most dramatically, in Muslim societies.”
The American public is strikingly at odds with publics around
the world in its views about the US role in the world and the
global impact of American actions. In contrast to people in most
other countries, a solid majority of Americans surveyed think the
US takes into account the interests of other

In contrast to people in most
countries when making international policy.
other countries, a solid majority
US image problems are not confined to
Muslim countries. The worldwide polling con- of Americans surveyed think the
ducted throughout the summer and fall finds US takes into account the
few people, even in friendly nations, expressing interests of other countries when
a very favorable opinion of America, and sizable making international policy.
minorities in Western Europe and Canada hav-
ing an unfavorable view. Many people around the world,
especially in Europe and the Middle East/Conflict Area, believe
the US does not take into account the interests of their country
when making international policies.
— What the World Thinks in 2002: How Global Publics View
Their Lives, Their Countries, The World, and America.
Pew Global Attitudes survey, December 200257
There are numerous strategies and policies that could be pursued to reduce
global tensions and begin restoring international goodwill toward the US.
Fundamentally speaking, reducing geopolitical tensions in an era of depleting
resources will require US policy-makers to revisit multilateral traditions — in
a world ruled by law, not by military might. Multilateral strategies providing
immediate benefits to US leadership would begin with adopting numerous
international accords, including the acceptance of the legitimacy of the ICC,
signing the treaty banning anti-personnel mines, strengthening as opposed to
weakening the Biological Weapons Convention, and accepting the Comprehensive
Test Ban Treaty on nuclear weapons.
Most of the world community has rejected the regional policies of the Bush
administration, and as such, a drastic reorientation of US strategy is required
if the economy and international stature is to be restored under new leader-
ship. The following regional policies outline a more enlightened approach to
US foreign policy.
Europe
The US does not need to maintain the current level of military forces in
Europe. The institutions of NATO should be transferred to the European
Defense Force (EDF), and the Atlantic Alliance should be relegated to a basic
mutual-defense pact. NATO’s historical mission ended with the 1991 collapse
of the Soviet Union, and other than the 1999 Kosovo campaign, it would
appear difficult to invent a new mission for this structure. The EU on its own
initiative seeks to gradually extend the supranational European economic and
governmental constructs across eastern Europe, and their accession guide-
lines (along with those of NATO which would be transferred to the EDF) are
more than sufficient to eventually create a uniformly prosperous and peaceful

zone at least to the borders of Russia. The damaged US relationship with
Turkey, although not generally regarded as part of Europe, over the Iraq War
could be mitigated by the next US administration if it provided political support
for Turkey’s acceptance into the EU.
Russia
The US should follow the EU’s lead by formally recognizing the Russian
Federation as a market economy that currently impedes Russia’s accession to
the World Trade Organization. Otherwise, the US government needs to become
fully committed to reducing the former Soviet WMD systems, implying a sig-
nificant increase in funding to dismantle them. Additionally, it should reverse
its opposition to mutual supervisory access toward monitoring nonproliferation
and disarmament agreements, which presents the greatest obstruction to
properly accounting for and dismantling Russian WMD.
Furthermore, the G–8 nations should adopt measures to disrupt the mas-
sive organized crime, financial laundering operations which have funneled at
least $200 billion into private accounts since the fall of the Soviet Union.
Undoubtedly, Russia presents an array of daunting obstacles to economic
development and political reform after a chaotic decade of inept privatization
schemes. A more appropriate development plan would entail a clear frame-
work of incentives with progressive accession to European institutions (the
EU and EDF). Lastly, the US should withdraw the many current military
deployments in various Caspian region states that are unnecessarily antago-
nizing the Russia government and its military leadership.
Korea
Resolving the Korean peninsular dispute requires at the very minimum the
reinvigoration of the Sunshine Policy rapprochement and ending this admin-
istration’s rather irrational antagonism of North Korea. A German-style
reunification should become the ultimate target of US foreign policy, with
UN involvement for the reassimilation of North Korea’s disastrous economy.
Furthermore, the $13 billion South Korean military budget alone is larger than
North Korea’s entire $9 billion governmental budget. Negotiations should
entail blanket amnesty for Kim Jong Il as well as all North Korean officialdom,
a concrete US military withdrawal timeline (as a concurrent de-escalation),
and an economic revitalization development plan could easily include $8 bil-
lion of the current South Korean annual military expenditure bolstered with
$2 billion of US assistance ($100 billion/10 years).
To gain amnesty, the North Korean government would be required to for-
feit all 8,000 spent uranium fuel rods, transferable technology, and related
nuclear material to the UN or International Atomic Energy Agency (IAEA).
Additionally, in exchange for massive economic, food supplies, and agricul-

tural development, the North Korean government should agree to cease all
exports of advanced missile technology. For this, the US and world community
should fulfill the earlier pledge to build two light-water nuclear power plants
for North Korea’s energy needs. In effect, the proposed reassimilation of
North and South Korea, along with general amnesty for the current North
Korean regime, should remove the impetus for such weaponry.
China
The US’ current belligerent policy of military containment around China’s
periphery survives as a pointless anachronism from the Cold War, and this
should end. Moreover, the Theater Missile Defense System, notable for its
uselessness and excessive cost, also symbolizes this posture’s illogic and
should be cancelled immediately. The divided-China problem persists as the
only real exacerbating factor in Sino-American relations that largely involves
US support for abandonment of the 1993 Singapore agreement.
A cooperative framework accord with a commonwealth arrangement that
ensures Taiwan’s free-market democracy under a sovereign One China prin-
ciple should be advocated by the US. Bilateral regime interactions (including
sequential rule compliance guidelines) should be implemented in the areas of
infrastructural networking. This should facilitate Taiwanese foreign policy
dismantlement and the demilitarization of the Taiwan Straits with the stated
objective of a coordinated federation treaty, ensuring Taiwan autonomy while
repudiating use of force.
Middle East
The Israeli-Palestinian conflict, the central flashpoint for all Middle Eastern
affairs, facilitates broad anti-American sentiments and potentially facilitates
the recruitment of Al Qaeda members. The outline of a viable peace plan is
understood by the majority of the world community and includes issues dis-
cussed during the last meaningful negotiations in Taba, Egypt (January
2001). The US should leverage its massive subsidization of the Israeli econ-
omy to compel a resolution based on 1967 borders, full diplomatic relations
with the Arab states, and binding regional cooperative frameworks. A sym-
bolic “right of return” for a few Palestinians to the newly created state would
seem advisable, along with a large refugee settlement fund for the majority of
Palestinians who remain in their host countries. This fund should be under UN
supervision, funded by members of the international community, especially
the wealthy G–7 nations.
Subsequently, the US should normalize relations with Iran and Syria based
on resolving particular grievances. For the most part, a resolution to the Arab–
Israeli conflict would itself eliminate both the rationale for the international
terrorist substructure, which underlies the Western–Arab hostility and the

primary outlet that enables various Arab regimes to maintain their popular
mandate and militant police states. Finally, the US should withdraw all atypical
financial and military support of the dictatorial Persian Gulf regimes (i.e.,
Saudi Arabia) and cease covert operations, thereby implicitly endorsing
democratization by internal processes, including internal uprisings to remove
oppressive regimes (without covert interference by the CIA or other clandestine
organizations).
Africa
The Western nations should establish a debt cancellation protocol under the
auspices of the UN that includes an explicit resolution of the reparations issue
with a further grant transfer component. Assistance qualification should
require the resolution of outstanding regional and internal disputes, human
rights guarantees under pluralistic democracy, and adoption of sustainable
growth policies. Implementation should remain contingent on progress toward
demilitarization, ongoing adherence to fiscally responsible guidelines, and
establishing a framework of intracontinental conventions.
One option would be incremental grants targeted to specific infrastructural
improvements under contractual obligation, as well as material humanitarian
goods and services as opposed to block cash handouts. While the specific
parameters of the protocol can be designed as appropriate, it is more impor-
tant that it entail all these elements in a comprehensive, enduring African
solution. The Bush administration’s initiative regarding AIDS should be con-
tinued and expanded in this decade.
Latin America
The strategies surrounding the perpetual war on drugs need to be objectively
evaluated and likely overhauled. The current policies seem to be creating noth-
ing but endemic “Narco Wars” that fuel the cycle of transience, poverty,
exploitation, and victimization. Furthermore, the most beneficial strategy would
facilitate overthrowing the drug overlords while also ending the oppressive
concentration of wealth and influence in the landed aristocratic elite.
Additionally, the US government should cease any ongoing covert activities
in the internal affairs of the democratically elected president of Venezuela and
other democracies in Latin America. The US government has more than
enough blowback from other regions, and it does not need to create adver-
sarial relationships in its own hemisphere. Negotiations on residual energy
issues should be performed via the normal diplomatic apparatus. Washington
should also prepare for normalized diplomatic and trade relationships with
Cuba. The end of the Cold War rendered the five-decade-old trade embargo as
another anachronism of the past, counterproductive for future relationships
with Cuba. Given the exceptionally warm waters off Cuba, it would also be
mutually beneficial to pursue a joint US/Cuba Ocean Thermal Energy
Conversion (OTEC) plantship to further evaluate this renewable energy.
International
The World Trade Organization (WTO) and the International Monetary Fund
(IMF) should be reorganized to specifically redress the imbalances of existing
trade agreements between the Heavily Industrialized Countries (HIC) and
the Less Developed Countries (LDC), provide developing nations with equitable
access to industrialized markets, and develop an enforceable structure for dif-
ferential provisions that guarantee development policies are not undermined
by trade liberalization. Oxfam’s website describes the goals of “Fair Trade:”
• To improve the livelihoods and well-being of producers by
improving market access, strengthening producer organizations,
paying a better price and providing continuity in the trading rela-
tionship.
• To promote development opportunities for disadvantaged pro-
ducers, especially women and indigenous people, and to protect
children from exploitation in the production process.
• To raise awareness among consumers of the negative effects on
producers of international trade so that they exercise their pur-
chasing power positively.
• To set an example of partnership in trade through dialogue, trans-
parency and respect.
• To campaign for changes in the rules and practice of conventional
international trade.
• To protect human rights by promoting social justice, sound envi-
ronmental practices and economic security.58
The US should work toward joining the global community, becoming a

full participant in multilateral nonproliferation accords and environmental
conventions, including ratification of the Kyoto Climate Treaty and a renego-
tiated ABM agreement. Most essential to US security and global security is
an international energy strategy based on aggressive domestic energy reforms
as well as global cooperation pursuant to the same goals. Ideally the US
should resolve that all international institutions be redesigned on the prereq-
uisite conformance with, and advancement of, the Universal Declaration of
Human Rights, revised with interpretive authority granted to the
International Court of Justice.59, 60 These efforts would do much to reduce
feelings of anti-Americanism and, if successfully pursued, allow America to

rebuild its international stature as a leading proponent of human rights,
democracy, and international cooperation.
Preserving Freedom at Home: Protecting the

Charters of Freedom
The Patriot Act makes it able for those of us in positions of
responsibility to defend the liberty of the American people.
— President George W. Bush, quoted by the National
Committee Against Repressive Legislation, May 200461
The objective of the Patriot Act [is to make] the population visi-
ble and the Justice Department invisible. The Act inverts the
constitutional requirement that people’s lives be private and the
work of government officials be public; it instead crafts a set of
conditions that make our inner lives transparent and the workings
of government opaque.
— Elaine Scarry, “Acts of Resistance,” Harper’s Magazine,
May 200462
More than two centuries ago, the patriots of Brewster [Massachusetts]
shut down the Colonial courts on Cape Cod in one of the first
acts of resistance against the tyrannical rule of King George III.
Now, deliberately evoking its Revolutionary history, Brewster
Town Meeting has formally condemned the antiterrorist USA
Patriot Act.
— Nat Hentoff, “Declarations of Independence,”
June, 200463
I believe there are more instances of the abridgement of the freedom
of the people by gradual and silent encroachments of those in
power than by violent and sudden usurpations.
— James Madison, US Founding Father
What country can preserve its liberties, if its rulers are not warned
from time to time that its people preserve the spirit of resistance.
— Thomas Jefferson, US Founding Father
The founding fathers of the The founding fathers of the United States were astute
United States were astute observers of not only history, but also human behavior.
observers of not only history, They saw that seeking an empire abroad would result in
but also human behavior. tyranny at home. Jefferson, Madison, and Washington under-
stood that democracies are incompatible with empires and
that imperial pursuits abroad invariably lead to sacrifices in democratic principles,

and the diminishment of liberty and freedom. For these reasons the founders
warned against the temptation of seeking to be the next Rome, and correctly
sought to limit the federal government’s ability to engage in imperial wars.
As an American proud of the many noble accomplishments of this nation,
I found this chapter was the most difficult to write. The “politics of fear” that
have been vigorously pursued by US policy-makers over the last few years
have placed this nation and our liberties and freedoms at risk. If they were
alive today, Thomas Jefferson, James Madison, George Washington, and the
other founders would undoubtedly be appalled at the USA Patriot Act
(USAPA), provisions within the Homeland Security laws, various Executive
Orders, the consolidation and apparent censorship of the news, and the perpet-
ual state of war that has been declared by the executive branch. We have
entered a perilous period when the media has become uncritical and fearful
of reporting facts that are contrary to the official narrative yet widely reported
in the foreign media and on the Internet.
Nat Hentoff, a writer and longtime civil liberties commentator, noted that
just as the colonists rebelled against tyranny when this country was founded,
today’s patriots are rebelling against provisions of the Patriot Act I (and aspects
of Patriot Act II that were covertly passed under the 9/11 Commission laws).
Jefferson would be proud to know that over 300 municipalities in 41 states
have declared themselves immune to federal law concerning certain provi-
sions of the Patriot Act and Homeland Security. They regard themselves as
“Patriot Act-Free Zones.”
The outrage of these informed citizens is largely based on two provisions
within the original Patriot Act. One is section 215 that gives the government
new power to search people’s homes without notification.64 This is known as
a “sneak and peak” warrant; the old standard was called “knock and announce.”
Another controversial section gives the government and the FBI new power
to look into people’s library, business, and medical records.65
Furthermore, the framers of the Constitution would consider debate over
the rationales for the Iraq War not as unpatriotic, but as absolutely necessary.
Authoritarians refer to anti-war protestors as anti-American, and allies or
experts who raised objective questions about the rationales for war were
either bribed (Turkey), threatened (Old Europe), dismissed as “irrelevant”
(Hans Blix and his UN weapons inspection team), had their character
impugned (former weapons inspector Scott Ritter), or even had their careers
ruined (outed CIA asset Valarie Plume, the wife of former ambassador
Wilson, who disputed the claims that Saddam Hussein attempted to purchase
yellowcake uranium from Niger). Indeed, authoritarian media pundits and
partisan politicians proclaimed that mere criticism of the president’s policies
amounted to “political hate speech.”
This ideological rigidity concerning the serious subject of engaging in an

unprovoked war of choice indicates a significant deterioration of societal dis-
course. David Domke, a professor of communication at the University of
Washington and former journalist, analyzed the “strategic communications”
of the Bush administration in his illuminating book, God Willing? Political
Fundamentalism in the White House, the “War on Terror,” and the Echoing
Press. In the wake of 9/11 until the March 2003 invasion of Iraq, Domke
undertook a scholarly analysis of hundreds of White House communications
and associated news stories to dissect the current political environment,
which he has termed “political fundamentalism.”66
This construct described the purposeful communication strategy that
“capitalized” on Americans’ fears, along with the subservient US media who
uncritically echoed this mixing of religion and governance. Domke found the
Bush administration’s governing patterns included the following elements of
political fundamentalism:
• Binary, or simplistic, conceptions of the political landscape, such
as good vs. evil and “Either you are with us or you are with the
terrorists.”
• Calls for immediate action on administration policies as a necessary
part of the nation’s “calling” and “mission” against terrorism.
• Declarations about the will of God for America and for the spread
of US conceptions of freedom and liberty.
• Claims that dissent from the administration is unpatriotic and a
threat to the nation.67
Domke effectively warned that this form of intolerant political fundamen-
talism is damaging our basic democratic and political process:
Blind faith in US governmental leadership to act with integrity
and on behalf of the mass public does not work, has never
worked. The lessons of McCarthyism in the 1950s, the Vietnam
War in the 1960s, Watergate in the 1970s, and Iran-Contra in the
1980s are being learned anew in the United States.68
Most of this dilemma is that the press is not fulfilling its historical role of
offering critical analysis, while the authoritarians quickly denounce any criticism
of the president’s policies as un-American. This includes false rationales, such
as “supporting the troops” is somehow interchangeable with “supporting the
president.” But they are not the same: it is the politicians who start the wars,
not the warriors.
According to previous US presidents, to not criticize the federal govern-
ment in times of war if one disagrees with its policies is not only unpatriotic,
but un-American. For example, during WW I Teddy Roosevelt stated, “To

announce that there must be no criticism of the president, or that we are to
stand by the president, right or wrong, is not only unpatriotic and servile, but it
is morally treasonable to the American public.”69 Just after Pearl Harbor, con-
servative Republican Bob Taft reiterated these sentiments in December 1941:
I believe, there can be no doubt that criticism in time of war is
essential to the maintenance of any kind of democratic govern-
ment …. Too many people desire to suppress criticism simply
because they think it will give some comfort to the enemy .… If
that comfort makes the enemy feel better for a few moments, they
are welcome to it as far as I am concerned, because the mainte-
nance of the right of criticism in the long run will do the country
maintaining it a great deal more good than it will do the enemy,
and it will prevent mistakes which might otherwise occur.70
Roosevelt and Taft were both right; the concept of dissent — even during
the 20th century world wars — served to strengthen US democracy. Each
member of the US military has sworn to protect this fundamental concept of
the Constitution. Sadly, this is often not understood by more reactionary seg-
ments of the American population, whom I refer to as authoritarians.
Every American should be concerned
Every American should be concerned with with the unprecedented claim that the
the unprecedented claim that the president president has the right to personally desig-
has the right to personally designate an nate an American citizen as an “enemy
American citizen as an “enemy combatant,” combatant,” possibly resulting in their
possibly resulting in their indefinite, or
indefinite, or perhaps permanent, deten-
perhaps permanent, detention, without
tion, without being charged or even
having access to legal representation. This
being charged or even having access to
claim is thoroughly authoritarian, and this
legal representation.
so-called right is clearly unconstitutional.
This segues into a subject that has
caused much alarm for those Americans, such as me, who believe that our
freedom and liberty is sacred and that protection of the Constitution and its
ideas is the citizens’ highest duty. In an extensive interview for Cigar
Aficionado, retired General Franks, the former commander of Central
Command and the Iraq War, speculated that if terrorists were to successfully
use a WMD in the US then our Constitution and Republican government
would be in jeopardy.
The Western world, the free world, loses what it cherishes most,
and that is freedom and liberty we’ve seen for a couple of hundred
years in this grand experiment that we call democracy.
It means that the potential of a weapon of mass destruction

and a terrorist, massive, casualty-producing event somewhere in
the Western world — it may be in the United States of America
— that causes our population to question our own Constitution
and begin to militarize our country in order to avoid a repeat of
another mass, casualty-producing event. Which in fact then begins
to unravel the fabric of our Constitution.71
It seems heedless that someone who swore to protect the Constitution

from enemies both foreign and domestic would openly discuss the possibility
of discarding the essence of what their career was dedicated to protect. Many
Americans, myself included, found these sentiments both strange and pro-
foundly disturbing. Franks seemed to suggest that a terrorist WMD strike
against the American people or anywhere in the “Western world” might cause
us to fundamentally question our free and open system of government,
unravel our Constitution, and replace it with a militarized government. This
would be repeating the German people’s grave mistake after the burning of
the Reichstag in 1933. Would we too demand “temporary” restrictions on
liberty while allowing the militarization of our government in order to sup-
posedly protect us from terrorists?
While the successful detonation of a dirty bomb could produce panic in
society and the financial markets, political turmoil, economic damage in the
affected area due to the need to decontaminate, and perhaps an economic
depression, it would not destroy the US. No terrorist attack could destroy our
ideas as espoused in the Constitution. After all, the Constitution survived the
war of 1812, which included the burning of Washington DC, the Civil War
in which over 600,000 Americans died, two world wars, and one Great
Depression. The founders spent years carefully deliberating a form of govern-
ment that could survive the test of time. Lord Hoffman’s statements to the
British House of Lords illustrated why terrorism does not truly threaten the
essence of Great Britain or the US:
This is a nation which has been tested in adversity, which has sur-
vived physical destruction and catastrophic loss of life …. I do not
underestimate the ability of fanatical groups of terrorists to kill and
destroy, but they do not threaten the life of the nation. Whether
we would survive Hitler hung in the balance, but there is no doubt
that we shall survive al-Qaeda .… The Spanish people have not said
that what happened in Madrid, hideous crime as it was, threatened
the life of their nation. Their legendary pride would not allow it
.… Terrorist violence, serious as it is, does not threaten our insti-
tutions of government or our existence as a civil community.72
The Charters of Freedom — the Declaration of Independence, Constitution,

and Bill of Rights — are far more than pieces of parchment paper; they embody
universal truths that define the fundamental principles of the US by boldly
proclaiming that all men are created equal — this was, and still is, a revolu-
tionary philosophy that transcends the sovereignty of nations. The
Constitution was carefully designed to limit the power of the federal govern-
ment, thereby protecting the people’s rights, and thwart the formation of an
oppressive tyranny in the new nation. The only way a terrorist attack could
destroy the US is if Americans let it destroy their freedom and liberty.
It is not surprising that many informed citizens, libertarians, and other
proponents of civil rights are concerned that a second major terrorist attack
on US soil could create the very situation on which Franks pontificated — an
unraveling of the Constitution with the passage of draconian powers to the
executive branch. Hopefully Americans would instead react with empathy,
dignity, and steadfastness should another such attack occur. Regardless, neither
a dirty bomb, another anthrax attack, nor even a rogue nuclear bomb justifies
the dissolution of our Constitution, our form of government, the postpone-
ment of elections as prescribed by the Constitution, or the diminishment of
our rights and liberties.
We have entered a disturbingly dangerous period in America history when
authoritarians hold the reins of power and imply that the Constitution and its
protections are strangely viewed as impediments to our national security.
Nothing could be further from the truth. The shift of power to the executive
branch based on an ambiguous notion of a “perpetual war” embodies the
very threat of despotism and oppression that our forefathers revolted against.
The Bush administration stated that this “war on terror” might last decades,
thereby implying our Constitutional protections may not apply during this
indefinite period. This Orwellian and wholly intolerable situation has become
critical in part due to the collective failure of our corporate media conglom-
erates to fulfill their traditional role as watchdogs against government abuse.
Of all the enemies to public liberty war is, perhaps, the most to be
dreaded because it comprises and develops the germ of every
other. War is the parent of armies; from these proceed debts and
taxes ... known instruments for bringing the many under the
domination of the few .… No nation could preserve its freedom
in the midst of continual warfare.
— James Madison, US President, 1809–1817
It is the duty of the patriot to protect his country from the gov-
ernment.
— Thomas Paine, hero of the American Revolution, author
of Common Sense, 1776
Seven
Envisioning Progressive Global Reform in

the New Century
The significant problems we face can not be solved at the same

level of thinking we were at when we created them.
— Albert Einstein
195
New Realities of the 21st Century: Emerging Tri-Polar World

Let the present America expend what remains of its energy, if that
is what it wants to do, on the “war on terrorism” — a substitute
battle for the perpetuation of a hegemony that it has already lost.
If it stubbornly decides to continue showing off its supreme power,
it will only end up exposing to the world its powerlessness. ...
what the world needs is not that America disappear, but that it
return to its true self — democratic, liberal, and productive.
— Emmanuel Todd, After the Empire: Breakdown of the
American Order, 20041
The current US predicament in Iraq serves as another example
that when a country’s superiority psychology inflates beyond its
real capability, a lot of trouble can be caused. But the troubles and
disasters the United States has met do not stem from the threats
by others, but from its own cocksureness and arrogance .… The
21st century is not the ‘American Century.’ That does not mean
that the United States does not want the dream. Rather it is inca-
pable of realizing the goal.
— Qian Qichen, former Chinese minister regarded as one of
the “main architects” of China’s foreign policy, October, 20042
The US can lose its dominance only as a result of its own mistakes.
At present the country is in the process of committing such mistakes
because it is in the hands of a group of extremists whose strong
sense of mission is matched only by their false sense of certitude.
This distorted view postulates that because we are stronger than
others, we must know better and we must have right on our side.
That is where religious fundamentalism comes together with mar-
ket fundamentalism to form the ideology of American supremacy.
— George Soros, The Bubble of American Supremacy, 20043
Unfortunately, our country has a problem in far too many parts of
the world … a problem we have regrettably gotten into over many
years through both Democrat and Republican administrations,
and a problem that does not lend itself to a quick fix or a single
solution or a simple plan.
— Margaret D. Tutwiler, in her first public appearance as the
State Department’s Undersecretary for Public Diplomacy and
Public Affairs, February 20044
D uring the debate over the Iraq War, Senator Robert Byrd stated that the
preemptive doctrine is a “distortion of long-standing concepts of the
Envisioning Progressive Global Reform 197
right of self-defense [and] a blow against international law.” In what may be

prophetic, Senator Byrd also proclaimed that President Bush’s politics “could
well be a turning point in world history [and] lay the foundation for anti-
Americanism” across much of the world.5
These observations were also articulated by former president Jimmy
Carter: “The restrictions on civil rights in the US and at Guantanamo, can-
cellation of international accords [illustrates] contempt for the rest of the
world,” and finally triggered an unprovoked attack on Iraq, “although there
[was] no threat to the US from Baghdad …. This entire unilateralism will
increasingly isolate the US from those nations that we need in order to do
battle with terrorism.”6
Tragically, the international stature of the US has significantly deteriorated
over the past few years, initially due to its various unilateral policies before
9/11, and greatly exacerbated by events surrounding the Iraq War. Tutwiler
is quite correct that America’s standing abroad has deteriorated to such an extent
that “it will take us many years of hard, focused work” to restore our lost
stature.7 Obviously, US foreign policies must change in order to effect this.
Not surprisingly, when the horrific pictures were leaked to the US media
of naked Iraqi prisoners being tortured by US intelligence and military forces
at Abu Ghraib prison, Tutwiler quit her State Department job and began work-
ing on Wall Street. It took her four months to realize her job was “mission
impossible.” Without a doubt, the failure to immediately hold accountable
high officials, such as Donald Rumsfeld, has severely and adversely impacted
the ability of the US to repair its standing in Iraq and the entire Middle East.
The world has been willing to follow the US only when it pursued
multilateral policies and adhered to international law. The differ-
ence between leadership and domination is that the former relies
on persuasion, while the latter relies on coercion. As the war in
Iraq demonstrates all too clearly, the US cannot coerce the world
community to pursue objectives that are in the interests of the US
alone. It’s clear that the Bush administration has accelerated the
decline of the US’ global status. To be sure, even if the US lead-
ership had changed after the 2004 election, the task of regaining
America’s lost moral standing in the world community would
have remained a significant challenge.8
While many Americans have unknowingly supported the neoconservative
plan for US global domination via the “war on terror,” the strategic errors
regarding the Iraq War are beginning to expose its inherent paradoxes. The
world is now in the process of reorganizing itself into spheres of influence: Europe
(to possibly include Russia), the Pacific Rim with China and Japan as its focal
point, and North and South America. The US will still be a major nation, but
without the overarching threat of the Soviet Union, it is unreasonable to

think it can maintain the same global reach and influence that it had during
and immediately after the Cold War.
”Old” and “New” Europe as The United States of Europe

I don’t want to see a situation develop in which either Europe or
America sees a huge strategic interest at stake and we are not help-
ing each other …. Some want a so-called multi-polar world where
you have different centres of power, and I believe [that] will quickly
develop into rival centres of power; and others believe, and this is
my notion, that we need one polar power which encompasses a
strategic partnership between Europe and America.
— Prime Minister Tony Blair, April 20039
The emergence and growth of the Unites States of Europe as a
countervailing power doesn’t have to be a nightmare for
Americans. In countless ways, the united Europe is a downright
boon to the United States …. Beyond the opportunity for profit,
Americans can only benefit if an ambitious united Europe begins
to take on some of the burdens that necessarily fall to a super-
power.
To secure these benefits though, Americans will have to wake
up to the revolution. We need to recognize and accept the plain
fact that the planet has a second superpower now, and its global
influence will continue to increase as the world moves toward a
bipolar balance of economic, political, and diplomatic authority.
To put it simply, the United States of America has to show respect
for the United States of Europe.
— T. R. Reid, The United States of Europe, 200410
During the first half of the 20th century, Europe suffered terribly under the
imperial hubris of Germany, resulting in two devastating world wars with tens
of millions of Europeans killed, followed by a long Cold War with the Soviet
Empire. In 1946 Winston Churchill powerfully declared that the “tragedy of
Europe” could only be solved if the issues of ancient nationalism and
sovereignty could give way to a sense of European “national grouping.” He
said that the path to European peace and prosperity on the world stage was
clear: “We must build a kind of United States of Europe.”11
This bold path was pursued during the second half of the 20th century
when European countries gave up their nationalism in order to create a more
peaceful pan-European community. As we enter into this new century
Europeans and their governments have largely accomplished this goal from
an economic perspective. Robert Mundell, the American Nobel laureate and

one of world’s experts in currency unions, noted, “The introduction of the
euro is one of those epochal events that can only be understood in the context
of long periods of history.”12
Reid’s The United States of Europe observed that the euro’s successful
launch was nothing less than a revolutionary act that de facto created a bipolar
world from an economic and political perspective.13 The single euro currency
ties their economic fates together, just as the dollar links the 50 US states.
Given past centuries of warfare, the Europeans are naturally more interested
in their own economic development than militarization of their foreign poli-
cies. As Reid argued, the challenge for American policy-makers is to partner
with this newly united Europe so that it may share the global “burden” of
superpowers.14
In order to ensure a “strategic partnership” between an integrated EU and
the US as proffered by Prime Minister Blair, a new monetary compromise
similar to the Bretton Woods Conference will be required. This chapter offers
various suggestions for monetary and energy reform to facilitate development
of a strategic partnership, as opposed to a strategic threat. However, before
any such policies could be pursued, new approaches toward the EU would be
required.
In 2003 Secretary of Defense Rumsfeld created diplomatic consternation
amongst the traditional EU centers of power when he referred to the central
nations of Europe, many of whom were former eastern bloc (Soviet) nations,
as the “New Europe,” its new center of power. However as Zbigniew Brzezinski
stated in his recent book, The Choice, “America must resist the temptation to
divide its most important strategic partner. There is no ‘old’ and ‘new’ Europe”
and that such a slogan has “no geographical or historical content.”15 Despite
Rumsfeld’s transparent attempts to divide various European governments,
the US may be losing not only “Old Europe” but also “New Europe.”16 In
fact, these so-called New Europe nations have since transitioned to the euro,
and as such their economic and political fates have become inextricably inter-
twined with the 12 original EU nations of Old Europe. Following the
enlargement of the EU–25 in May 2004, the economic destinies of these cen-
tral European countries are now in the eurozone, not in Washington DC.17
In addition, the neoconservatives’ “strategic mistakes” have pushed Russia
closer to the EU, and the failed attempt to bribe Turkey to participate in the
Iraq War has facilitated a new geopolitical alliance between the previously reluc-
tant western European governments regarding Turkey’s entry into the EU:
President Bush and the neocons have made many new enemies;
old strategic friends, such as France, Germany, and Turkey, are on
the road to opposition to everything American, this does not
bode well for America’s future. Russia is distancing itself from

Washington and forming much closer ties with Berlin and Paris,
Saudi Arabia has had enough, which is probably good, but the
loss of Turkey is really a stupid foreign policy failure.
By treating Turkey like a fifth-rate client state the Bush govern-
ment has pushed Ankara further into the camp of the benevolent
Europeans, and the way Ankara refused to be intimidated by the
cowboys in Washington did much to curry favor with Berlin and
Paris, which will only serve to help Turkey obtain membership to
the European Union.
The Europeans initial balking at Turkey’s entry to the Union
is quickly being seen by European elites as a strategic mistake;
with Iraq now subjugated and under American rule, Turkey has
become vital for the Europeans to get a foothold in the Mid East,
and Turkey being part of the European Union, the euro would
gain substantial legitimacy in the Arab world. As far as Ankara is
concerned their economic and strategic future lies with Brussels
not Washington.18
If this analysis is correct, it is increasingly unlikely the US can maintain its

position atop all other nations while attempting to thwart any challenge to its
superpower status. The EU is not interested in challenging US military power,
but instead in achieving parity status to US economic power. Furthermore,
the EU government understands that attempting to challenge the US from a
military perspective is not only unnecessary, but unwise, and would likely pro-
duce a destabilizing geopolitical environment.
The European Union: Second Pole of Power

Beneath the surface of current security debates, therefore, and in
stark contrast to the perceived mismatch of strategic competence
and geopolitical power between the US and Europe, lies a sleep-
ing tiger. Despite the many arguments that would question
Europe’s capacity to take economic and political advantage from
such a tectonic shift in monetary realities, the only likely future
scenario of change in the realm of currencies is one of greater rel-
ative weight for the euro. This is the one area in which long-run
dynamics seem to place Europe in a relative structural advantage
vis-à-vis the US — despite the appearance of the contrary in the
realm of economic productivity and with respect to the current
military gap.
— Paul Isbell, “The Shifting Geopolitics of the Euro”19
The only way the US has to gain back its currency monopoly
would be by destroying the country that is at the heart of the
Euro, this is, by waging a Third World War against Germany. But
that it cannot do because Germany has been a good girl since
1945, and the nuclear power France is standing at Germany’s
side, encouraged by Russia and China in the background.
— Germar Rudolf, “On the Brink of World War Three”20
From an international trade perspective, the EU economy is much more bal-

anced than that of the US. The EU nations have done a more effective job
constraining their debt formation/dependence on foreign capital, while
retaining much of their crucial domestic manufacturing base. Because of this
past management of its respective economic zones, the EU is poised to become
a major pole of global power. Conversely, successive Republican administra-
tions in the US have left themselves little room for error and squandered the
opportunity offered by Clinton’s surplus economics. Even though much of
the surpluses projected in 2000 were bubble-based, they should have been
properly taken advantage of to reduce future debt-servicing.
Instead, a policy of tax cuts and massive military spending was pursued.
While France and Germany have not been able to strictly adhere to the debt
provisions in the Growth and Stability Pact, their external balances are,
according to an OPEC executive, much more “balanced” than that of the
United States economy.21
Furthermore, while European governments have a sometimes stifling pol-
icy structure, they have retained a great deal of room for reform when
necessary. For example, in 2003 German Prime Minister Schroeder pushed
through major reforms of the German economy, Agenda 2010, which is
slowly beginning to pay dividends, while in contrast, the US in a similar reces-
sionary phase has no such option.
These structural imbalances suggest that the ongoing bubble distortions
of the American economy will ultimately hit a tipping point soon, with a poor
prognosis of quick recovery. If this occurs, the euro would serve to increase
domestic demand in the EU via expansion of the monetary supply, counter-
balanced with a decrease in US domestic demand as its monetary supply
contracted. Whether the global impact would be a net increase or net
decrease in aggregate demand depends on whether the EU monetary supply
expanded more rapidly than the US monetary supply contracted.
The crucial issue at hand is the realization that the EU and the European
Central Bank (ECB) will have more monetary flexibility in such an event,
which the US no longer has, due to its unbalanced external accounts. This is
compounded by foreign holdings of its federal debt, which is now approxi-
mately 40 percent of a total $7.6 trillion debt. Ironically, despite the US’
history of seeking political and economic independence, its economy and mili-
tary are simply unable to operate independently of massive foreign investment.
China: Emerging Third Pole of Power

Something surprising is happening to China’s currency.
— “The Renminbi Zone,” Asia Times, 200322
In the last century, American people were pioneers of system and
technology innovation. However, the interests of a few American
financial monopolies now lead this country to war. This is such a
tragedy for the American people.
— Wang Jian, Chinese bureaucrat, 200323
The US dollar is no longer … in our opinion [seen] as a stable
currency, and is devaluating all the time, and that’s putting trou-
bles all the time. So the real issue is how to change the regime
from a US dollar pegging ... to a more manageable reference, say
Euros, yen, dollars — those kind of more diversified systems.
— Fan Gang, director of the National Economic Research
Institute, China Reform Foundation, quoted at the World
Economic Forum in Davos, Switzerland, January 26, 200524
China deserves special mention given its likely trajectory as a major pole of
global power in the beginning of the 21st century. While it may take several
more years for China’s economy and banking system to undertake the neces-
sary reforms, its regional influence seems assured. The eventual emergence of
the Chinese renminbi (RNB), currently being re-valued, as a major currency
appears to be well underway, with tacit support of Beijing. As evident in the
following article, China’s currency is apparently becoming a de facto convert-
ible currency in the Asian Pacific economies.
Something surprising is happening to China’s currency. Although
not fully convertible, the renminbi, the ‘people’s money,’ is grow-
ing in use as a hard currency outside China — the first sign of its
potential role as ‘Asia’s money.’ In Hong Kong and along China’s
borders with Southeast Asia, an emerging renminbi zone can be
traced, fuelled by burgeoning Chinese trade and tourism.25
China’s membership in the World Trade Organization only accelerates the
emergence of a strong, unified Chinese currency. This in turn will increase the
desirability of a fully convertible renminbi, both as a way of smoothing the
integration of China’s economy into the world economy, and as a way for
China to exercise its economic might more directly. Full convertibility is a
stated goal, but no fixed timetable has been set.
The rising geopolitical influence of China will not only be based upon its
economic clout, but its increased demand for sources of hydrocarbons will
not transpire with the potential for geopolitical tension with the US. Contrary
to stateside US commentary, in 2003, a Chinese bureaucrat, Wang Jian, portrayed
a very disconcerting picture of impending geopolitical conflict as we enter the
21st century. His white paper advised China to prepare itself for what he foresaw
as an inevitable war between the US and EU — not between the US and China.
Clouds of war are gathering. Right now, the most important
things to do for China are:
1. Remain neutral between two military groups while insisting on
an anti-war attitude.
2. Stock up in strategic [oil] reserves.
3. Get ready for a short supply of oil.
4. Strengthen armament power.
5. Speed up economic integration with Japan, Hong Kong, Korea
and Taiwan.
War is the extension of politics and politics is the extension of
economic interests .... America’s wars abroad have always had a
clear goal; however, such goals were never made obvious to the
public. We need to see through the surface and reach the essence
of the matters. In other words, we need to figure out what the
fundamental economic interests of America are. Missing this point,
we would be misled by American government’s shows and feints.26
Wang’s argument suggesting this conflict is largely based on the structural
imbalances endemic to the current US economy. He offered the following
warning to Chinese policy-makers:
While [the dollar’s dominance] has been bringing to America eco-
nomic prosperity and hegemonic power over money, it has its own
inborn weakness. In order to sustain such prosperity and hegemonic
power, America has to keep unilateral inflow of international capital
to the American market .… If America loses its hegemonic power
over money, its domestic consumption level will plunge 30-40%.
Such an outcome would be devastating for the US economy. It
could be more harmful to the economy than the Great Depression
of 1929 to 1933.27
Assuming that such a major US economic dislocation could occur, every
effort should be undertaken to lesson geopolitical tensions that could develop
between the US, EU, and China. In any event, the US economy’s structural
imbalances justify a re-evaluation of fiscal/tax policies as well as foreign policies.
Ultimately we will witness the emergence of a multi-polar world. These

trends underline why US policy-makers must quickly begin realigning some
longstanding foreign policies in an effort to rebuild its goodwill.
US structural debt levels indicate that its economic security is fundamen-
tally based on the “kindness of strangers,” particularly that of Japan and China,
who hold a combined $1.4 trillion of US debt. For this reason Washington
should cease antagonistic “shows of force” such as the navy’s Operation
Summer Pulse in July 2004. This massive D-Day-style operation off Taiwan
and China’s coast marked the first time that 7 of the US’ 12 carrier strike
groups were all deployed in one place.28
The Chinese government was not amused. Despite irresponsible claims in
stateside commentary about a potential US “energy war” with China in the
coming decade, China may not need to build up its military forces, given its
financial leverage over the US economy. Hopefully US policy-makers realize
that if China felt threatened by the current belligerent US military encirclement
strategy of it — along with the neoconservatives’ planned stranglehold over
oil supplies in central Asia and the Middle East — China alone has the ability
to pull the monetary plug on the dollar by selling off its massive US Treasury
holdings.29
The most effective method to mitigate such destabilizing global events
would be to systematically pursue, through the UN, multilateral reform of
the global monetary system, and agreements regarding petroleum and natu-
ral gas consumption, access, and pricing mechanisms. Only this approach to
cooperatively unwind the current global economic imbalances could provide
a desirable outcome for both the US and world community.
The Conundrum: Risk of Widespread US Economic Dislocation

Stephen Roach, the chief economist at investment banking giant
Morgan Stanley, has a public reputation for being bearish. But you
should hear what he’s saying in private. His prediction: America
has no better than a 10 percent chance of avoiding economic
‘Armageddon’ …. Roach sees a 30 percent chance of a slump
soon and a 60 percent chance that ‘we’ll muddle through for a
while and delay the eventual Armageddon.’ The chance we’ll get
through OK: one in 10. Maybe.
A source who heard the presentation concluded that a ‘spec-
tacular wave of bankruptcies’ is possible … people downtown
agree with much of the analysis. It is undeniable that America is
living in a ‘debt bubble’ of record proportions.
— Brett Arends, “Economic ‘Armageddon’ Predicted,”
November 23, 200430
The US economy is being held together with a prodigious amount of duct

tape in the form of massive debt manipulation, excessive consumer spending
that is soaking up global investment capital, and a plethora of misleading gov-
ernment statistics about unemployment, productivity, inflation, “GDP growth,”
and other figures. Various commentators have warned that US economic
problems are being exacerbated by unilateral policies that heightened geopo-
litical risk throughout 2003–2004. These factors all played a significant part
in the rising gold price and a falling dollar. If Washington continues to pur-
sue the neoconservative global strategy by threatening countries such as Iran,
Syria, or North Korea, this could create a capital flight out of the US and a
panic on the dollar.
The most profound and damaging expression of [US] unilateralism
has been through the pursuit of the war on terrorism. The invasion
and occupation of Iraq explicitly contravened the United Nations
and abrogated international law.
Nearly $1 trillion of foreign capital is funding the US public
sector and current account deficits. About $800 billion of this for-
eign money is invested in US government, agency and corporate
bonds …. The weight of foreign investment in the US financing
the large twin deficits indicates that the risk of much greater dollar
weakness is substantial. Expected dollar depreciation, the large
current account and fiscal deficits and increasing geopolitical
instability, driven by US electoral politics, make the dollar a very
unlikely safe haven for global investors. Foreign capital flight from
the US could easily trigger a large dollar devaluation.31
Various economic and strategic analysts contend that a major restructuring

of the global monetary system is imminent. Additionally, an increasing num-
ber of domestic and foreign commentators have warned that an “America in
economic crisis would place the world in even greater danger of American
military adventures by a government seeking both diversions from its domestic
ills while it also sought means to shore up its empire.”32
Fortunately, the dollar’s slide in 2002–2004 was relatively gradual, but
appeared to accelerate after the 2004 election. If a dollar “panic” were to occur,
Japan alone could not thwart such a crisis. The Japanese government, the
largest holder of US Treasury bills, took the unusual step of warning the
White House in December 2004 that it will unload its US Treasury/debt
holdings if the Bush administration “maintains its laissez-faire approach to
the mounting currency crisis.”
The criticism of President Bush’s inaction, by a senior member of

the ruling Liberal Democratic Party, will be taken as a veiled
threat that Japan could start to sell off its multi-billion-dollar

holdings of US Treasuries. ‘The Japanese government is going to
ask for a strong dollar policy; if it continues to fall, there would be
enormous capital flight from the dollar,’ said Kaoru Yosano, chair-
man of the LDP’s policy council.33
In order to mitigate a In order to mitigate a potential monetary crisis, the US

potential monetary crisis, government must be in the good graces of the world’s
the US government must be industrial nations, in particular the EU. To facilitate that
in the good graces of the
goal, a new US approach that encourages a strong and
world’s industrial nations, in
united EU will be needed, and soon. Therefore, the ques-
tion becomes: What can the US and EU do to ensure that
particular the EU.
a strategic partnership develops in the emergence of an
integrated EU with a rival currency to the US dollar? Paul
Isbell, senior researcher at the Spanish Real Instituto Elcano, offered an alter-
native approach to US geostrategy — one based on cooperating with the EU
to strengthen the US/EU relationship.
What can Europe do to consciously prepare the way for the day
when this tectonic shift in monetary relations becomes undeniably
obvious? .… What might Europe do to help insulate itself — and
the US — from a potentially cataclysmic jolt to transatlantic relations
as the byproduct of such a change? First, Europe should move for-
ward with liberalization and economic reforms in a sensible,
integrated fashion …. Second, Ecofin should work to reform the
stability pact in a rational way …
Third, the ECB should stand ready to cooperate with the US
Federal Reserve should coordinated currency intervention be
called for to halt an excessively rapid fall of the dollar.
Fourth, efforts to integrate and harmonize European capital
markets should continue in an effort to drive down transactions
costs even further …. Finally, Europe should not abandon its
vision of a transatlantic relationship (or a vision of ‘the West’)
based on multilateralism and an international system based on the
rule of law.34
Isbell illuminated one of the most critical reasons why the US government
should seek to maintain a cooperative and strong relationship with the EU.
Given the huge structural imbalances in the US economy, heightened possi-
bility of a terrorist attack at a US financial center, along with the risks and
expense of US military operations, the likelihood of dollar devaluation is
authentic. Isbell stated, the “ECB should stand ready to cooperate with the
US Federal Reserve should coordinated currency intervention be called for to
halt an excessively rapid fall of the dollar.”35 [emphasis added] I concur with
his analysis of why the US must change its macroeconomic policy to accom-
modate the inevitable ascendancy of a strong euro. As Brzezinski noted, “Only
two sides of the Atlantic working together can chart a truly global course that
may significantly improve the worldwide state of affairs.”36
As discussed in chapter 1, the core macroeconomic stresses that have gathered
in the global economy are excessive credit expansion with subsequent global
overcapacity. The first challenge is economic and requires an increase in global
aggregate demand. Any process of sustainable development combined with
demographic growth will increase aggregate demand over time. The problem
with the current global economy is that excess levels of supply capacity are well
beyond those necessary to meet the requirements of aggregate demand. As a
general rule, a period of deflationary contraction will simply permit a decline
of supply capacity until growth in demand initiates a new expansionary cycle.
To mitigate the depth of a global deflationary contraction, it would seem
advisable for the euro to ascend to an International Reserve Currency that
should increase domestic demand in the EU via expansion of the monetary
supply. This process would have to be counterbalanced with a decrease in US
domestic demand as the monetary supply contracted. Managing this type of
scenario will be the core monetary challenge for both US and EU finance
ministers should a deflationary period occur.
The second major monetary reform revolves around East Asia, but the
dollar-euro transition would most likely need to have minimal impact on their
supply of capital or rate of demand growth. Asian domestic markets are
expanding, and this should be seen as an extension of current development
trends. Eventually the demographic and economic trends in Asia should cre-
ate a consumer base that will eclipse the American consumer base, but this
could easily take at least a decade.
Although rarely discussed outside of Internet forums, the US Federal
Reserve is quickly facing a financial crisis that may result in some level of debt
repudiation. Although unlikely, and assuming any such mechanism could be
negotiated, the agreement would require a graduated approach over a decade
or more, ideally within the framework of broad international cooperation.
If one agrees with this description of generalized macroeconomic factors,
then it is clear that US policy-makers and Americans must accept that some
of the following scenarios are irrefutably incompatible with reforms necessary
to rebalance the global economy. First, the US does not need any more tax
cuts, nor can we afford them. Secondly, we do not need any more “preemp-
tive” wars, nor can we afford them. Thirdly, we cannot continue our excessive
oil consumption. Finally, we must not accept any further deterioration of our
Constitutional protections, but we must demand that recent legislation be
repealed to restore our liberties and freedom.
What Americans do need are exceptionally creative leaders in all govern-

ment branches and in the private sector with truly Big Ideas — and willing to
be honest and yet optimistic with the American people. We need peace and
justice in the Middle East to alter the chemistry of the soil in which terrorism
grows. Above all, we must reduce our energy consumption and help lead the
world in an unprecedented crash program for “energy reconfiguration.”
The Global Imperative: International Energy Projects

We are grossly wasting our energy resources … as though their
supply was infinite. We must even face the prospect of changing
our basic ways of living. This change will either be made on our
own initiative in a planned and rational way, or forced on us with
chaos and suffering by the inexorable laws of nature.
— Jimmy Carter, 197637
We need an energy bill that encourages consumption.
— President George W. Bush, 200238
There is no need to belabor the point: the people of this world whose
opinions count the most — the people with the power to com-
mand armies, economics, and governments — have already made
up their minds. The cards are dealt and the bets are on the table.
For them, the coming decades will constitute a fatal game of Last
One Standing, a brutal contest for the world’s remaining resources.
To the interested observer, this may seem patently insane.
Even the nation that ‘wins’ the game will be utterly devastated. In
the end, oil, natural gas, and even coal will run out, and not even
the wealthy will be able to maintain their current way of life. And
in the meantime, hundreds of millions — perhaps billions — will
have violently perished. Why would anyone choose this path?
— Richard Heinberg, Powerdown: Options and Actions for a
Post-Carbon World, 200439
Peak Oil is the greatest challenge modern man has faced. Citizens of the
world community, especially Americans, must come to accept the fundamental
principles of Peak Oil and the fact that energy resource limitations will become
evident by 2010. Once this psychological barrier is breached, we must ask,
what kind of future do we want, and what are our options?
It is beyond the scope of this book to fully analyze various alternative
energy sources and technologies, but more appropriately, it explores the
expediency under which this must be pursued.
The US, as the most voracious energy consumer, is the only nation that could
provide global leadership in pursuing the development and implementation
of energy alternatives. Along with a rejection of the “preventative war” or

“Bush doctrine,” this would do much to repair its international image.
Ideally, such efforts should begin immediately. Robert Freeman eloquently
wrote that only “energy reconfiguration” can save America from devolving
into despotism. His essay, “Will the End of Oil Mean the End of America?”
offered several specific policy recommendations that symbolized the sacrifices
we must soon undertake if America is to pursue a concerted effort to enhance
our national security, and preserve our freedom:
Energy reconfiguration means retrofitting all of the nation’s build-
ings, both commercial and residential, to double their energy
efficiency. It means a crash program to shift the transportation sys-
tem — cars, trucks — to a basis that uses perhaps half as much oil
per year. This is well within reach of current technology .... It
means refitting industrial and commercial processes — lighting,
heating, appliances, automation, etc. — so that they, too, con-
sume far less energy than they do today. It means increasing
efficiency, reducing consumption, and building sustainable, long-
term alternatives in every arena in which the economy uses oil.40
Freeman found optimism in China’s 1980s nationwide program to adopt

energy efficiency that resulted in a 50 percent reduction in energy intensity
while maintaining economic growth. Furthermore, in the 1980s Denmark
began a “crash program” in wind-generated electricity that now provides 10
percent of its electrical power, and India’s Renewable Energy Development
Agency began a program in 1987 to reduce oil-based electricity usage by
becoming the largest user of photovoltaic systems in the world.41 Another
renewable energy technology that should be pursued is OTEC. In 2002 the
Natural Energy Laboratory in Hawaii successfully deployed a 9,000-foot ocean
pipeline that researchers predict will make this electrical production process
“far more efficient than previously used technologies.”42 This abundant renew-
able technology warrants a massive increase in research and development on
a global scale.
As for the US, an aggressive 7-year roll-out of 35 mpg Corporate Average
Fuel Efficiency (CAFÉ) standards for all automobiles (including light trucks)
would be a tremendous investment enhancing its national security. Writing
for the Austin Chronicle, Michael Ventura advocated transitioning to a rail-based
system, and made the astute observation that our ability — or inability — to
quickly dismantle our military empire in exchange for enacting energy recon-
figuration, will likely determine the fate of the US dollar in the new century.
One key to America’s future will be: How quickly can we build or
rebuild heavy and light rail? And where will we get the money to
do it? Railroads are the cheapest transport, the easiest to sustain....

There’s only one section of our economy that has that kind of money:
the military budget. The U.S. now spends more on its military than
all other nations combined. A sane transit to a post-automobile
America will require a massive shift from military to infrastructure
spending. That shift would be supported by our bankers in China
and Europe (that is, they would continue to finance our debt)
because it’s in their interest that we regain economic viability. What’s
not in their interests is that we remain a military superpower. 43
Americans should harbor no illusions that, with the current campaign
finance structure, it will be exceedingly difficult to enhance national security,
given the powerful military and energy conglomerates who “invest” hundreds
of millions in cash to political campaigns every election in order to purchase
politicians in both parties. This system will have to yield to a more workable
system that places humanity above political ideology and power. Considering
all suppliers report that current oil production is running “flat out,” the world
may have arrived at a plateau. Neither the US nor the global community is pre-
pared for such a reality.
Following the peaking of domestic oil production in 1971 and the oil
shocks of the 1970s, the US should have spent much of the past 25 years
preparing for global Peak Oil. A second historic opportunity was lost in the
aftermath of 9/11, when, if under real leadership, the American people could
have become united in the patriotic pursuit of conserving energy and seeking
energy alternatives to strengthen our national security. Unfortunately that
tragedy was exploited to introduce another upon the world — the unpro-
voked invasion and subsequent occupation of Iraq.
Despite this substantial setback, Americans must have realistic faith in our-
selves and believe that we can adjust to the challenges of Peak Oil, or we will
certainly fail. We need a visionary leader to define America’s new role and
work together toward realizing that vision. Multilateralism and extraordinary
international energy reform in the post-Peak Oil era is the key to global sta-
bility in the 21st century. In his book on Peak Oil, Kenneth S. Deffeyes warned
his readers:
This much is certain: no initiative put in place starting today can have
a substantial effect on the peak production year. No Caspian Sea
exploration, no drilling in the South China Sea, no SUV replace-
ments, no renewable energy projects can be brought on at a sufficient
rate to avoid a bidding war for the remaining oil. At least, let’s hope
that the war is waged with cash instead of with nuclear warheads.
— Kenneth S. Deffeyes, retired oil geologist and author,
Hubbert’s Peak: The Impending World Oil Shortage, 200144
Crafting a More Balanced Global Economy

Petrodollar recycling was unusual in that it was a severe shock to
international economic stability. Yet insofar as the oil shocks were
a symptom of US hegemonic decline, similar shocks can be expected
in the future. International institutions do not have the capability
to handle such threats to stability, and US unilateralism will prevent
the strengthening of multilateral cooperative regimes.
Although the relative decline of US hegemony has led to an
increase in observable power outcomes, the result ultimately will
be worldwide economic instability. When it is in a period of relative
decline, it is in the short-term interest of the United States to pursue
unilateral exploitation of its dominant position. This interest is
increasingly at variance with the international goals of confidence,
stability, and cooperation.
— David E. Spiro, The Hidden Hand of American Hegemony 45
This chapter’s suggestions are most assuredly audacious and contentious to
many observers, but they would provide a broad, and perhaps visionary,
framework in which to rebalance the global economy and promote energy
conservation and alternative energy sources, while also reducing current “anti-
American” sentiments in an effort to restore the US’ international stature. If
Thomas Jefferson, James Madison, or George Washington were alive today, I
suspect they would judge many of these recommendations to be in basic
alignment with the nation’s founding principles.
Americans must demand that our govern- Americans must demand that our
ment begin the long and difficult journey
government begin the long and difficult
toward energy conservation, the development
journey toward energy conservation, the
of renewable energy sources, and sustained
development of renewable energy
balanced budgets that allow real deficit reduc-
sources, and sustained balanced budgets
tion. Repealing large portions of the clearly
that allow real deficit reduction.
unaffordable 2001 and 2003 tax cuts could
facilitate a balanced budget.
One the main reasons the US is a waning superpower is its manufacturing
base’s marked decline. The US was able to propel itself into a dominant role at
the end of WW II because of its then massive manufacturing capability. However,
this advantage has been lost over the past 30 years. In 1973, the Trilateral
Commission stated that for globalization to work, US jobs would have to be
transferred to populations with much lower wages than found in the US.
The US has followed this path for the past 30 years, resulting in a huge
trade account deficit. Never before in US history have there been such large
increases in government spending, tax cuts, federal budget deficits, consumer
spending and borrowing, yet without any meaningful job or income growth.
The massive fiscal and monetary stimulus has mostly been spent, with con-
tinued excessive military spending as a percentage of GDP, further sapping
the ability of the US to do what is absolutely necessary regarding national
security — massive energy reconfiguration. Not surprisingly, middle class liv-
ing standards have stagnated. Addicted to debt and consumption, US society
has lost touch with the basic economic reality that domestic savings and
implementing the means of production are the mechanisms of wealth cre-
ation and social stability.
The Federal Reserve is in the process of slowly raising interest rates in an
effort to stem the weakening dollar, but we are in a perilous situation.
American corporations and consumers have acquired so much debt that a rate
hike might stave off domestic economic growth. A rate increase may cause a
lot of pain for average Americans, but we have lived in the fantasy of huge tax
cuts, low interest rates, huge budget and trade account deficits for much too
long. Military empires have never been cheap. One of the unknown variables
is the dollar, which is being rapidly debased. In a best-case scenario, the
Federal Open Market Committee would spread this pain over several years,
but dollar devaluation will probably occur precipitously.
Hopefully, the US would then begin to restore some of its lost international
stature by compromising on the crucial issue of global monetary reform.
Responsible leaders are needed who are willing to return to balanced budgets,
conservative fiscal policies, and our tradition of engaging in multilateral for-
eign policies while seeking broad international cooperation. Until the US
agrees to negotiate a more balanced global monetary system and embarks on
a viable national energy strategy, our nation will continue to pursue a hypo-
critical foreign policy that is incompatible with the founding fathers’ ideals of
democracy and liberty.
In order to save the American experiment and stop the slide toward an
authoritarian state, Americans must elect an enlightened administration in 2008
and create revolutionary changes in the current political establishment. Both
of the major political parties have failed the American people, as the main
constituencies of the current governing body are simply different factions of
the richest two-percent of the population (the elites who run the military–
industrial–petroleum–banking complex). This is a function of our structurally
flawed campaign finance structure that renders both Congress and the presi-
dent incapable of voicing the concerns and interests of the other 98 percent
of Americans.
There is no easy way out, and I do not envy the arduous journey that
awaits the 44th president, who will likely face a combined economic and energy
crisis. Global monetary reform and a compromise with the EU ultimately
means the US will have to forfeit its hyperpower status and revert to being a
realistic nation as one among equals. Many Americans do want to hear this
message, but the US’ extraordinary economic imbalances will ultimately unwind.
Americans believe the myth that the other G–7 nations’ living standards
would somehow be unfulfilling if we lived “their way.”
In reality their living standards are all excellent relative to the global com-
munity, and each of the citizens in those privileged nations should be thankful.
Perhaps many of us will have to give up our irrational attraction to gas-guzzling
SUVs, but do we really want these excesses to define our “values?” Regardless,
we may not have the luxury of choice for much longer, as the dictates of the
global economy and physics will soon come to the forefront.
The only solution is international cooperation, real leadership, global
monetary reform, and sacrifices by the American citizenry to reduce energy
consumption. US politicians are not interested in being truthful with the people,
as both parties are more or less in the pockets of the military–energy conglom-
erates. The US media conglomerates are not serving the public’s interest.
Consequently, real campaign finance reform and the comprehensive rejection
of corporate personhood may be the only way for the US to possibly enact
the required energy reforms with the onset of global Peak Oil.
In order to save the American experiment from the shared destiny of all
empires — military overextension and subsequent economic decline — I recom-
mend the following suggestions. While these proposals are bold, imperfect,
and contentious, it is obvious that adjustments will be required to begin
rebalancing the global economy and preparing the world community for the
challenges presented by global Peak Oil.
Disavow the Preventative War Doctrine

The unrealistic neoconservative goal of global domination must be quickly
discarded by any new US administration if it seeks to reduce current and future
geopolitical tensions. The concept of the US openly violating international
law with unilateral “preventative wars” in the oil-rich regions of the world will
simply not be tolerated by most industrialized nations.46 Hopefully one of the
first official acts of the 44th president will be to officially disavow this “Bush
doctrine” and state a desire for a multilateral approach to international terror-
ism. Such a gesture would allow the world community to breathe a collective sigh
of relief and extend to the new administration much needed political capital.
Multilateral cooperation will be needed for the following issues/ reforms.
US Fiscal Discipline
We must restore some semblance of fiscal responsibility in this country if we
want to save the dollar. The Iraq conflict had cost approximately $300 billion
by the end of 2004, and estimates of current military expenditures are
approximately $1 billion per week. US taxpayers (and their children and
grandchildren) will pay for the 2003 Iraq War, unlike the 1991 Gulf War. The
credit worthiness of a currency is based upon the ability of the government

to collect tax revenue from its citizens. The devaluation of the dollar in 2002–
2004 reflected the world community’s lack of trust in US economic policies.
International Energy Projects

Washington should propose to the UN that it form an international consortium
of energy scientists and researchers to develop alternative fuels for transportation.
IHS Energy has stated that least 85 percent of the world’s total oil deposits
are already in production. The most recent findings of worldwide oil “mega
projects” going online from 2004 to 2010 suggest an “unbridgeable supply-
demand gap [for oil] opening up after 2007.”47 If alternative fuels for
transportation cannot be developed and implemented over the next decade,
disastrous consequences will beset the global community. Ideally, the US and
UN would immediately advocate investments totaling hundreds of billions to
be spent annually on simultaneous, international Manhattan Project/Apollo-
type energy programs pursuant to global energy reconfiguration.
• Ultra-fuel-efficient gasoline and diesel engines (as a “bridge tech-
nology”)
• Clean coal technology with mitigation of carbon dioxide emissions
• Geothermal power (retrofitting commercial and residential buildings)
• Hydrogen Fuel cells for mass transit (land, sea, and air)
• Small-scale solar retrofitting of residential and commercial buildings
• Large-scale solar power plants (e.g., 200-megawatt solar “Power
Tower”)
• OTEC (e.g., fleet of 100-megawatt floating plantships producing
liquified hydrogen and potable water)
• Biomass and biodiesel for localized, agriculture-based farm pro-
duction
• Wind power (rapid deployments in both small- and large-scale
settings)
• Thermal deployermization (new technology that warrants more
R&D)
• Nuclear fusion (still unproven technology but warrants more R&D)
Advanced Manufacturing to Reduce US Trade Deficit

Alan Greenspan, the chairman of the Federal Reserve, has given Americans
the peculiar impression that it does not matter where American products are
made, just so long as people can continue to buy them. This is simply not
true. The demise of over 2.8 million US manufacturing jobs since 2000 has
led to decreased income, growing levels of personal debt, and new records of
personal bankruptcies.
A superpower that loses its manufacturing base will not be a superpower
for long. One of the most outspoken observers of this truism is Eamonn
Fingleton, whose 1999 book In Praise of Hard Industries: Why Manufacturing,
Not the Information Economy, Is the Key to Future Prosperity was somewhat
derided during the “New Economy” frenzy.48 Following the dot-com/tech-
nology bubble, it appeared that he was right: there is no “New Economy
paradigm,” and real wealth creation requires manufacturing and production.
The US must substantially reinvest in sustainable energy technology,
advanced manufacturing, and various other export sectors in order to gradually
but earnestly move the economy from a trade account deficit position back
into a trade account surplus position. This will take decades, but on a positive
note, the imperative for large-scale “energy reconfiguration” and development
of alternative energy technologies provides the US workforce with an opportu-
nity to make gains in its advanced manufacturing base, while also enhancing
long-term security.
Energy Allocation Accords

The UN should form an international group of scientists and engineers to
study energy depletion stemming from global Peak Oil. Under UN supervision,
the global community should devise a methodology and formal agreements
regarding the distribution of hydrocarbons based on the global depletion rate
(i.e., Uppsala Accord).49 Successful implementation of such a worldwide
treaty would undoubtedly be a modern miracle. The incentive to abide by
such an accord is the inescapable fact that the alternatives are either oil deple-
tion warfare in the Persian Gulf and/or economic warfare in the international
foreign exchange markets. These adverse events can be avoided, but only if
the international community can agree to an energy treaty that reflects oil
depletion, while also transforming the current economic/monetary system
and implementing strict measures to control population growth.
It is essential that the US uses less energy and
immediately improves its infrastructure before the
It is essential that the US uses less
full effects of Peak Oil make any energy reforms
energy and immediately improves
excessively painful and expensive. Given that
its infrastructure before the full
Americans consume 25 percent of all hydrocar-
effects of Peak Oil make any energy
bons, we have the most to both gain and lose if
reforms excessively painful and
energy reforms are not implemented during this
expensive.
decade while we still have the capability to pursue a
gradual Powerdown scenario.50
Global Monetary Reform

The main problem with the current global economy is that excess levels of
credit creation (i.e., a credit/derivative bubble) have facilitated the building
of supply capacity that is well beyond the requirements of global aggregate
demand. As a general rule, a period of deflationary contraction would permit
a decline of supply capacity until such time that growth in demand initiates a
new expansionary cycle.
Economists, such as Richard Duncan (author of The Dollar Crisis), have
argued that excessive growth of global credit and subsequent structural prob-
lems of the US dollar may unleash a deflationary contraction of the global
economy.50 A depression could occur with a significant devaluation of the dollar,
and the downturn will be very long-lasting unless global aggregate demand
increases, particularly in the EU and East Asian economies.
Therefore it seems imperative that the US government begins discussions
with the G–8 nations (plus China) to reform the global monetary system,
ideally, to allow for a controlled expansion of markets in Europe and East
Asia. The global economy will be more balanced and better off with three
engines of global growth: the US, the EU, and Asia. The great challenge will
be to implement a gradual, controlled decrease in the US money supply,
while attempting to minimize dislocations in the US and global economy.
The first reform should be the euro as the second International Reserve
Currency, at parity with the dollar, thereby allowing a dual-OPEC oil trans-
action currency standard. This should join the US with the EU as two equal
“co-hegemons.”
While this rebalancing is necessary to create sustainable long-term growth,
any broad transition from a dollar to a euro standard or euro/dollar standard
with subsequent enormous capital market reorientation will be forcefully
opposed by the American elite of the political and business establishment.
Regardless, the ascendance of the euro and ultimately the yuan has likely
been fortified given the structural debt, trade, and fiscal imbalances in the US
economy. The US consumer cannot go into indefinite debt as the single
engine for global growth, nor can the Federal Reserve continue to reinflate
bubbles indefinitely.
Both the EU and East Asia will have to recognize that the party is over
and they cannot ride the American consumer in perpetuity. Whether or not
they wish to confront the challenges of this transition, they will find these
imposed by brutal economic realities.
Conclusion
Guard against the impostures of pretended patriotism.
— President George Washington, Farewell address, 1796
Peace, commerce, and honest friendship with all nations —

entangling alliances with none.
— President Thomas Jefferson, Inaugural address, 1801
This great Nation will endure as it has endured, will revive and
will prosper. So, first of all, let me assert my firm belief that the
only thing we have to fear is fear itself — nameless, unreasoning,
unjustified terror which paralyzes needed efforts to convert
retreat into advance. In every dark hour of our national life, a
leadership of frankness and vigor has met with that understanding
and support of the people themselves which is essential to victory.
— President Franklin D. Roosevelt, Inaugural address, 1933
In the end, the choice of these two alternatives — Grab the Oil
or Energy Reconfiguration — is much bigger than oil alone. It is
a choice about the fundamental ethos and, in fact, the very nature
of the country. Most immediately, it is about democracy versus
empire. In economic terms, it is about prosperity or poverty. In
engineering terms, it is a matter of efficiency over waste. In moral
terms this is the choice of sufficiency or gluttony. From the stand-
point of the environment, it is a preference for stewardship over
continued predation. In the ways the US deals with other coun-
tries it is the choice of co-operation versus dominance. And in
spiritual terms, it is the choice of hope, freedom and purpose over
fear, dependency and despair. In this sense, this is truly the deci-
sion that will define the future of America and perhaps the world.
— Robert Freeman, “Will the End of Oil Mean the
End of America?” 200452
This book is intended to inform the readers of the challenges and choices that
lie directly ahead. In my own analysis three decades of US fiscal and energy
policies have placed the nation on a trajectory toward an economic downturn
of considerable depth and duration, and recent US foreign policies are fostering
potentially cataclysmic global warfare that will ultimately leave the so-called
winner in a ruined state of energy deprivation and economic bankruptcy.
This need not be the case, but global Peak Oil is undoubtedly the true test
that will define the human condition during this new century. Freeman ended
his essay on the profound notion that the US’ destiny will be based on how will-
ing the American people are to adjust to the realities of hydrocarbon depletion.
The “Greatest Generation” of Americans came of age when America was
not a superpower. They endured hardships under the Great Depression and
made tremendous sacrifices during WW II, both of which served to strengthen
their character. The current generation must also adapt to new realities, just
as the Greatest Generation did, and begin to pursue sustainable fiscal policies
and reduced energy consumption levels.
Regrettably, the US political system is flawed under its current funding
mechanisms, and the media has become excessively filtered by its large con-
glomerates. As a result politicians in both major political parties are completely
incapable of initiating the needed reforms, while the American people have
become largely ignorant and complacent about the world around them. The
sad reality is that too many of us resemble Leo Strauss’s “vulgar many” who
could be “inspired to rise above their brutish existence only by fear of
impending death or catastrophe.”53
Too many Americans are willing to be ruled by fear and lies, rather than by
persuasion and truth. We have allowed our government to initiate the dangerous
“preventative war” doctrine by waging an unpopular and illegal war in Iraq,
while refusing to acknowledge that Saddam Hussein, although a despot, did
not pose an imminent security threat to the US.
Now the US military occupies a country where polls indicate 80 percent
of the Iraqi people have “no confidence” in US involvement and will feel safer
if the US military “occupiers” were to leave immediately.54 Obviously, only
broad UN involvement could possibly restore political stability within Iraq,
as the US/CIA-sponsored Iraq leader does not have much popular support,
or control, outside the militarized “green zone” within Baghdad.
From a foreign policy perspective, Americans live in a self-censored bub-
ble, too often failing to acknowledge that 50 years of covertly overthrowing
governments and replacing them with oppressive puppet-regimes in oil-
producing states, in conjunction with our unprincipled support of Israel, is
not in the interest of long-term national security. This combination of foreign
policies as practiced under both Republican and Democratic administrations
has not surprisingly produced blowback in the form of the Al Qaeda terrorist
network. Likewise, the recent growth of anti-American sentiments (or more
accurately, anti-Imperialism) will continue to result in further diplomatic and
economic backlash against the US’ reckless foreign policies.
Nations that convert to a petroeuro-based transaction currency will not
undertake such monetary decisions on the false notion that the US and Europe
have fundamentally different values, cultures, or principles, but instead will
base them on economic factors and, in some cases, for political considera-
tions. Abandoning international law in the pursuit of imperialist US policies
that openly seek global domination and control over the world’s energy supply
will result in economic catastrophe and international isolation.
The belief in market fundamentalism is inappropriate for energy policy. If
Americans make the mistake of letting the “invisible hand of the market”
decide this issue, we would be condemning millions of people in our nation
and in the world community to a life of poverty, suffering, and death. Simply
stated, too much of the US’ infrastructure is tied up in oil

dependence for a market-based correction. The resulting Simply stated, too much of
market failure would create escalations in the price of virtu- the US’ infrastructure is tied
ally everything, and certain critical items, such as food, up in oil dependence for a
would soon become too expensive for a large segment of market-based correction.
society.
Clearly, the imperative of energy reconfiguration, in conjunction with
monetary reform, implies that the US’ overblown military expenditures of
$400 billion per year must be reduced by perhaps 50 percent, which even at
$200 billion per year is comparable to the combined expenditures of the EU,
Russia, and China (which in aggregate represent about 2 billion people, com-
pared to the US’ 300 million). Energy reconfiguration will require trillions of
dollars in new investment and create new domestic jobs that will be safe from
outsourcing. Clearly, the US should use what is left of its capital and taxpayer
base toward this goal — and certainly not tax cuts for the wealthiest among
us, nor expanding our empire of bases.
A full-scale reallocation of hundreds of billions of tax dollars is immediately
required toward essentially draconian government policies of restructuring our
energy infrastructure to accommodate a much less energy-intensive existence.
We will need to become a fully mobilized society, like the one that made sac-
rifices during WW II, that is dedicated toward energy reconfiguration. Ironically,
reducing military expenditures is in our long-term national security interest.
With increasingly limited choices, the US must seek policies that could miti-
gate this transition into a graduated approach where possible, and a rapid
approach where needed.
The fundamental problem is that much of the world feels that the US, and
especially the Bush administration, simply does not play fair. This administra-
tion’s unilateralism, combined with events after WW II and during the Cold
War standoff, have consistently stacked the global deck in our favor. Now, we
seem to be further solidifying our hegemonic power by seizing control of the
Middle East’s energy supply, establishing satellite states around Russia and China,
undermining the emergence of a cohesive, powerful EU rival, while ignoring
international law and abandoning multiple international treaties. Yet from all
appearances this strategy is being recklessly pursued without analysis, or even recog-
nition, of the subsequent unfolding economic and geopolitical consequences.
In recent years an interesting conceptual bias has gained prominence in
stateside commentary, especially within right-wing ideology, that appears to
manifest on two levels. On the one hand, there’s a singular fixation with the
US military element of geopolitical relations, to the relative disregard for the
economic dimension. On the other hand, there’s a certain presumption that
the US can pursue its geopolitical aims with impunity, while other nations will
be restrained by economic considerations.
This segues into the more long-standing assumption that other major
powers would be unable to overcome their own rivalries in such manner as to
present effective opposition to US interests; America would be able to play
one against the other to its own advantage, in perpetuity. Given the events in
Iraq before and after the war, this belief may prove to be the key false assump-
tion made by the Bush administration. OPEC’s momentum toward a petroeuro
or basket of currencies for international oil transactions is well underway.55 A
gradual transition to a petroeuro is likely by 2010, and without active US
engagement and compromise, the Iraq War will likely not be this decade’s last
oil currency/oil depletion war.
As Brzezinski noted, the US has acquired a rather “paranoiac” view of the
world.56 We must throw off such fears and be realistic; it is we who have
changed, not the world. Despite this growing paranoia, no industrialized or
developing nation wants the American economy to collapse. They admire our
technical base, research and development capability, education system, and of
course they want us as consumers. In return, we are expected to be good cus-
tomers, not a militant imperialist power seeking domination over the world’s
largest energy supply.
My principal concern is that our nation appears to be on a path like that of
the German population of the 1930s, on the verge of becoming a highly milita-
rized society that is fearful of shadowy enemies lurking inside every airplane and
distrustful of all allies. We must overcome such irrational fear and peacefully make
some painful, but necessary, adjustments to both our economy and our society.
First and foremost, we must not allow our govern-
First and foremost, we must not
ment to cynically use the “war on terror” to frighten
allow our government to cyni-
the citizenry in order to gain our complicity for more
unprovoked oil-related warfare. If we allow such imperial-
cally use the “war on terror” to
ist policies to continue, the international community
frighten the citizenry in order to
will reluctantly thwart such belligerency in nonviolent
gain our complicity for more
“economic warfare” — via abandoning the dollar. This
unprovoked oil-related warfare.
situation would quickly prove devastating given the
structural imbalances in the US economy. Failure to
pursue multilateral reforms will result in increasing levels of societal disorder,
endless warfare with requisite military conscription, ongoing political decep-
tion and repression at home, and ultimately economic bankruptcy. Undeniably,
the only rational strategy is to compromise our hegemonic status and pursue
multilateral treaties. Unfortunately, I remain rather skeptical that the proposed
reforms will happen unless a significant global financial crisis occurs.
The real struggle in the US is apparently more internal than external. Can
we return to our republican origins and restrain ourselves from seeking
empire? Can we rejoin the community of industrialized nations, as an equal
to the EU and ultimately China? The ultimate test for the American experi-
ment: Can we once again begin living within our means, from both fiscal and
energy perspectives? Can the US show global leadership by reducing our oil
and gas consumption and pursue what Heinberg called the necessity of
engaging in a “Global Powerdown” toward less complexity?57 If we could rise
to that type of enlightened leadership, our problems with today’s “anti-
Americanism” and tomorrow’s terrorist will quickly subside.
The analysis provided in this text proffers that five difficult challenges will
await the next US administration: 1) negotiating global monetary reform, 2)
broadly re-organizing US fiscal policies, 3) developing a national energy strategy,
4) attempting to repair our damaged foreign relationships with the UN, EU,
Russia, and the Middle East by realigning our foreign policies with American
principles and human rights, and 5) reigning in the unwarranted power of the
military–industrial–petroleum–intelligence branch of our government through
comprehensive campaign finance reform and massive reallocation of public
funds from military spending toward alternative energies and wide-ranging
infrastructure energy reconfiguration.
To conclude, it is not hyperbole to suggest that the destiny of the global
community in this new century will be largely determined by monetary and
energy developments before 2010 as we enter the post–Peak Oil world. This
epoch for the US and the world community requires broad reform of the global
monetary system and the imperative of worldwide cooperation pursuant to
energy reform.
The beginning of the 21st century will either be a disastrous period of oil-
related military and economic warfare, or an unprecedented and noble effort
at international cooperation. Either way, the status quo is no longer plausible
due to both physics and macroeconomics, nor is it desirable if we wish to pre-
serve our humanity.
As Americans, our political, social, and economic choices will impact this
momentous judgment. Will we rejoin the community of nations as an equal
among allies and collectively work on future challenges, or will we continue
our downward path of militarism and economic ruin in a desperate attempt to
maintain superpower status under the guise of the “war on terror?” These des-
perate attempts to maintain the unsustainable status quo will ultimately damage
the essential principles of liberty and freedom that founded the United States
229 years ago.
The American experiment has reached a historic crossroad. Will we be a
fleeting empire recklessly pursuing global domination with its potential of gen-
erating catastrophic warfare, or are we to be a long-lived enlightened Democratic
republic that heeds the wisdom of the founding fathers by resisting the temp-
tation of empire — and compromise for peace, justice, and the rule of law as
we enter the 21st century?
America will never be destroyed from the outside. If we falter and

lose our freedoms, it will be because we destroyed ourselves.
I am a firm believer in the people. If given the truth, they can
be depended upon to meet any national crisis. The great point is
to bring them the real facts.
— Abraham Lincoln, US President, 1861–1865
All tyranny needs to gain a foothold is for people of good con-
science to remain silent.
I have sworn upon the altar of God eternal hostility against
every form of tyranny imposed upon the mind of man.
Epilogue
By Lieutenant Colonel Karen Kwiatkowski (retired)
I n a lifetime of taking chances, Saddam Hussein’s biggest gamble occurred

in late September 2000 when he walked out of a government meeting and
announced he would henceforth sell his oil in euros, not dollars. This was
seen as a political move; the euro had been down, struggling against the dol-
lar and other currencies. Saddam would pay a financial price for this decision.
In return, he would perhaps curry favor with the euro-based suppliers of
his Oil for Food imports, France and Germany, in a move not likely to con-
cern the euro-ambivalent, but US-wary, Russia and China. Certainly the
currency switch was a slap at the American and British governments. It prob-
ably seemed to be not only a cost-effective tactic, but also an efficient one,
given the dearth of Iraqi military and economic capacity after over a decade
of sanctions and US/UK bombing in northern and southern Iraq.
Saddam Hussein’s gamble didn’t work out this time. He, his family, the
Ba’ath Party that had ruled Iraq since 1968, 24 million Iraqis, France,
Germany, Russia, China, Iraq’s neighbors, and the United Nations continue
to pay dearly for this choice.
Saddam Hussein’s decision was ignored, buried in the petroleum business
journals and the odd European publication, a blip in the stream from selected
wire services. It was disregarded, just as Americans themselves missed the
signs that the first part of the 21st century would be known by political scien-
tists as Neoconservatism Ascendant.
William Clark has wisely and patiently explained how and why Saddam
Hussein’s choice accelerated the current American military quagmire in Iraq.
Clark has carefully illuminated how the Washington establishment, unaccount-
able to citizens and shrouded in arcane motivations, has willfully compromised
the ideas of liberty and freedom that we so cherish in this country.
Of course, some of them, particularly the neoconservatives, do understand
what global Peak Oil means for the United States’ financial house of cards
and its military-industrial complex that has become so dangerous to the rest
of the world. In order to solve serious structural economic problems and deal
with changing international energy supplies and finances, they might have
considered the traditional American ethic of working hard, producing value,
223
and living frugally until the nation emerged with honor, a free market, and
individual liberty intact, as its founders envisioned.
Instead, the neoconservative prescription, embraced by a panicked Washington
establishment, continues to be to print and spend easy money and to harden
and spuriously exercise the military empire constructed over the last 65 years.
The invasion of Iraq, and very likely the American annexation of the Saudi oil
fields, is part of the neoconservative vision as suggested by Richard Perle and
David Frum in An End to Evil: How to Win the War on Terror.1 This mani-
festo is the ultimate neoconservative solution: a cure that kills enemies of the
American banking and energy sectors until, presumably, none exist and the
economy lives out its remaining days in a bell jar of safety and profit.
As fantastical and paranoid as the neoconservative perspective on America’s
role and rights in the world may be, those qualities are trumped by its sheer illogic
and by its almost robotic contempt for classical liberal values of the individual,
liberty, and the binding nature of one’s word. Neoconservatives advocate an
America that prospers through domination and promotes radical change along
these lines. But for neoconservatives, American aggression and contempt for
international law and morality is acted out on an unnaturally static stage.
Neoconservatism has hijacked the language of liberalism while clearly
repudiating ideas of a decentralized, responsible, and honorable Republic and
the value of a well-informed citizenry armed with a Constitution. That
President Bush, Vice President Cheney, and their esteemed staff could bla-
tantly lie their way into a long-planned, illegal, and unprovoked invasion of
Iraq is an amazing accomplishment. Even after those lies were exposed and
thousands of casualties taken, the Bush administration proceeds apace in the
Middle East and Caspian oil regions. Free trade with all and entangling
alliance with none has been transmogrified into coerced trade and military
subjugation of the lesser recalcitrants.
Instead of the promised liberty, human rights, and self-government, neo-
conservatism delivers a gift of distrust, fear, and hate on a national level, and
a bloody spectacle of destruction on a local level. American soldiers and militias
once fought for the values of self-government and individual liberty. Our cur-
rent era of Neoconservatism Ascendent violates that heritage and has made
our defenders into mercenaries for a modern Washington establishment with
international intentions as closely guarded as the recommendations of Cheney’s
National Energy Policy Development Group, and for the same reason.
In my 20th year of military service, from May 2002 to February 2003, I
was a staff officer in the office of the Secretary of Defense, Undersecretary for
Policy, Near East and South Asia Directorate (NESA). Our deputy undersec-
retary was Cheney’s hand-placed acolyte, William Luti. Our undersecretary
for policy was the ardently pro-Likud and strikingly dim Douglas Feith; his
bosses were Deputy Defense Secretary and neoconservative ideologue Paul
Epilogue 225
Wolfowitz, and old Cheney pal and establishment insider Defense Secretary
Donald Rumsfeld. The machinery for a new kind of American empire was in
place with the odd neoconservative at the State Department and a former
Chevron board director Condoleeza Rice as national security advisor to
George W. Bush, himself quite familiar with the financial vulnerability end of
the oil business. Fueled by unchallenged military capability, this group was
further energized by the uniquely ignorant hubris that comes from never having
worn a uniform. When I came to this assignment, I was unaware that neo-
conservatism was our foreign policy impetus. Co-workers told me there was a
dangerously politicized environment in this part of the Defense Policy secre-
tariat. I was advised to learn about neoconservatism and Leo Strauss in order
to understand these strategy and policy choices and the role of propaganda
and misdirection in pursuing them.
As William Clark has pointed out, neoconservative strategy — using overt
military actions to pursue energy or financial policies — has two main flaws.
First, the enabling political propaganda that may be successfully directed at
Americans usually remains transparent to the rest of the world, and the odd
American as well. Secondly, the aftermath of our invasion and occupation of Iraq,
a country we had militarily humiliated in 1991 and militarily and economi-
cally punished since, would predictably provide a complicated environment
on the ground. This would be necessarily unsupportive of the known neo-
conservative objectives of oil production, access, and military presence.
That the Bush administration apparently had no plan to change this envi-
ronment of predictable resistance to better support our wishes is beyond
irresponsible. But it is understandable. The philosophy that calls for American
military dominance and control of (not just access to) global energy stocks,
clothed in language of liberation and human rights, truly has little insight into
either military strategy or liberation. Compounding the widespread igno-
rance of its advocates, the philosophy itself is unconstrained by basic morality.
It became clearer to me that the oaths taken by career military officers and
NCOs, and similar commitments made by government employees and polit-
ical appointees, to serve with honor, lawfully, respecting and preserving the
Constitution of the United States, had been corrupted. Key neoconserva-
tives, such as Paul Wolfowitz and Abe Shulsky, the director of the
Orwellian-named Office of Special Plans (OSP), seemed to spend far more
time in creative and urgent justification for the invasion of Iraq than in con-
sidering the legalities or moral correctness of propagating fearful falsehoods
to the Congress and the people in order to “get” a war.
The recent revelation of an ongoing FBI investigation, since 2001, into
possible espionage and other untoward activities in this part of the Pentagon is
only one of many red flags indicating that our current foreign policy, particularly
our neoconservative policy in Iraq, is defective and unserviceable.
Supporters of Bush’s neoconservative remedy for a declining dollar, and

those who believe that the invasion and subsequent occupation of Iraq is
really about liberation and fighting terrorism have an enduring dilemma, even
after they understand the underlying themes and motivations of US foreign
and domestic policies as detailed in this book. If not neoconservative mili-
tarism, or the more deceptively phrased “democratic imperialism,” what then
should comprise American foreign and domestic policy? What guiding paradigm
gets us safely into the future, our lives and lifestyles and values not cast away
like so much jetsam?
The answer lies in our own short history as a nation. When America has
behaved beyond the strict confines of her charter as a constitutional republic,
she has wasted lives and treasure, and in the long term lost much and gained
little. Our early imperial adventure in the Philippines began after Washington
and the mainstream media of the day provoked a similarly preemptive war
with a weakened Spain in 1898. The result was a 35-year insurgency in the
Philippines with tens of thousands dead, its eventual dictatorships, and finally,
almost 100 years later, our military withdrawal from that country.
In early 2003 retired lieutenant general and administration insider Jay Garner
tried to explain the positive side of the Iraq occupation by comparing it to the
Philippine experience.2 This comparison reeks with truth, but the conclusion
Americans draw should be far less comforting than Garner intended.
America’s Korean experience likewise contains lessons on the futility of
military and political strategies pursued by academics and laypeople in
Washington, far from those who pay the price for their ignorance and mis-
takes. Former US foreign service officer and Korea scholar Gregory Harrison
wrote in 1971:
No [case] is so astonishing in its origin as the division of Korea;
none is so unrelated to conditions or sentiment within the nation
itself at the time the division was effected; none is to this day so
unexplained; in none does blunder and planning oversight appear
to have played so large a role …. 3
Tragically, in 2023, 20 years after the American invasion and occupation
of Iraq, historians will draw similar conclusions about that unjustified, costly,
and disastrous intervention.
Vietnam is often discussed as a parallel to Iraq these days, but it is a super-
ficial one, with one exception. Then, as now, we witnessed a media too willing
to serve as a mouthpiece for Republican and Democratic administrations alike
and too able to ignore the history, reality, and hypocrisies of our approach
and objectives in Vietnam. Shortly after the Tet Offensive, Walter Cronkite
was both commended and scorned for stating on the CBS Evening News in
February 1968 that “We are mired in stalemate.” Any assessment of Cronkite’s
Epilogue 227
honesty or venality ignored the fact that, long before 1968, the Pentagon
understood the condition of stalemate and politicians were unwilling or
unable to withdraw American forces from Vietnam until 1975, seven years
after that CBS broadcast and after tens of thousands more American troops
had died there.
As we have seen in our recent Iraq experience, the Pentagon’s steadfast
reliability in the face of amazingly corrupt and incompetent policy-makers
and media collusion with the Washington party line are still with us. As a
result, men and women still die for the unclear objectives, impossible dreams,
and incorrigible greed of those inside the Beltway.
Today two generations of Vietnamese struggle to create their own reality,
made possible only after our complete military withdrawal. Today, our
administrations encourage trade with, and travel to, an emerging capitalistic
and peaceful Vietnam. Could this be an Iraqi future? If we leave now, it
indeed could be. But if neoconservatism really is ascendant, we are staying,
and thanks to Petrodollar Warfare, you can begin to understand why.
The United States is facing crises — an energy crisis, a national fiscal cri-
sis, a petrodollar crisis. A phase in our modern American history is ending,
and something new will be either forced upon us or chosen by us, or some
combination of both.
Neoconservatives, accepting a zero-sum game and having a startling lack
of imagination, believe that we need only reject our classical liberal and
republican traditions and forcibly change others, to the extent of taking over
foreign oil-rich countries while intimidating fellow oil-importing countries.
America is a great nation, but the world is far bigger and far more resourceful
than George W. Bush and the neoconservatives can appreciate.
The solid performance of the euro both before and since the invasion of
Iraq and the emergence of a competing petroeuro continue to evolve, seem-
ingly unaffected by our adventure in Iraq and, ironically, even encouraged by
it. The economic marketplace seeks comparative value in currency, in busi-
nesses, in policies, and in countries. Thus the millions of economic and financial
transactions worldwide persist and eventually prevail, while Washington neo-
conservatives nervously finger their beads and seek to implement a global
command economy.
Thomas Jefferson clearly envisioned the disaster that would befall America
if media were restrained, if citizens were uninformed and too trusting of gov-
ernment proclamations, and if the excessive political influence of big business
and special interests were metastasized in the corridors of political power and
at the door of the US Treasury.
While Jefferson had some familiarity with the Jacobins in revolutionary
France, it is doubtful he envisioned the neoconservative persuasion and its
inane and warlike approaches to solving critical problems of excessive debt,
decades of a military “subsidy” artificially depressing domestic oil prices, and

currency collapse. He might have addressed our current and coming crisis as
an oil-dependent nation in terms he knew and loved best — classical liberal
values of free speech, free trade, and free action, constitutional restraint of
centralized government power, strict limitations on executive power, trust in
the creativity and productive power of Americans themselves, and possibly, the
occasional usefulness of refreshing “the tree of liberty with the blood of tyrants”
— tyrants he fully expected to be hiding out in a city called Washington.
Endnotes
Foreword and Introduction

1. Peter Phillips, Censored 2004: The Top 25 Censored News Stories, Seven Stories
Press, 2003, pp. 94–97.
2. Chalmers Johnson, Sorrows of Empire: Militarism, Secrecy, and the End of the
Republic, Metropolitan Books, 2004, p. 283.
3. Association for the Study of Peak Oil and Gas, “Updating the Depletion Model
#392,” <www.asponews.org/HTML/Newsletter44.html>. Note: The calcula-
tion of Peak Oil by the ASPO is updated throughout the year, which can create
small shifts in the calculation for the actual peak. Before the mid-2004 revi-
sion, APSO predicted the peak production in 2010, but now projects it to be
2008.
4. Association for the Study of Peak Oil and Gas, “Country Assessment: Saudi
Arabia,” Newsletter #21, September 2002,
<www.asponews.org/ASPO.newsletter.021.php#99>. Also see “Country
Assessment: Iraq,” September 2002, Newsletter 24, December 2002,
<www.asponews.org/ASPO.newsletter.024.php#118>.
Chapter 1. The American Century: Post_World War II Period

1. John S. Irons, “Beyond the Baseline: 10 year Deficits Likely to Reach $5.9
Trillion,” OMB Watch, August 26, 2003,
<www.ombwatch.org/article/articleview/1768/1/202/>.
2. “2003 Job Searches the Longest in 20 Years,” Reuters, January 9, 2004,
<www.foxnews.com/story/0,2933,107945,00.html>.
3. Martin Wolk, “White House Job Comments Touch a Nerve,” msnbc.com, February
16, 2004, <www.msnbc.msn.com/id/4263244/>.
4. United States Department of Labor, July 2004 employment statistics, August 6,
2004, <www.bls.gov/news.release/empsit.nr0.htm>.
5. “Unemployment Measures Understate Job Slack,” Economic Policy Institute
(EPI), March 2004 bulletin, <www.jobwatch.org/previous.html>.
6. “Growth in Unemployment and Missing Labor Force,” Economic Policy Institute,
July 2004 bulletin.
7. Stephen Roach, “Coping with the Global Labor Arbitrage,” Morgan Stanley,
February 4, 2004, <www.morganstanley.com/GEFdata/digests/
20040209-mon.html>.
8. Kevin Phillips,Wealth and Democracy: A Political History of the American Rich,
Broadway Publishing, 2003.
9. Ibid., p. 153.
10. Administrative Office of the US Courts, “Personal Bankruptcy Filings
Continue to Rise in Fiscal Year 2003,” news release, November 14, 2003,
<www.uscourts.gov/Press_Releases/fy03bk.pdf>.
229
11. Administrative Office of the US Courts, “Bankruptcy Filings Down in Fiscal Year
2004,” news release, December 3, 2004, <www.uscourts.gov/
Press_Releases/fy04bk.pdf>.
12. Roach, op. cit.
13. Richard Duncan, Dollar Crisis: Causes, Consequences, Cures, John Wiley & Sons,
2003, p. 3.
14. Brett Arends, “Economic ‘Armageddon’ Predicted,” Boston Herald, November
23, 2004, http://business.bostonherald.com/businessNews/
view.bg?articleid=55356.
15. William Keegan, “Sinking US Dollar Could Drag World Under: The Bank of
International Settlements Fears a Deflationary Crisis Because the Global Economy
is Too Tied to America,” the Observer, July 6, 2003,
<www.guardian.co.uk/recession/story/0,7369,992277,00.html>.
16. International Institute for Strategic Studies (IISS), 2002 International Defense
Expenditures table, March 19, 2003, <www.iiss.org/>.
17. Ibid.
18. Stockholm International Peace Research Institute (SIPRI), “The Fifteen Major
Spenders in 2003,” <www.sipri.org/contents/milap/milex/
mex_major_spenders.pdf>.
19. Ibid.
20. Ibid.
21. Chalmers Johnson, Sorrows of Empire: Militarism, Secrecy, and the End of the
Republic, Metropolitan Books, 2004.
22. Ibid., pp. 6–7.
23. Zbigniew Brzezinski, speech given at the New American Strategies for Security
and Peace conference, October 28–29, 2003, general website
<www.newamericanstrategies.org/>. Link to speech
<www.newamericanstrategies.org/transcripts/Brzezinski.asp>.
24. Wesley Clark, Winning Modern Wars; Iraq, Terrorism, and the American Empire,
Public Affairs, 2003, p. 130.
25. Ron Suskind, The Price of Loyalty: George W. Bush, the White House, and the
Education of Paul O’ Neill, Simon & Schuster, 2004, p. 86.
26. Richard A. Clarke, Against All Enemies: Inside America’s War on Terror, Free
Press, 2004, pp. 30–32.
27. US Department of State, press remarks of Secretary Powell with Foreign
Minister of Egypt Amre Moussa, Cairo, Egypt (Ittihadiya Palace), February 24,
2001, <www.state.gov/secretary/rm/2001/933.htm>.
28. “Official: US Calls off Search for Iraqi WMDs,” CNN News, January 12, 2005,
<www.cnn.com/2005/US/01/12/wmd.search/>.
29. James Risen and David Johnson, “Threats and Responses: Terror Links; Split at
CIA and FBI On Iraqi Ties to Al Qaeda,” New York Times, February 2, 2003.
30. Michael Klare, Resource Wars: The New Landscape of Global Conflict, Owl Books,
2002.
31. F. William Engdahl, “A New American Century? Iraq and the Hidden Euro-dollar
Wars,” currentconcerns.ch, no. 4, 2003, <www.currentconcerns.ch/archive/
2003/04/20030409.php>.
32. F. William Engdahl, A Century of War: Anglo-American Oil Politics and the New
World Order, 2nd edition, Pluto Press, 2004.
33. Emmanuel Todd, After the Empire: The Breakdown of the American Order,
Columbia University Press, 2004, p. 64.
34. Engdahl, “A New American Century?” op. cit.
Endnotes 231
35. Ibid.
36. Ibid.
37. Ibid.
38. Ibid.
39. Daniel Yergin and Joseph Stanislaw, The Commanding Heights: The Battle for the
World Economy, 1997, pp. 60–64. Excerpt from “The Commanding Heights,
Nixon, Price Controls, and the Gold Standard,” <www.pbs.org/wgbh/
commandingheights/shared/minitext/ess_nixongold.htm>.
40. David E. Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling
and International Markets, Cornell University Press, 1999, pp. 121–123.
41. Ibid, p. x.
42. Ibid, p. 125.
43. Engdahl, A Century of War, p. 130.
44. Ibid., pp. 130–138. Engdahl was able to purchase the secret minutes of a May
1973 Bilderberg meeting from a Paris bookseller. His book contains photocopies
of the cover page and related text discussed in chapter 1. The cover page is
stamped: “SALSJOBADEN CONFERENCE 11–3 May 1973,” “PERSONAL
AND STRICTLY CONFIDENTIAL” and “NOT FOR PUBLICATION EITHER
IN WHOLE OR IN PART”
45. Ibid, p. 140.
46. Duncan, op. cit., pp. 8–9.
48. Ibid.
49. Ibid.
50. Joseph Nye, The Paradox of American Power, Why the World’s Only Super Power
Can’t Go It Alone, Oxford University Press, 2002.
51. John Judis, “History Lesson: What Woodrow Wilson Can Teach Today’s
Imperialists,” the New Republic, June 2, 2003, <www.tnr.com/
doc.mhtml?pt=TQpQdfYWiSnYPS4TSm45pg==>.
52. George Kennan, document PPS 23 in Foreign Relations of the United States,
1948, I, pp. 509–529.
53. Gellman Barton, Washington Post reporter who covered the March 1992 story
on the original version of the Pentagon’s “Defense Policy Guide” as prepared by
Paul Wolfowitcz, <www.pbs.org/wgbh/pages/frontline/shows/iraq/themes/
1992.html>.
54. Project for a New American Century, “Rebuilding America’s Defenses: Strategies,
Forces and Resources for a New Century,” September 2000,
<www.newamericancentury.org/RebuildingAmericasDefenses.pdf>.
55. Ibid.
56. Engdahl, op. cit.
57. Ibid.
58. Ibid.
59. Ibid.
60. Robert Block, “Some Muslim Nations Advocate Dumping the Dollar for the
Euro,” Wall Street Journal, April 15, 2003.
61. Engdahl, A Century of War, op. cit., p. 135.
62. Oliver Morgan and Islam Faisal, “Saudi Dove in the Oil Slick,” Observer,
January 14, 2001, http://observer.guardian.co.uk/business/story/
0,6903,421888,00.html.
63. Spiro, op. cit., p. 110.
64. Engdahl, op. cit., pp. 137–138.
65. Ibid., p. 136.

66. Spiro, op. cit., p. x.
67. Block, op. cit.
68. Charles Recknagel, “Iraq: Baghdad Moves to Euro,” Radio Free Europe, November
1, 2000, <www.rferl.org/nca/features/2000/11/01112000160846.asp>.
69. Ibid.
70. “UN to Let Iraq Sell Oil for Euros, Not Dollars,” CNN News, October 30, 2000,
http://archives.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/.
72. Ibid.
73. Stan Goff, “The War for Saudi Arabia,” freedomroad.org, August 9, 2004,
<www.freedomroad.org/milmatters_30_saudiarabia.html>.
74. California Energy Commission database, “World Gasoline Prices: Average Prices
for February 2004,” <www.energy.ca.gov/gasoline/statistics/world_
gasoline_prices.html>.
75. Davis Wastell, “Bush accuses Clinton of Exploiting Oil Reserves,” Telegraph
(UK), September 24, 2000, <www.telegraph.co.uk/news/
main.jhtml?xml=/news/2000/09/24/wpres24.xml>.
76. “German Truckers Fume over Fuel Prices,” CBS News, September 26, 2000,
<www.cbsnews.com/stories/2000/09/15/world/
main233748.shtml>.
77. “French Fuel Dispute Escalates,” CNN News, September 7, 2000,
http://edition.cnn.com/2000/WORLD/europe/09/07/france.fuel/.
78. Ed Vulliamy, Paul Webster, and Nick Paton Walsh, “Scramble to Carve up
Iraqi Oil Reserves Lies behind US Diplomacy,” Observer, October 6, 2002,
http://observer.guardian.co.uk/iraq/story/0,12239,805580,00.html.
79. “Cheney Energy Task Force Meeting Map of Iraq Oil Fields,” Judicial Watch
Media Advisory, July 17, 2003, <www.judicialwatch.org/071703.c_.shtml>.
80. Simon Nixon, “What’s That in Euros,” Spectator (UK), October 16, 2003.
81. “The Disappearing Dollar,” Economist, December 2, 2004,
<www.economist.com/printedition/displayStory.cfm?Story_ID=3446249>.
83. Todd, op. cit., p. 64.
84. Michael Hudson, Super Imperialism: The Origin and Fundamentals of US World
Dominance, Pluto Press, 2003.
85. Martin Feldstein, quoted in “EMU and International Conflict,” Foreign Affairs,
November/December 1997, pp. 2, 21.
86. William Drozdiak, “Even Allies Resent US Dominance: America Accused of
Bullying World,” Washington Post, November 4, 1997.
88. Ibid.
89. Ibid.
90. Michel Chossudovsky, War and Globalization: The Truth Behind September 11,
Global Outlook and the Centre for Research on Globalization (CRG), 2002, pp.
109–112.
91. Pepe Escobar, “The Roving Eye: Pipelinestan,” Asia Times, January 26, 2002.
92. Coilin Nunan, “Petrodollar or Petroeuro? A New source of global conflict,” Feasta
Review 2, 2004, <www.feasta.org/documents/review2/nunan.htm>.
93. “The Strategy Behind Paris-Berlin-Moscow Tie,” Intelligence, 447, February 20,
2003, <www.intelligence.com>.
94. Ibid.
Endnotes 233
95. Zbigniew Brzezinski, The Grand Chessboard: American Primacy and Its
Geostrategic Imperatives, Basic Books, 1998, p. 40.
97. Project for a New American Century (PNAC),
<www.newamericancentury.org/>.
98. PNAC “Rebuilding America’s Defenses: Strategies, Forces and Resources for a
New Century,” op. cit.
99. Neil Mackay, “Bush Planned Iraq ‘Regime Change’ Before Becoming
President,” Sunday Herald (Scotland), September 15, 2002.
100. Pat Rabbitte, “Iraq Being Used by the US to Flex Its Political Muscles,” Irish
Times, March 31, 2003, <www.ireland.com/focus/iraq/comment/
comment3103b.htm>.
101. “Polls: World Not Pleased with Bush,” Associated Press, March 4, 2004,
<www.cbsnews.com/stories/2004/03/04/world/main604135.shtml>.
102. Will Lester, “Many Think US Wants World Domination,” Associated Press, March
16, 2004, <www.guardian.co.uk/worldlatest/story/0,1280,-3868046,00.html>.
Chapter 2. US Geostrategy and the Persian Gulf: 1945–2005

1. Franklin D. Roosevelt, letter to Stettinius, February 18, 1943.
2. Miles Ignotus (pseudonym suggested to be Henry Kissinger), “Seizing Arab
Oil,” Harper’s Magazine, March, 1975.
3. PNAC, “Rebuilding America’s Defenses: Strategies, Forces and Resources for a
New Century,” September 2000, <www.newamericancentury.org/
RebuildingAmericasDefenses.pdf>.
4. Osama bin Laden, “World Islamic Front Statement: Jihad Against Jews and
Crusaders,” February 23, 1998, <www.fas.org/irp/world/para/docs/
980223-fatwa.htm>.
5. Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power, Free Press,
1991, pp. 404–405.
6. Craig Unger, House of Bush: House of Saud: The Secret Relationship between the
World’s Two Most Powerful Dynasties, Scribner, 2004, pp. 14–15.
7. Agence France-Presse, “US World Leader in Arms Sales, Saudi Arabia No 1
Buyer,” spacewar.com, October 15, 2003, <www.spacewar.com/2003/
031015185737.myb78ucw.html>.
8. President Carter, US State of the Union, January 21, 1980,
<www.jimmycarterlibrary.org/documents/speeches/su80jec.phtml>.
9. Michael Klare, Resource Wars: The New Landscape of Global Conflict, Owl Books,
2002, p. 64.
10. Robert Dreyfuss, “The Thirty Year Itch,” Mother Jones Magazine, March/April
2003, <www.motherjones.com/news/feature/2003/10/ma_273_01.html>.
11. Ibid.
12. Ibid.
13. Michael Klare, “Bush-Cheney Energy Strategy: Procuring the Rest of the
World’s Oil,” Foreign Policy in Focus (FPIF), January 2004,
<www.fpif.org/papers/03petropol/politics_body.html>.
14. Thomas L. Friedman, “A New Mission for America,” International Herald
Tribune, December 6, 2004, <www.iht.com/articles/2004/12/05/
opinion/edfried.html>.
15. Yergin, op. cit.
16. CIA Intelligence Memorandum (ER 77–10147), “The Impending Soviet Oil
Crisis,” March 1977, <www.foia.cia.gov>. In search field, type ER77–10147.
17. Ibid., p. 6.
18. Ibid., p. 3.
19. Richard Heinberg, “Smoking Gun: The CIA’s Interest in Peak Oil,”
museletter.com, August 2003, <www.museletter.com/archive/cia-oil.html>.
20. Dick Cheney, then CEO of Halliburton, 1998, cited by Sitaram Yechury,
“America, Oil and Afghanistan,” Hindu, October 13, 2001,
<www.hinduonnet.com/thehindu/2001/10/13/stories/05132524.htm>.
21. National Energy Policy Development Group (NEPDG), Report, May 2001,
<www.whitehouse.gov/energy/>.
22. Klare, op. cit.
23. Krell Aleklett, “Dick Cheney, Peak Oil, and the Final Countdown,” paper pre-
sented at Uppsala University, Sweden, The Association for the Study of Peak
Oil and Gas, May 12, 2004, <www.peakoil.net//Publications/Cheney_
PeakOil_FCD.pdf>.
24. NEPDG, op. cit.
25. F. William Engdahl, “Iraq and the Problem of Peak Oil,” Current Concerns, no.
1, 2004, <www.currentconcerns.ch/archive/2004/01/20040118.php>.
26. US Energy Department, Iraq Country Analysis Brief, March 2004,
<www.eia.doe.gov/emeu/cabs/iraq.html>.
27. Klare, Resource Wars, op. cit.
28. Michael Klare, Blood and Oil: The Dangers and Consequences of America’s
Growing Petroleum Dependency, Metropolitan Books, 2004.
29. Klare, “Bush-Cheney Energy Strategy,” op. cit.
30. Ibid.
31. Ibid.
32. Barton Gellman, “Keeping the US First: Pentagon Would Preclude a Rival
Superpower,” Washington Post, March 11, 1992, A1. Also see Der Spiegel,
March 16, 1992, pp. 18–21, <www.yale.edu/strattech/92dpg.html>.
33. PNAC, op. cit., p. 26.
34. Gellman, op. cit.
35. Letter to President Clinton dated January 26, 1998, advising military action for
“the removal of Saddam Hussein’s regime from power,” PNAC,
<www.newamericancentury.org/iraqclintonletter.htm>.
36. PNAC, op. cit.
38. Ibid.
39. Ibid.
40. “The War behind Closed Doors,” PBS Frontline, excerpts from a 2003 interview
with Washington Post reporter Barton Gellman on the original 1992 “First Draft
of a Grand Strategy,” <www.pbs.org/wgbh/pages/frontline/shows/iraq/
themes/1992.html>.
41. Joseph Nye, The Paradox of American Power: Why the World’s Only Superpower
Can’t Go It Alone, Oxford University Press, 2002.
43. PNAC, op. cit., p. 8.
44. Mackay, op. cit.
45. PNAC, op. cit.
46. Bernard Weiner, “How We Got into This Imperial Pickle: A PNAC Primer,”
The Crisis Papers, May 26, 2003, <www.crisispapers.org/Editorials/
PNAC-Primer.htm>.
47. Ibid.
Endnotes 235

49. PNAC, op. cit.
50. Office of the President of the United States of America, The National Security
Strategy of the United States (NSS), 2002, p. 29, <www.whitehouse.gov/nsc>.
51. The Crisis Papers (<www.crisispapers.org>) contains a broad compilation of
essays by Bernard Weiner and Earnest Partridge. Partridge, a lecturer-consultant
in environmental and applied ethics, has a website, Gadfly (http://gadfly.igc.org).
Partridge is writing a book, A Progressive Manifesto.
52. Weiner, op. cit.
53. NSS, op. cit.
54. E.J. Currie Duncan, LL.B., LL.M. provided a legal analysis of the 2003 Iraq
War, “Preventive War and International Law after Iraq,” May 22, 2003,
<www.globelaw.com/Iraq/Preventive_war_after_iraq.htm>.
55. “Iraq War Illegal, Says Annan,” AFP/Reuters, September 16, 2004,
<www.abc.net.au/news/newsitems/200409/s1200210.htm>.
56. Julian Darley, High Noon for Natural Gas: The New Energy Crisis, Chelsea Green
Publishing, 2004, back cover. Transcript of interview of Julian Darley discussing
natural gas depletion with Sue Supriano, globalpublic media.com., August 18,
2004, <www.globalpublicmedia.com/INTERVIEWS/JULIAN.DARLEY/>.
57. Victor Mallet, “China Unable to Quench Thirst for Oil,” Financial Times,
January 20, 2004, http://news.ft.com.
58. Gal Luft is executive director of the Institute for the Analysis of Global Security
(IAGS), Washington, DC. Anne Korin is its director of policy and strategic plan-
ning and the editor of Energy Security.
59. Tim Appenzeller, “End of Cheap Oil?” National Geographic, June 2004, p. 89.
60. David R. Francis, “China’s Risky Scramble for Oil,” Christian Science Monitor,
January 20, 2005, <www.csmonitor.com/2005/0120/p16s01-cogn.html>.
61. Stephen Kinzer, “Pipe Dreams: A Perilous New Contest for the Next Oil Prize,”
New York Times, September 24, 1997, IV–1.
62. Rahul Bedi, “India Joins Anti-Taliban Coalition,” Jane’s Intelligence Review,
March 15, 2001, <www.janes.com/security/international_security/news/
jir/jir010315_1_n.shtml>.
63. Jean Charles-Brisard and Guillaume Dasquie, The Forbidden Truth: US-Taliban
Secret Oil Diplomacy, Saudi Arabia and the Failed Search for bin Laden, Nation
Books, 2002, p. 43.
64. Ibid.
65. “Agreement on US 3.2 Billion Gas Pipeline Project Signed,” Global Policy
Forum, December 28, 2002, <www.globalpolicy.org/security/oil/2002/
1230pipe.htm>.
66. Dale Allen Pfeiffer, “Much Ado about Nothing — Whither the Caspian Riches?”
From The Wilderness, December 5, 2002, <www.fromthewilderness.com/
free/ww3/120502_caspian.html>.
67. “New Study Says Caspian Oil Reserve Estimates are Exaggerated,” Alexander’s
Gas & Oil Connections, 7 (13), June 27, 2002, <www.gasandoil.com/goc/
news/ntc22663.htm>.
68. “Kerr McGee Abandons Kazakhstan,” Neftegaz.ru, November 21, 2002,
<www.neftegaz.ru/english/lenta/show.php?id=29666>.
69. “Expert: No Guarantees in Caspian Oil,” Johnson’s Russia List, November 1,
2002, <www.cdi.org/russia/johnson/6529-2.cfm>.
70. “Cheney Energy Task Force Meeting Map of Iraq Oil Fields,” Judicial Watch
Media Advisory, July 17, 2003, <www.judicialwatch.org/071703.c_.shtml>.
71. Ed Vulliamy, Paul Webster, and Nick Paton Walsh, “Scramble to Carve up Iraqi
Oil Reserves Lies behind US Diplomacy,” Observer, October 6, 2002,
http://observer.guardian.co.uk/iraq/story/0,12239,805580,00.html.
72. ASPO, “Iraq Reserves,” Newsletter no. 37, January 2004,
<www.asponews.org/HTML/Newsletter37.html>.
73. “Maps and Charts of Iraqi Oilfields: Cheney Energy Task Force,” Judicial Watch,
<www.judicialwatch.org/071703.c_.shtml>.
74. Iraqi Oil Foreign Suitors: List #1: Algeria through Italy, Judicial Watch,
<www.judicialwatch.org/IraqOilFrgnSuitors.pdf>.
Iraqi Oil Foreign Suitors: List # 2: Japan through Vietnam, Judicial Watch,
<www.judicialwatch.org/IraqOilGasProj.pdf>.
75. Dan Morgan and David B Ottoway, “Iraqi War Scenario, Oil Is the Key Issue;
US Drillers Eye Huge Petroleum Pool,” Washington Post, September 15, 2002.
76. Vulliamy, Webster, and Walsh, op. cit.
77. Ibid.
78. Ibid.
79. Iraq: Country Analysis, Energy Information Administration, November 2004
analysis, <www.eia.doe.gov/emeu/cabs/iraq.html>.
80. Engdahl, “Iraq and the Problem of Peak Oil,” op. cit.
81. ASPO, op. cit.
82. Ibid.
83. Thomas L. Friedman, “A New Mission for America,” International Herald
Tribune, December 6, 2004, <www.iht.com/articles/2004/12/05/
opinion/edfried.html>.
84. Timothy Burn, “Hunt for ‘New’ Oil,” Washington Times, September 28, 2003,
<www.washtimes.com/specialreport/20030928-123431-1449r.htm>.
85. Ibid.
86. Ibid.
87. John R. Talbot, Where America Went Wrong, Financial Times Prentice Hall, 2004,
p. 133.
88. Burn, op. cit.
89. Ibid.
90. Ibid.
91. Thomas I. Palley, Publish What You Pay: Confronting Corruption and the Natural
Resource Curse, Open Society Institute (OSI), July 1, 2003, <www.soros.org/
initiatives/washington/articles_publications/articles/publishpay_20030304>.
92. Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power, Free Press
1991, p. 334.
93. “Behind the Invasion of Iraq” Aspect’s of India’s Economy, 33 and 34, November/
December, 2002, <www.rupe-india.org/>. Also available as a book.
94. Michael Klare, “Transforming the American Military into a Global Oil-Protection
Service,” Global Policy Forum, www.tomdispatch.com, October 7, 2004,
<www.globalpolicy.org/empire/economy/2004/1007oilprotection.htm>.
95. Yergin, op. cit., p. 183.
96. Ibid., p. 334.
97. Ibid., p. 337
98. Ritt Goldstein, “Defense Redefined Means Securing Cheap Energy,” Sydney
Morning Herald, December 26, 2002, <www.smh.com.au/articles/2002/
12/25/1040511092926.html>.
99. Michael Meacher, “This War on Terrorism is Bogus,” Guardian (UK), September 6,
2003, http://politics.guardian.co.uk/iraq/comment/0,12956,1036687,00.html.
Endnotes 237
100. Klare, “Bush-Cheney Energy Strategy,” op. cit.

101. Ibid.
102. Klare, Blood and Oil, op. cit., p. 70.
103. Ibid.
104. Ibid., p. 72.
105. “OPEC Head: We Have No Extra Oil,” Reuters, as reported on CNNmoney.com,
August 3, 2004, http://money.cnn.com/2004/08/03/news/international/
opec.reut.
106. “Russia May Stop Exporting Energy Sources by 2010: Expert,” mosnews.com,
December 7, 2004, <www.mosnews.com/money/2004/12/07/
energyefficiency.shtml>.
Chapter 3. Global Peak Oil: The Millennium’s Greatest Challenge

1. Colin J. Campbell and Jean H. Laherrère, “The End of Cheap Oil,” Scientific
American, March 1998, pp. 80–86, http://dieoff.com/page140.pdf.
2. George Monbiot, “Bottom of the Barrel: The World is Running out of Oil — So
Why Do Politicians Refuse to Talk about It?” Guardian (UK), December 2,
2003, <www.guardian.co.uk/comment/story/0,3604,1097622,00.html>.
3. Chris Skrebowski, “Global Oil Production Now Flat Out,” Energy Institute,
August 2004, <www.energyinst.org.uk/index.cfm?PageID=948>.
4. Inscription at the CIA Headquarters. Almost a direct quote from The Bible, John
8:32 “And ye shall know the truth, and the truth shall make you free.”
5. John Myers, “The Hard Truth About Crude,” Financial Sense, January 16,
2004, <www.financialsense.com/editorials/daily/2004/0116.html>.
6. Anthony H. Cordesman, The US, the Gulf, and the Middle East: Energy
Dependence, Demographics, and the Forces Shaping Internal Stability, Center for
Strategic and International Studies, December 2, 2002, <www.csis.org/
burke/gulf/us_me_energy_demo.pdf>.
7. Colin J. Campbell, “Peak Oil: An Outlook on Crude Oil Depletion, revised
February 2002,” Mbendi Information Services Ltd., <www.mbendi.co.za/
indy/oilg/p0070.htm>.
8. Kenneth A. Dreffeyes, Hubbert’s Peak: The Impending World Oil Shortage,
Princeton University Press, 2001, p. 4. Also see Newsletter “Hubbert’s Peak,”
January 16, 2004, predicted Peak Oil in 2005, <www.princeton.edu/
hubbert/current-events-01-16-04.html>.
9. Ibid., p. 4.
10. ASPO, Newsletter no. 23, November 2002, <www.asponews.org/
ASPO.newsletter.023.php#109>.
11. Fossil Fuels and Human Civilisation, Institute for Environmental and Legal
Studies, July 31, 2004. Source for graph listed as ASPO/Exxon,
<www.intnet.mu/iels/Fossil_Fuels.htm>.
12. Ibid.
13. Jeffrey Ball, “As Prices Soar, Doomsayers Provoke Debate on Oil’s Future,” Wall
Street Journal, September 21, 2004, A1, A14.
14. Ibid.
15. Michael C. Lynch, “The New Pessimism about Petroleum Resources: Debunking
the Hubbert Model (and Hubbert Modelers),” 2003,
<www.energyseer.com/NewPessimism.pdf>.
16. Fossil Fuels and Human Civilization, op. cit.
17. New Projects Cannot Meet World Demand This Decade, ODAC/The Oil
Depletion Analysis Centre, November 16, 2004.
18. ASPO, Newsletter no. 44, August 2004, <www.asponews.org/

HTML/Newsletter44.html>.
19. Skrebowski, op. cit.
20. Jean H. Laherrère, “Forecasting Future Production from Past Discovery,”
OPEC seminar, September 28–29, 2001,
<www.hubbertpeak.com/laherrere/opec2001.pdf>.
21. Skrebowski, op. cit.
22. Dreffeyes, op. cit., p. 7.
23. Laherrère, op. cit.
24. Ibid., p. 15.
25. “World Oil Reserves: The Coming World Oil Crisis,” Figure 3.3, table of
reported oil reserves: 1980–1998, <planetforlife.com/oilcrisis/
oilreserves.html>.
26. ASPO, <www.asponews.org/>.
27. Campion Walsh, “Canada’s Oil Reserves 2nd Only to Saudi Arabia,” Dow Jones
Newswires/ Petroleumworld.com, May 6, 2003, <www.rense.com/general37/
petrol.htm>.
28. Michael C. Ruppert, “Paris Peak Oil Conference Reveals Deepening Crisis,”
From the Wilderness, May 30, 2003, report on research presented May 26–27
at the French Institute for Petroleum (IFP), sponsored by ASPO,
<www.fromthewilderness.com/free/ww3/053103_aspo.html>.
29. Jean H. Laherrère, “Future of Oil Supplies,” Seminar Center of Energy
Conversion in Zurich, May 7, 2003, <www.hubbertpeak.com/laherrere/
zurich.pdf>.
30. Ibid., p. 12.
31. Ibid.
32. Ibid.
33. Julian Darley, High Noon for Natural Gas: The New Energy Crisis, Chelsea Green,
2004.
34. Brad Lemley, “Anything into Oil,” DISCOVER, 24 (05), May 2003.
35. Richard Heinberg, The Party’s Over: Oil, War and the Fate of Industrial Societies,
New Society Publishers, 2003.
36. Jeff Wright, “Energy and the Free Market,” Colorado Free Report, July 12,
2003, <www.freecolorado.com/2003/07/energy.html>.
37. Ibid.
38. Ibid.
39. Heinberg, op. cit.
40. Bill Butler, “The Great Rollover Juggernaut: World Oil Depletion and the
Inevitable Crisis,” section entitled “Alternate Sources of Hydrocarbon Fuels
and Why Most of Them Can’t Help.”
<www.durangobill.com/Rollover.html>.
41. Ibid.
42. Ulf Bossel and Baldur Eliasson, “Energy and the Hydrogen Economy,” Methanol
Institute, Switzerland, January 8, 2003, <www.methanol.org/
pdfFrame.cfm?pdf=HydrogenEconomyReport2003.pdf>.
43. John R. Wilson and Griffin Burgh, “The Hydrogen Report: An Examination of
the Role of Hydrogen in Achieving US Energy Independence,” TMG/ The
Management Group, July 2003, <www.tmgtech.com/images/Energy_
Economics_Rev_B.doc>.
44. Richard Heinberg, Powerdown, Options and Actions For a Post-Carbon World,
New Society Publishers, 2004, pp. 124–129.
Endnotes 239
45. David W. Keith and Alexander E. Farrell “Rethinking Hydrogen Cars,” Science,
301, 2003, pp. 315-316, <www.sciencemag.org/cgi/content/full/301/
5631/315?ijkey=7l8fYOLX4bkJs&keytype=ref&siteid=sci>.
46. Robert Sanders, “Hydrogen-Fueled Cars Not Best Way to Cut Pollution,
Greenhouse Gases and Oil Dependency,” UC Berkeley News, June 17, 2003.
47. “What Is Ocean Thermal Energy Conversion?” National Renewable Energy Lab
reference, <www.nrel.gov/otec/what.html>.
48. William Avery and Chih Wu, Renewable Energy from the Ocean: A Guide to
OTEC, Oxford University Press, 1994. Search for ISBN: 0195071999 at
<www.oup.com>. Also see white paper by Dr. Luis Vega, principal researcher,
Natural Energy Laboratory of Hawaiian Authority (NELHA). Ocean Thermal
Energy Conversion (OTEC), December 1999,
<www.otecnews.org/articles/vega/OTECbyVega_with_photos.pdf>.
49. William Avery and Walter G. Berl, “Solar Energy from the Tropical Oceans,” Issues
in Science and Technology, Winter 1997, <www.issues.org/issues/14.2/avery.htm>.
50. Heinberg, op. cit., pp. 117-137.
52. George Monibot, “Bottom of the Barrel,” Guardian (UK), December 2, 2003.
53. “US Using Anti-Terror War to Gain World Oil Reserves - Soviet Intelligence
Chief,” mosnews.com, March 21, 2005, <www.mosnews.com/news/2005/
03/21/shebarsh.shtml>.
54. “Revealing Statements from a Bush Insider about Peak Oil and Natural Gas
Depletion,” transcript of ASPO Conference with comments of Matthew
Simmons, Paris, France, May 2003, From the Wilderness, June 12, 2003,
<www.fromthewilderness.com/free/ww3/061203_simmons.html>.
55. Ibid.
56. Campbell, op. cit., pp. 151–152.
57. “BP Maps out Iraq Strategy: World’s No. 3 Oil Company Is Getting Ready to
Work on the World’s Second-largest Reserves of Crude,” CNN News, April 9,
2003, <www.cnn.com/2003/BUSINESS/04/09/bp.reut/>.
58. “US Pulls out of Saudi Arabia,” BBC News, April 29, 2003,
<news.bbc.co.uk/1/hi/world/middle_east/2984547.stm>.
59. PNAC, “Rebuilding America’s Defenses: Strategies, Forces and Resources for a
New Century,” September 2000, <www.newamericancentury.org/
RebuildingAmericasDefenses.pdf>.
60. “Saudi Arabia: A Balancing Act,” Stratfor, January 30, 2004, www.stratfor.com.
61. Ibid.
62. Ibid.
63. Michael C. Ruppert, “Peak Oil Revisited: The Bill Collector Calls,” From The
Wilderness, June 21, 2004, <www.fromthewilderness.com/free/ww3/
062104_berlin_peak.html>.
64. CIA Intelligence Memorandum (ER 77-10147), “The Impending Soviet Oil
Crisis,” March 1977, <www.foia.cia.gov>. In search field, type ER77-10147.
65. Heinberg, op. cit., p. 86.
66. Ibid. Includes a powerful, but fictitious, speech entitled: “What Should Have
Been George W. Bush’s Speech to the Nation, 9/11/01,” pp. 76-77.
67. R. James Woolsey, “Defeating the Oil Weapon,” Commentator, 114 (2), September
2002.
68. Stan Goff, “The Infinite War and Its Roots,” From the Wilderness, August 27,
2002, <www.fromthewilderness.com/free/ww3/082702_infinite_war.html>.
69. George Orwell, Ninety Eighty Four: A Novel, Harcourt Brace Jovanovich, 1949.
70. Barton Gellman, “Keeping the US First: Pentagon Would Preclude a Rival
Superpower,” Washington Post, March 11, 1992, A1.
71. Uppsala Hydrocarbon Depletion Study Group, UHDSG, Uppsala University,
Sweden, <www.oilcrisis.com/uppsala/uppsalaProtocol.html>. The Uppsala
Accord, <www.globalpublicmedia.com/DOCS/2004/05/RIMINI%
20PROTOCOL.pdf>.
72. Heinberg, op. cit., p. 168.
73. Adam Porter, “The Death of Cheap Crude,” Aljazeera.Net, August 4, 2004,
http://english.aljazeera.net/NR/exeres/416F7BA6-90FC-48E6-8F4C-
CA30FDD6EB39.htm.
74. Michael Meacher, “Plan Now for a World without Oil,” Financial Times,
January 5, 2004, archived at <www.energycrisis.com/uk/planNow.htm>.
75. Richard Heinberg, “Beyond the Peak ,” Muse Letter, 152, December 2004,
<www.museletter.com/archive/152.html>.
Chapter 4. Manifest Subterfuge: Disguising the Macroeconomic and Geostrategic

Rationales for War
1. US Department of State, press remarks of Secretary Powell with Egypt’s Foreign
Minister Amre Moussa, Cairo, Egypt (Ittihadiya Palace), February 24, 2001.
2. Vice President Cheney, remarks to the Veterans of Foreign Wars 103rd National
Convention, August 26, 2002, <www.whitehouse.gov/news/releases/2002/
08/20020826.html>.
3. Secretary Powell, remarks to the United Nations Security Council, New York,
February 5, 2003, <www.state.gov/secretary/rm/2003/17300.htm>.
4. “Bush: ‘Leave Iraq within 48 hours,’” transcript of Bush’s televised speech to
the nation, CNN, March 17, 2003,
<www.cnn.com/2003/WORLD/meast/03/17/sprj.irq.bush.transcript/>.
5. Prime Minister Blair to House of Commons, March 18, 2003, BBC News,
http://news.bbc.co.uk/nolpda/ukfs_news/hi/newsid_3054000/3054991.stm.
6. G. M. Gilbert, Nurenberg Diary, New York: Signet, 1947.
7. Ron Suskind, The Price of Loyalty, op. cit., pp. 75-76.
8. Glen Rangwala, “Claims and Evaluations of Iraq’s Proscribed Weapons,” Middle
East Reference, February 25, 2003, http://middleeastreference.org.uk/
iraqweapons.html#start
9. UNMOVIC Working Document, Unresolved Disarmament Issues: Iraq’s
Proscribed Weapons Programmes. March 6, 2003, p. 15, <www.un.org/Depts/
unmovic/documents/6mar.pdf>.
10. IAEA Director General Mohamed ElBaradei, statement to the Security Council,
March 7, 2003, <www.iaea.org/worldatom/Press/Statements/2003/
ebsp2003n006.shtml>.
11. Tom Raum, “Cheney: Weapons Report Justifies Iraq War,” Associated Press,
October 7, 2004, <www.wjla.com/news/stories/1004/178314.html>.
12. Peter Beaumont and Faisal Islam, “Carve-up of Oil Riches Begins,” Observer
(UK), November 3, 2002, http://observer.guardian.co.uk/iraq/story/
0,12239,825105,00.html.
13. “In Their Own Words: Iraq’s Imminent Threat,” Center for American Progress,
January 29, 2004, <www.americanprogress.org/site/pp.asp?c=
biJRJ8OVF&b=24970>.
14. “Plans for Iraq Attack Began on 9/11,” CBS News, September 4, 2002,
<www.cbsnews.com/stories/2002/09/04/september11/main520830.shtml>.
Endnotes 241
15. Michael Meacher, “This War on Terrorism Is Bogus,” Guardian (UK), September
6, 2003.
16. Nafeez M. Ahmed, The War on Freedom: How and Why America Was Attacked
September 11, 2001, Media Messenger Books; 3rd edition, 2002.
17. Michael Ruppert, Crossing the Rubicon: The Decline of the American Empire at
the End of the Age of Oil, New Society Publishers, 2004.
18. Danny Postel, “Noble Lies and Perpetual War: Leo Strauss, the Neo-cons, and
Iraq,” October 16, 2003, <www.informationclearinghouse.info/
article5010.htm>.
19. Niccolo Machiavelli, The Prince, written 1513, first published 1532.
20. Michael Ledeen, Machiavelli on Modern Leadership: Why Machiavelli’s Iron Rules
Are As Timely and Important Today As Five Centuries Ago, St. Martin’s Press,
1999, p. 91.
21. “Wolfowitz: Iraq Intel Was ‘Murky,’” CBS News/Associated Press, July 31, 2003,
<www.cbsnews.com/stories/2003/07/31/iraq/main566000.shtml>.
22. Oliver Burkeman and Julian Borger, “War Critics Astonished as US Hawk Admits
Invasion Was Illegal,” Guardian (UK), November 20, 2003,
<www.guardian.co.uk/Iraq/Story/0,2763,1089158,00.html>.
23. Danny Postel, op. cit.
24. Shadia Drury, The Political Ideas of Leo Strauss, Palgrave Macmillan, 1988.
25. Shadia Drury, Leo Strauss and the American Right, Palgrave Macmillan, 1997.
26. Danny Postel, op. cit.
27. Ibid.
28. Ibid.
29. Ibid.
30. Ibid.
31. Louis Dubose, “Bush’s Hit Man: Karl Rove Wins…by Any Means Necessary,”
Texas Observer, March 16, 2001, <www.texasobserver.org/
showArticle.asp?ArticleID=398>.
32. Glenn Kessler, “US Decision on Iraq Has Puzzling Past: Opponents of War
Wonder When, How Policy Was Set,” Washington Post, January 12, 2003, A01,
<www.washingtonpost.com/ac2/wp-dyn/A43909-2003Jan11>.
33. Bob Woodward, Plan of Attack, Simon & Schuster, 2004, p. 30.
34. Ibid., p. 31.
35. Ibid., p. 137. Also see CBS News interview “Woodward Shares War Secrets,”
April 18, 2004, <www.cbsnews.com/stories/2004/04/15/60minutes/
main612067.shtml>.
36. Seymour Hersh, “Selective Intelligence: Donald Rumsfeld Has His Own Special
Sources. Are They Reliable?” New Yorker, May 12, 2003,
<www.newyorker.com/fact/content/?030512fa_fact>.
37. Ibid.
38. Analysis by Jim Lobe, “War Critics Zero in on Pentagon Office,” Inter Press Service
News Agency, August 5, 2003, <www.ipsnews.net/interna.asp?idnews=19542>.
39. Hersh, op. cit.
40. Robert Dreyfuss and Jason Vest, “The Lie Factory,” Mother Jones Magazine,
January/February edition, 2004, <www.motherjones.com/news/feature/
2004/01/12_405.html>.
41. Julian Coman, “Fury over Pentagon Cell That Briefed White House on Iraq’s
‘Imaginary’ Al-Qaeda Links,” Telegraph (UK), July 7, 2004,
<www.telegraph.co.uk/news/main.jhtml?xml=/news/2004/07/11/
wsept11.xml&sSheet=/news/2004/07/11/ixnewstop.html>.
42. Chris Strohm, “Rumsfeld: Pentagon Did Not Bypass Intelligence Community
on Iraq,” govexec.com, March 12, 2004, <www.govexec.com/dailyfed/
0304/031204c1.htm>.
43. Dreyfuss and Vest, op. cit.
44. Hersh, op. cit.
45. Ibid.
47. Kim Sengupta, “Intelligence Agencies Doubt Al-Qaida Links,” UK Independent,
February 4, 2003, http://news.independent.co.uk/world/middle_east/
story.jsp?story=375403.
48. Walter Pincus, “CIA Finds No Evidence Hussein Sought to Arm Terrorists,”
Washington Post, November 16, 2003, <www.washingtonpost.com/wp-dyn/
articles/A46460-2003Nov15.html>.
49. Neil Mackey, “Revealed: The Secret Cabal Which Spun for Blair,” Sunday
Herald, June 8, 2003, <www.sundayherald.com/34491>.
50. Michael Meacher, “The Very Secret Service,” Guardian (UK), November 21,
51. Vice President Cheney, remarks, op. cit.
52. “Quotes: War of Words,” CBC News, September 9, 2002,
<www.cbc.ca/news/iraq/issues_analysis/quotes.html>.
53. “President Bush Outlines Iraqi Threat,” White House press release, October 7,
2002, <www.whitehouse.gov/news/releases/2002/10/20021007-8.html>.
54. Jonathan Schell, “The Case against the War,” The Nation, February 13, 2003,
<www.thenation.com/doc.mhtml?i=20030303&c=6&s=schell>.
55. Wolf Blitzer, “Did the Bush Administration Exaggerate the Threat from Iraq?”
CNN News, July 8, 2003, <www.cnn.com/2003/ALLPOLITICS/07/
08/wbr.iraq.claims/>.
56. Timothy Noah, “Whopper of the Week: Donald Rumsfeld, Meet Dick Cheney,”
slate.msn.com, May 23, 2003, http://slate.msn.com/id/2083532/.
57. Vice President Cheney, transcript, Tim Russert, moderator, September 14, 2003,
http://msnbc.msn.com/id/3080244/.
58. Postel, op. cit.
59. Schell, op. cit. Also see Srdja Trifkovic, “9-11 Commission: No Iraq Link to
Al-Qaida,” choniclesmagazine.org, June 18, 2004,
<www.chroniclesmagazine.org/News/Trifkovic04/NewsST061804.html>.
60. Andrew Buncombe, “Official Verdict: White House Misled World over
Saddam,” Independent, June 17, 2004, http://news.independent.co.uk/world/
americas/story.jsp?story=532341. Also see: Schell, op. cit.
61. G.M. Gilbert, Nurenberg Diary, New York: Signet, 1947.
62. Ian Traynor, “Pakistan’s Nuclear Hero Throws open Pandora’s Box: Investigators
Have Uncovered a Sophisticated Black Market in Components with Islamabad
at Its Centre,” Guardian (UK), January 31,2004, <www.guardian.co.uk/
pakistan/Story/0,2763,1135961,00.html>.
63. CRS Report for Congress, Received through the CRS Web: Order Code RS21293.
“Terrorist Nuclear Attacks on Seaports: Threat and Response,” August 23,
2002, Jonathan Medalia, Specialist in National Defense, Foreign Affairs,
Defense, and Trade Division.
64. “Bush Continues to Insist on Link between bin Laden and Saddam,” CBC News,
June 18, 2004, <www.cbc.ca/stories/2004/06/17/world/bush040617>.
65. Bob Woodward, Bush at War, Simon & Schuster, 2002. Bush quoted in an inter-
view by Bob Woodward in Crawford, Texas, August 20, 2002. Also see CBS
Endnotes 243
News, “A Rare Glimpse inside Bush’s Cabinet,” November 17, 2002,

<www.cbsnews.com/stories/2002/11/17/60minutes/main529657.shtml>.
66. Al Karmen, “Road Map in the Back Seat?” Washington Post, June 27, 2003.
67. Ledeen, op. cit., p. 95.
68. Karen Kwiatkowski, “Career Officer Does Eye-opening Stint inside Pentagon,”
Akron Beacon Journal, July 30, 2003, <www.ohio.com/mld/beaconjournal/
6424570.htm?1c>.
69. Hans Blix, Disarming Iraq, Pantheon Books, 1st edition, 2004.
70. Scott Ritter, Frontier Justice: Weapons of Mass Destruction and the Bushwhacking
of America, Context Books, 2003.
71. Dilip Hiro, Secrets and Lies: Operation “Iraqi Freedom” and After: A Prelude to
the Fall of US Power in the Middle East? , Nations Books, 2004, pp. 453–454,
Appendix II.
73. Joseph Wilson, The Politics of Truth: Inside the Lies that Led to War and Betrayed
My Wife’s CIA Identity: A Diplomat’s Memoir, Carroll & Graf, 2004.
74. John Dean, “The Bush Administration Adopts a Worse-than-Nixonian Tactic:
The Deadly Serious Crime of Naming CIA Operatives,” FindLaw.com, August
15, 2003, http://writ.news.findlaw.com/dean/20030815.html.
75. William Pitt, “Interview: 27-Year CIA Veteran,” www.truthout.org, June 26,
2003, <www.truthout.org/docs_03/062603B.shtml>. McGovern was a CIA
analyst during administrations from Kennedy to George H. W. Bush, chairing
National Intelligence Estimates and briefing the President’s Daily Brief (PDB).
He co-founded Veteran Intelligence Professionals for Sanity (VIPS).
76. Ibid.
77. Ibid.
78. Mark Follman, “The White House War with the CIA,” Salon interview with
Thomas Powers, author of Intelligence Wars: American Secret History from Hitler
to Al Qaeda, 2002, regarding the relationship between the Pentagon, OSP, and
CIA, salon.com, November 8, 2003, <www.salon.com/news/feature/
2003/11/08/powers/>.
80. Philip Sherwell, “The CIA ‘Old Guard’ Goes to War with Bush,” Telegraph (UK),
October 10, 2004, <www.telegraph.co.uk/news/main.jhtml?xml=/news/
2004/10/10/wbush10.xml&sSheet=/news/2004/10/10/ixnewstop.html>.
81. Ibid.
82. “CIA Purge May Go Too Far,” Journal Sentinel, editorial, November 18, 2004,
<www.js.com/news/editorials/nov04/276355.asp>. Also see Knut Royce, “CIA
Plans to Purge Its Agency,” Newsday, Washington Bureau, November 15, 2004.
83. Barton Gellman, “Secret Unit Expands Rumsfeld’s Domain: New Espionage
Branch Delving Into CIA Territory,” Washington Post, January 23, 2005, A01.
84. Marc Cooper, “Soldier for the Truth: Exposing Bush’s Talking-points War,” LA
Weekly, February 20, 2004, <www.laweekly.com/ink/printme.php?eid=51202>.
85. “Spain, United Kingdom of Great Britain and Northern Ireland, and the United
States United: Draft Resolution,” UN Security Council Resolution #1483, passed
May 21, 2003, <www.un.org/News/dh/iraq/iraq-blue-res-052103en.pdf>.
86. President Bush and President Alvaro Uribe of Colombia, White House press
release, September 2002, <www.whitehouse.gov/news/releases/2002/09/
20020925-1.html>.
87. Richard Benson, “Oil, the Dollar, and US Prosperity,” August 11, 2003,
<www.prudentbear.com>.
88. John Chapman, “The Real Reasons Bush Went to War,” Guardian (UK), July
28, 2004, <www.guardian.co.uk/comment/story/0,3604,1270414,00.html>.
89. William Clark, “The Real Reasons for the Upcoming War in Iraq: A
Macroeconomic and Geostrategic Analysis of the Unspoken Truth,” January 2003
(updated January 2004), <www.ratical.org/ratville/CAH/RRiraqWar.html>.
91. “UN To Let Iraq Sell Oil for Euros, Not Dollars,” CNN News, October 30, 2000,
http://archives.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/.
92. Charles Recknagel, “Iraq: Baghdad Moves to Euro,” Radio Free Europe, November
1, 2000, <www.rferl.org/nca/features/2000/11/01112000160846.asp>.
93. Faisal Islam, “Iraq Nets Handsome Profit by Dumping Dollar for Euro,”
Observer, February 16, 2003, http://observer.guardian.co.uk/iraq/story/
0,12239,896344,00.html.
94. Ibid.
95. Ibid.
96. Faisal Islam, “When Will We Buy Oil in Euros?” Observer, February 23, 2003,
<www.observer.co.uk/business/story/0,6903,900867,00.html>.
97. Ibid.
98. Ibid.
99. Personal correspondence.
and International Markets, Cornell University Press, 1999, pp. 121–122.
101. Laurence Vance, “Eight Facts about Iraq.” This addresses the history of covert
CIA operations in Iraq, including involvement by the CIA and Saddam Hussein
in the botched assassination attempt of Abd al-Karim Qasim. January 2, 2004,
<www.lewrockwell.com/orig4/vance2.html>.
102. John S. Irons, “Beyond the Baseline: 10-year Deficits Likely to Reach $5.9
Trillion,” OMB Watch, August 26, 2003, <www.ombwatch.org/article/
articleview/1768/1/202/>.
103. Howard Fineman, “In Round 2, It’s the Dollar versus the Euro,” msnbc.com, April
23, 2003, <www.msnbc.com/news/904236.asp>.
104. Carol Hoyos and Kevin Morrison, “Iraq Returns to the International Oil Market,”
Financial Times, June 5, 2003,
<www.thedossier.uk.co.uk/Web%20Pages/FINANCIAL%20TIMES_
Iraq%20returns%20to%20international%20oil%20market.htm>.
105. Greg Palast, “OPEC on the March,” Harper’s Magazine, April 2005, pp. 74–76.
106. Nayyer Ali, “Iraq and Oil,” PakistanLink, December 13, 2002,
<www.pakistanlink.com/nayyer/12132002.html>.
107. “Albright acknowledges American responsability,” New York Times, March 18, 2000.
108. Stephen Kinzer, All the Shah’s Men: An American Coup and the Roots of Middle
East Terror, John Wiley & Sons, 2003
109. Ibid., pp. 67–69, 79–80.
110. Ibid., p. 87.
111. Ibid.
112. Ibid., pp. 81–82.
113. Ibid., pp. 132–133.
114. Ibid., pp. 157–158.
115. Ibid., p. x.
116. Dan de Kuce, “The Spectre of Operation Ajax,” Guardian (UK), August 20,
Endnotes 245
117. Sun-tzu, The Art of War, Ralph D. Sawyer (trans.), Barnes and Nobles Books,
1994, p. 173.
118. General (Ret) Mohammad Yahya Nawroz, Army of Afghanistan, and LTC (Ret)
Lester W. Grau, US Army, “The Soviet War in Afghanistan: History and
Harbinger of Future War?”1996, United States Army, Foreign Military Studies
Office, Fort Leavenworth, Kansas, http://fmso.leavenworth.army.mil/fmsopubs/
issues/waraf.htm or <leav-www.army.mil/fmso.
119. Bob Woodward, Plan of Attack, op. cit., p. 150
120. Pepe Escobar, “Bremer a Quick Study in Colony Building,” Asia Times, July 12,
2004, <www.atimes.com/atimes/Middle_East/EG12Ak02.html>.
121. “ECB Blasts Bush Economy,” Eupolitix.com, October 30, 2003,
<www.eupolitix.com/EN/News/1947cbee-bbfc-4804-aa90-46521fa785e8.htm>.
122. William Keegan, “Sinking US Dollar Could Drag World Under: The Bank of
International Settlements Fears a Deflationary Crisis Because the Global Economy
Is Too Tied to America,” Observer, July 6, 2003, <www.guardian.co.uk/
recession/story/0,7369,992277,00.html>.
123. “Russia Shifts to Euro as Foreign Currency Reserves Soar,” AFP/Johnson’s
Russia List, June 8, 2003, <www.cdi.org/russia/johnson/7214-3.cfm>. Also see
“Russia May Lift Euro Share of Reserves,” Bloomberg, November 23, 2004.
124. “China to Diversify Foreign Exchange Reserves,” China Business Weekly, May 8,
2004, <www.chinadaily.com.cn/english/doc/2004-05/08/content_328744.htm>.
125. Naomi Klein, “Baghdad Year Zero,” Harpers Magazine, posted September 24,
2004, <www.harpers.org/BaghdadYearZero.html>.
126. Hannah Allam and Tom Lasseter, “Iraqi Whispers Mull Repeat of 1920s Revolt
over Western Occupation,” Knight-Ridder Newspapers, January 27, 2004:
<www.realcities.com/mld/krwashington/7809559.htm>.
127. Klein, op. cit.
128. Henry Porter, “A History of Blood and Deception,” Guardian (UK), August
17, 2004, <www.guardian.co.uk/Iraq/Story/0,2763,1284526,00.html>.
129. Ibid.
130. “100,000 Excess Iraqi Deaths Since War — Study,” Reuters, October 28, 2004,
<www.commondreams.org/headlines04/1028-08.htm>.
131. “The Fog of War,” documentary film, directed by Errol Morris Film, Sony
Classics Production, 2003. Robert McNamara quote from “Lesson #8: Be pre-
pared to reexamine your reasoning.”
132. Julian Coman, “CIA Plans New Secret Police to Fight Iraq Terrorism,”
Telegraph (UK), April 1, 2004, <www.telegraph.co.uk/news/main.jhtml?xml=/
news/2004/01/04/wirq04.xml&sSheet=/news/2004/01/04/ixnewstop.html>.
133. Joshua Hammer, “Digging in: If the US Government Doesn’t Plan to Occupy
Iraq for Any Longer than Necessary, Why Is It Spending Billions of Dollars to
Build ‘Enduring’ Bases?,” Mother Jones Magazine, March/April 2005.
134. “Rebuilding America’s Defenses: Strategies, Forces and Resources for a New
Century,” PNAC, September 2000, p. 14, <www.newamericancentury.org/
RebuildingAmericasDefenses.pdf.420>.
135. Ibid., p. 17.
136. Sir Winston Churchill, 1874 – 1965, <www.quotationspage.com/quote/
27333.html>.
137. Pepe Escobar, “The Shi’ites Faustian Pact,” Asia Times, February 11, 2005,
<www.atimes.com/atimes/Middle_East/GB11Ak02.html>.
138. Michael Hirsh, “Grim Numbers: A US-sponsored Poll Shows Iraqis Have Lost
Confidence in the Occupying Authorities — and That the Majority of Iraqis
Want Coalition Troops out of the Country,” msnbc.com, June 15, 2004 (updated
June 16, 2004), <www.msnbc.msn.com/id/5217874/site/newsweek/>.
139. Escobar, op. cit.
140. Line Thomsen, “Privatising,” Baghdadbulletin.com, March 28, 2005,
<www.baghdadbulletin.com/pageArticle.php?article_id=146&cat_id=1>.
141. Dana Priest and Robin Wright, “Scowcroft Skeptical Vote Will Stabilize Iraq:
Friend of Bush Family Joins Pessimists,”Washington Post, January 7, 2005, A12.
142. Ibid.
Chapter 5. Dollar Dilemma: Why Petrodollar Hegemony is Unsustainable

1. “Euro Set to Be Currency of Oil Pricing?” Scotsman, June 17, 2003,
http://thescotsman.scotsman.com/business.cfm?id=666132003.
2. “Iraq Wants to Stop Trading in US Dollars,” Reuters, September 14, 2000,
<www.arabia.com/business/article/english/0,,28727,00.html>.
3. Robert Block, “Some Muslim Nations Advocate Dumping the Dollar for the
Euro,” Wall Street Journal, April 15, 2003.
4. European Parliament resolution on the Communication from the Commission on
the European Union’s oil supply, COM(2000) 631 — C5-0739/2000 — 2000/
2335(COS), June 14, 2001, <www.europarl.eu.int/plenary/default_en.htm>.
Click on “words in title or text” under “Texts adopted by Parliament,” and
search for “oil supply.”
5. Robin Newbold, “EU Urges Russia to Swap Dollar for Euro,” Asia Times, May
19, 2001, <www.atimes.com/c-asia/CD19Ag01.html>.
6. Ibid.
7. “Economics Drive Iran Euro Oil Plan, Politics Also Key,” IranExpert, August 23,
2002, <www.iranexpert.com/2002/economicsdriveiraneurooil23august.htm>.
8. Ibid.
9. “Should Oil Be Priced in Euros?” Alexander’s Oil and Gas Journal, 9 (4), February
25, 2004; Source, Khaleej Times, <www.gasandoil.com/goc/features/
fex40825.htm>.
10. Larry Birms and Alex Volberding, “US Is the Primary Loser in Failed Venezuelan
Coup,” Newsday, April 21, 2002, <www.ratical.org/ratville/CAH/linkscopy/
USprimaryL.html>. Also see “USA Intelligence Agencies Revealed in Plot to
Oust Venezuela’s President,” vheadline.com, December 12, 2002,
<www.ratical.org/ratville/CAH/linkscopy/USintelVen.html>.
11. “The Choice of Currency for the Denomination of the Oil Bill,” speech by Javad
Yarjani, head of OPEC’s Petroleum Market Analysis Dept., on the International
Role of the Euro, April 14, 2002, <www.opec.org/NewsInfo/Speeches/
sp2002/spAraqueSpainApr14.htm>.
12. Ibid.
13. C. Shivkumar, “Iran Offers Oil to Asian Union on Easier Terms,” Hindu Business
Line, June 16, 2003, <www.thehindubusinessline.com/bline/2003/06/17/
stories/2003061702380500.htm>.
14. Steve Johnson and Javier Blas, “OPEC Sharply Reduces Dollar Exposure,”
Financial Times, December 6, 2004.
15. James Turk, “OPEC Has Already Turned to the Euro,” GoldMoney, February
18, 2004, <goldmoney.com/en/commentary/2004-02-18.html>.
16. Ibid.
17. Ibid.
18. Ron Suskind, The Price of Loyalty: George W. Bush, the White House, and the
Education of Paul O’ Neill, Simon & Schuster, 2004, p. 291.
Endnotes 247
19. Sam Fletcher, “Crude Futures Prices Rise in Shortened NYMEX Session,” Oil
and Gas Exchange, February 20, 2004.
20. Patrick Brethour, “OPEC Mulls Move to Euro for Pricing Crude Oil,” Globe
and Mail, January 12, 2004, <www.theglobeandmail.com/servlet/story/
RTGAM.20040112.wopec0112/BNStory/Business/>.
21. United States Census: Imports of Energy Related Petroleum Products, including
Crude Oil, Exhibit #17, <www.census.gov/foreign-trade/Press-Release/
current_press_release/exh17.pdf>.
22. Christian E. Weller and Scott Lilly, “Oil Prices Up, Dollar Down: Coincidence?”
Center for American Progress}, November 30, 2004,
<www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=258795>.
23. Faisal Islam, “When Will We Buy Oil in Euros?” Observer, February 23, 2003,
<www.observer.co.uk/business/story/0,6903,900867,00.html>.
24. Ibid.
25. Allison Mitchell, “OPEC and the Euro,” Tiscali UK Information, February 2,
2004, http://europe.tiscali.co.uk/index.jsp?section=Current%20Affairs&level=
preview&content=169132.
26. Block, op. cit.
27. Martin Sieff, “Zogby: Iraq War a Mistake on Many Levels,” Arab American
Institute, March 18, 2003, <www.aaiusa.org/news/aainews031803.htm>.
28. John Garnaut, “US Dollar Losing Its Position As Asia’s Reserve Currency,”
www.rense.com, July 17, 2002, <www.rense.com/general27/rec.htm>.
29. “US Dollar on Shaky Ground,” Associated Press, 24 January 2003,
<www.ratical.org/ratville/CAH/linkscopy/USDshakyGrnd.html>.
30. “Canada Sells Gold, Keeps Shift into Euro Reserves,” Forbes, January 6, 2003,
<www.forbes.com/newswire/2003/01/06/rtr838251.html>.
31. Grainne McCarthy, “Dollar’s Decline Starting to Accelerate, Rattling Nerves,”
Dow Jones Newswire, January 25, 2003, <www.ratical.org/ratville/CAH/
linkscopy/dollarDec.html>.
32. Personal correspondence.
33. William Pesek Jr., “Indonesia May Dump Dollar, Rest of Asia Too?” Bloomberg
News, April 17, 2003.
34. Caroline Gluck, “North Korea Embraces the Euro,” BBC News, December 2,
2002, http://news.bbc.co.uk/1/hi/world/asia-pacific/2531833.stm.
35. Block, op. cit.
36. Catherine Belton, “Putin: Why Not Price Oil in Euros?” Moscow Times, October 10,
2003, <www.moscowtimes.ru/stories/2003/10/10/001.html> or archived,
<www.globalpolicy.org/socecon/crisis/2003/1010oilpriceeuro.htm>.
37. Ibid.
38. Ibid.
39. Ibid.
40. Ibid.
and International Markets, Cornell University Press, 1999, p. 121.
42. “Protest by Switching Oil Trade from Dollar to Euro,” Oil and Gas International,
April 15, 2002, <www.agitprop.org.au/nowar/20020415_ogi_switch_trade_
currency.php>.
43. Jean-Charles Brisard and Guillaume Dasquie, The Forbidden Truth: US-Taliban
Secret Oil Diplomacy, Saudi Arabia and the Failed Search for bin Laden, Nation
Books, 2002, pp. 115–139.
44. Ibid, pp. 181–230.
45. Ibid, pp. xxvii–xxx.

46. Ibid, p. xxx.
47. Michael C. Ruppert, Crossing the Rubicon: Decline of the American Empire at the
End of the Age of Oil, New Society Publishers, 2004, pp. 204–207, 220–222.
48. “Has Someone Been Sitting on the FBI?” BBC 2, November 6, 2001, http://
news.bbc.co.uk/1/hi/events/newsnight/1645527.stm. Also see: Mosaddeq
Ahmed Nafeez, The War on Freedom: How and Why America Was Attacked
September 11, 2001, Media Messenger Books; 3rd edition, 2002, pp. 106–113,
176–202.
49. Spiro, op. cit., p. 121.
50. Islam, op. cit.
51. Johnson and Blas, op. cit.
52. James McInerney, “Saudi Sees Stronger Euro Role,” Middle East Finance and
Economy, AME Info, January 12, 2005, <www.ameinfo.com/news/Detailed/
52008.html>.
53. Ibid.
54. Hazel Henderson, “Beyond Bush’s Unilateralism: Another Bi-Polar World or a New
Era of Win-Win?” InterPress Service, June 2002, <www.hazelhenderson.com/
editorials/beyondBush’sUnilaterialism06-02.html>.
55. “Economics Drive Iran Euro Oil Plan, Politics Also Key,” Iran Expert, August 23,
2002, <www.iranexpert.com/2002/economicsdriveiraneurooil23august.htm>.
56. Terry Macalister, “Iran Takes on West’s Control of Oil Trading,” Guardian (UK),
June 16, 2004, <www.guardian.co.uk/business/story/0,3604,1239644,00.html>.
57. “War-Gaming the Mullahs: The US Weighs the Price of a Pre-emptive Strike,”
Newsweek, September 27, 2004, <www.msnbc.msn.com/id/6039135/site/
newsweek/>.
58. Seymour Hersh, “The Coming Wars,” New Yorker, January 24, 2005, pp.
40–47, <www.newyorker.com/fact/content/?050124fa_fact>.
59. “Iran Eyes Deal on Oil Bourse; IPE Chairman Visits Tehran,” Rigzone.com, July
8, 2004.
60. Macalister, op. cit.
61. Shivkumar, op. cit.
62. Macalister, op. cit.
63. “Iran Eyes Deal” op. cit.
64. “Oil Bourse Closer to Reality,” IranMania.com, December 28, 2004,
<www.iranmania.com/News/ArticleView/Default.asp?ArchiveNews=
Yes&NewsCode=28176&NewsKind=BusinessEconomy>.
65. “War-Gaming,” op. cit.
66. “Terror and Regime Change: Any US Invasion of Iran Will Have Terrible
Consequences,” News Insight: Public Affairs Magazine, June 11, 2004,
<www.indiareacts.com/archivedebates/nat2.asp?recno=908&ctg=World>.
67. Tactical analysis of Musa Island, <www.globalsecurity.org/wmd/world/
iran/abu-musa.htm>.
68. James Fallows, “Will Iran Be Next?” Atlantic Monthly, December 2004, pp.
97–110.
69. Ibid.
70. Ibid.
71. “China, Iran Sign Biggest Oil and Gas Deal,” China Daily, October 31, 2004,
<www.chinadaily.com.cn/english/doc/2004-10/31/content_387140.htm>.
72. Michael C. Ruppert, “As the World Burns,” From the Wilderness, December 1,
2004, <www.fromthewilderness.com/free/ww3/120104_world_burns.shtml>.
Endnotes 249
73. Sammy Salama and Karen Ruster, “A Preemptive Attack on Iran’s Nuclear
Facilities: Possible Consequences,” Monterey Institute of International Studies,
August 12, 2004, http://cns.miis.edu/pubs/week/040812.htm.
74. Robert Baer, “The Fall of the House of Saud,” Atlantic Monthly, May, 2002.
75. Will Hutton, “Why Bush Is Sunk without Europe,” Observer, January 26, 2003,
http://observer.guardian.co.uk/print/0,3858,4591686-102273,00.html.
76. Peter Dale Scott, “Bush’s Deep Reasons for War on Iraq: Oil, Petrodollars, and
the OPEC Euro Question,” updated May 27, 2003,
http://ist-socrates.berkeley.edu/~pdscott/iraq.html
77. Johnson and Blas, op. cit.
78. Neil Mackey, “US Admits the War for ‘Hearts and Minds’ in Iraq Is Now Lost,”
Sunday Herald, December 5, 2004, <www.sundayherald.com/46389>.
79. Derek Brown, “Millennium in Review, Day 479, 1956-1957,”Guardian Unlimited
(UK), <www.guardian.co.uk/Millennium/0,2833,246499,00.html>.
80. Ibid.
81. “Should Oil Be Priced in Euros?” op. cit.
82. Peter J. Cooper, “Forget the Oil Price, What About the Euro?” Middle East
Finance and Economy/AME Info, October 14, 2000,
<www.ameinfo.com/news/Detailed/16290.html>.
Chapter 6: Saving the American Experiment

1. Duncan Martell, “US: Ted Turner Calls Rival Media Mogul Murdoch
‘Warmonger,’” Reuters, April 25, 2003, www.worldrevolution.org/article/875.
2. Miren Gutierrez, “World’s Media: Fewer Players, Less Freedom,” Inter Press
Service, March 20, 2004, <www.ips.org/, <www.commondreams.org/
headlines04/0320-01.htm>.
3. Sidney Blumenthal, “Reality Is Unraveling for Bush,” Guardian (UK), June 24,
4. Sara Scavongelli, “Columnist Upset with White House: Helen Thomas Tells
Indy Journalist, Bush Administration and Media Ignore Truth,” The Indianapolis
Star, July 8, 2004, <www.indystar.com/articles/9/160828-7329-009.html>.
5. George Monbiot, “The Newspapers Must Also Be Held to Account for the
Decision to Invade Iraq,” Guardian (UK), July 20 2004,
<www.monbiot.com/archives/2004/07/20/>.
6. Details about Operation Mockingbird, <www.disinfopedia.org/
wiki.phtml?title=Operation_Mockingbird>.
7. “Media Conglomerates, Mergers, Concentration of Ownership,”
http://www.globalissues.org/HumanRights/Media/Corporations/Owners.asp.
8. Peter Phillips, Censored 2004: The Top 25 Censored Stories, Seven Stories Press,
2003, p. 171.
9. John R. Talbot, America Went Wrong and How to Regain Her Democratic Ideas,
Financial Times Prentice Hall, 2004, p. 206.
10. “Reporters without Borders Publishes the First Worldwide Press Freedom Index,”
<www.rsf.fr, October 2002, <www.rsf.fr/article.php3?id_article=4116>.
11. Fraizer Moore, “Bill Moyers Retiring from TV Journalism,” AP News, December
9, 2004, http://apnews.myway.com//article/20041209/D86SBTC80.html.
12. Chalmers Johnson, “The Military-Industrial Man: How Local Politics Works in
America, or a ‘Duke’ in Every District,” www.tomdispatch.com., September 14,
2004, <www.tomdispatch.com/index.mhtml?pid=1818>.
13. “Winning Contractors: US Contractors Reap the Windfalls of Post-war
Reconstruction,” The Center for Public Integrity, October 30, 2003,
<www.publicintegrity.org/wow/report.aspx?aid=65>. Also see “Big Contracts

Went to Big Donors,” CBS News/Associated Press, October 30, 2003,
<www.cbsnews.com/stories/2003/10/30/iraq/main580998.shtml>.
14. “What Did Eisenhower Mean When He Warned of a Military Industrial Complex?
Take a Look at the Carlyle Group.” June 23, 2003, Buzzflash interview with Dan
Briody, author of The Iron Triangle: Inside the Secret World of the Carlyle Group,
John Wiley & Sons, 2003, <www.buzzflash.com/interviews/03/06/
23_briody.html>.
15. “The Full Cost of Ballistic Missile Defense.” The Center for Arms Control and
Non-Proliferation and Economists Allied for Arms Reduction, January 2, 2003.
16. “Straws in the Wind: The Terrorist Attacks and Missile Defense,” Council for a
Livable World, October 1, 2001, <www.clw.org/nmd/sept11.html>.
17. Chalmers Johnson, “Sorrows of Empire,” Global Policy Forum, November
2003, <www.globalpolicy.org/empire/analysis/2003/11sorrow.htm>.
18. “The Real Price of Gas,” International Center for Technology Assessment, 1998,
<www.icta.org/projects/trans/rlprexsm.htm>.
19. “NDCF Report: The Hidden Cost of Imported Oil,” Institute for the Analysis
of Global Security, October 30, 2003, <www.iags.org/n1030034.htm>.
20. Thom Hartmann, Unequal Protection: The Rise of Corporate Dominance and the Theft
of Human Rights, Rodale Books, 2002. Also see: Thom Hartmann and Neil
Cohen (illustr.) We the People: A Call to Take Back America, Coreway Media, 2004
21. The concept of “corporate personhood” was evoked not by the Supreme Court
justices, but by the court reporter in that Supreme Court case. Also see Cecil
Adams, “How Can a Corporation Be Legally Considered a Person?” thestraight
dope.com, September 19, 2003, <www.straightdope.com/columns/030919.html>.
22. “The Danger of American Fascism,” by Henry A. Wallace, in Henry A. Wallace,
Democracy Reborn, New York, 1944, Russell Lord (ed.), p. 259. Sunday April 9,
1944, <www.truthout.org/docs_03/082103F.shtml>.
23. “Record 2004 Lobby Expenditures to Exceed $2 Billion,” Political Money Line,
December 28, 2004, <www.tray.com/>.
24. CNN notes on exit polls: National Election Poll: Frequently Asked Questions,
Edison Media Research / Mitofsky International, 2005, <www.exit-poll.net/
faq.html>. Also see Stephen Freeman, “The Unexplained Exit Poll Discrepancy,”
http://center.grad.upenn.edu/center/get.cgi?item=exitpollp, to be published
in Joel Bleifuss, Was the 2004 Presidential Election Stolen? Seven Stories Press,
2005, <www.appliedresearch.us/sf/epdiscrep.htm>.
25. Johns Hopkins University Information Security Institute Technical Report TR-2003,
July 2003; principal researcher, Dr. Aviel D. Rubin: “Analysis of an Electronic
Voting System,” February 27, 2004, <http://avirubin.com/vote/analysis/>.
26. Report for Maryland’s Department of Legislative Services, conducted by RABA
Technologies. Michael A. Wertheimer, “Trust Agent Report: Diebold AccuVote-
TS Voting System,” RABA Innovative Solution Cell (RiSC), January 20, 2004,
<www.raba.com/press/TA_Report_AccuVote.pdf>.
27. “For Those with a Flair for the Dramatic: How to SpeedHack the Vote, the FAST
Version,” Chuck Herrin, <www.chuckherrin.com/SpeedHackTheVote.htm>.
28. Johnson, op. cit., p. 310.
29. Ibid., p. 312.
30. G.G. Labelle, “Bush Speech Draws Cautious Reaction across Middle East,” The
Olympian, November 8, 2003, <www.theolympian.com/home/
specialsections/War/20031108/144118.shtml>.
31. Ibid.
Endnotes 251
32. Ibid.
33. Ibid.
34. Ibid.
35. Terrorism Questions and Answers Facts Sheet, “Causes of 9/11: US Support for
Repressive Regimes?” Council on Foreign Relations,
<www.terrorismanswers.org/causes/regimes.html>.
36. Rory McCarthy, “We Will Fight until the End, until Each One of Them Dies.”
Guardian (UK), April 8, 2004, <www.guardian.co.uk/Iraq/Story/
0,2763,1188156,00.html>.
Columbia University Press, 2004.
38. Ibid.
39. Bob Woodward, Plan of Attack, Simon & Schuster, 2004, p. 150.
40. Anonymous, Imperial Hubris: The West Is Losing the War on Terror, Brassey’s,
2004, p. 17.
41. Donna Bryson, “Bin Laden Says He Wants to Bankrupt America,” Chicago
Sun-Times, November 2, 2004, <www.suntimes.com/output/terror/
cst-nws-laden02.html>.
42. Dan Eggen and John Mintz, “Seriousness of Threat Defended Despite Dated
Intelligence,” Washington Post, August 4, 2004, A11,
<www.washingtonpost.com/wp-dyn/articles/A37954-2004Aug3.html>.
43. Ibid.
44. Anonymous, op. cit.
45. Ibid.
46. Ibid.
47. Ibid., p. 101.
48. Eric Margolis, “Anti-US militants showing up all over,” Toronto Star, June 23,
2002, <www.ericmargolis.com/archives/2002/06/antius_militants_showing_
up_all_over.php>.
49. Rebecca Carr, “Only 200 Hard-Core Qaeda Members,” Palm Beach Post, July
29, 2002, <www.why-war.com/news/2002/07/29/onlyhard.html>.
50. George Soros, “The Bubble of American Supremacy,” Atlantic, December
2003, <www.theatlantic.com/issues/2003/12/soros.htm>.
51. Jack Kelley, “Al-Qaeda Fragmented, Smaller but Still Deadly,” USA TODAY,
September 9, 2002.
52. Adam Curtis, writer, producer and narrator of the three-part documentary series,
The Power of Nightmares, BBC, http://news.bbc.co.uk/1/hi/magazine/
4171213.stm.
53. Michael Mann, Incoherent Empire, Verso, 2003, pp. 165–170.
54. Anonymous, op. cit.
55. Ibid., p. 241.
56. “Fact Sheet on Counter-terrorism Operations,” International Police/INTER-
POL, <www.interpol.int/Public/Icpo/FactSheets/FS200102.asp>.
57. “What the World Thinks in 2002: How Global Publics View Their Lives, Their
Countries, the World, and America,” The Pew Charitable Trusts, 2002.
58. Oxfam GB/Oxfam International, <www.oxfam.org.uk/what_we_do/
fairtrade/ft_faq.htm#1>.
59. Universal Declaration of Human Rights, adopted and proclaimed by General
Assembly of the United Nations, Resolution 217 A (III), 10 December 1948,
<www.un.org/Overview/rights.html>.
60. International Court of Justice, <www.icj-cij.org/>.
61. Nat Hentoff, “Patriot Act Besieged: Justice Department Honcho Confesses: ‘We
Are Losing the Fight for the Patriot Act,’” Village Voice, May 28, 2004,
<www.villagevoice.com/news/0422,hentoff,53938,6.html>.
62. Nat Hentoff, The War on the Bill of Rights and the Gathering Resistance, Seven
Stories Press, 2003, p. 138.
63. Nat Hentoff, “Declarations of Independence: Since the Reign of King George
III, Resistance Has Been Our Legacy — and to This Day Still Is,” Village Voice,
June 14, 2004, <www.villagevoice.com/news/0424,hentoff,54304,6.html>.
64. John W. Whitehead and Steven H. Aden, “Forfeiting ‘Enduring Freedom’ for
‘Homeland Security’: A Constitutional Analysis of the USA Patriot Act and the
Justice Department’s Anti-Terrorism Initiatives,” American University Law
Review, 51, 2002, pp. 1081–1133.
65. “Analysis of the USA Patriot Act,” Electronic Privacy Information Center (EPIC),
<www.epic.org/privacy/terrorism/usapatriot/>.
66. David Domke, God Willing? Political Fundamentalism in the White House, the
‘War on Terror’ and the Echoing Press”, Ann Arbor, MI: Pluto Press, 2004.
67. “Scholar Analyzes Religious Influence, Political Impact of Bush Administration’s
Strategic Communications in New Book,” Press Release for lecture at Whitworth
College September 22, 2004, <www.whitworth.edu/News/2004_2005/Fall/
DomkeLecture.htm>.
68. Domke, op. cit., pp. ix–xii.
69. “Roosevelt in the Kansas City Star,” May 7, 1918.
70. Richard C. Leone and Greg Anrig Jr., The War on Our Freedoms: Civil Liberties
in an Age of Terrorism, Public Affairs, 2003.
71. Marvin R. Shanken, “Command Central,” interview with General Franks, Cigar
Aficionado, December 2003, p. 90.
72. House of Lords: Opinions of the Lords of Appeal for Judgment in the Cause, A
(FC) and others (FC) (Appellants) vs. Secretary of State for the Home Department
(Respondent), X (FC) and another (FC) (Appellants) vs. Secretary of State for
the Home Department (Respondent), [2004] UKHL 56 on appeal from: 2002
EWCA Civ 1502, par. 96, <www.parliament.the-stationery-office.co.uk/
pa/ld200405/ldjudgmt/jd041216/a&oth-1.htm>.
Chapter 7. Envisioning Progressive Global Reform in the New Century

Columbia University Press, 2004, p. 202.
2. “China Lays Into ‘Bush Doctrine’ ahead of US Poll,” Reuters, October 31, 2004.
3. George Soros, “The Bubble of American Supremacy,” Atlantic, December
2003, <www.theatlantic.com/issues/2003/12/soros.htm>.
4. Christopher Marquis, “US Image Abroad Will Take Years to Repair, Official
Testifies,” New York Times, February 5, 2004, <www.nytimes.com/2004/
02/05/politics/05DIPL.html?pagewanted=print&position=>.
5. “Reckless Administration May Reap Disastrous Consequences,” Senator Robert
Byrd speech in the Senate, February 12, 2003.
6. Margo Kingston, “A Think Tank War: Why Old Europe Says No,” Sydney
Morning Herald, March 7, 2003, http://smh.com.au/articles/2003/
03/07/1046826528748.html?oneclick=true.
7. Marquis, op. cit.
8. “Abu Ghraib Reports: Highest Echelon’s Responsible for ‘Sadism,’” Analysis of
Foreign Media Reaction, Global Security, August 31, 2004,
<www.globalsecurity.org/wmd/library/news/iraq/2004/08/wwwh40831.htm>.
Endnotes 253
9. “Anti-America Europe Would Be Dangerous: Blair,” Daily Times, April 4, 2003,

<www.dailytimes.com.pk/default.asp?page=story_29-4-2003_pg4_2>.
10. T.R. Reid, The United States of Europe: The New Superpower and the End of
American Supremacy, Penguin Press, 2004, pp. 243–244.
11. Ibid., pp. 35–36.
12. Ibid., p. 63.
13. Ibid., pp. 1–6.
14. Ibid., pp. 227–244.
15. Zbigniew Brzezinski, The Choice: Global Domination or Global Leadership, Basic
Books, 2004, pp. 220–221.
16. Novakeo, “Currency Wars: Euro versus Dollar,” Etherzone.com, May 12, 2003,
<www.etherzone.com/2003/nova051203.shtml>.
17. Ibid.
18. Ibid.
19. Paul Isbell, “The Shifting Geopolitics of the Euro,” El Cano Institute, September
28, 2002, <www.realinstitutoelcano.org/analisis/70.asp>.
20. Germar Rudolf, “On the Brink of World War Three: Why the USA Must Wage
War, But Cannot Wage It against the Country It Ought to.” Revisionist 1 (2),
pp. 124–130.
21. Javad Yarjani, “The Choice of Currency for the Denomination of the Oil Bill,”
head of OPEC’s Petroleum Market Analysis Dept., speech on the International
Role of the Euro, April 14, 2002,
22. Michael Vatikiotis and Bertil Lintner, “The Renminbi Zone,” Asia Times, May
29, 2003.
23. Allison Wiggin, “The Era of Fictitious Capitalism,” LewRockwell.com, December
6, 2003, <www.lewrockwell.com/orig4/wiggin-addison1.html>.
24. Edith M. Lederer, “Economist: China Loses Faith in Dollar,” Associated Press,
January 26, 2005, as reported in theWashington Post,
<www.washingtonpost.com/wp-dyn/articles/A39107-2005Jan26.html>.
25. Vatikiotis and Lintner, op. cit.
26. Ibid.
27. Wiggin, op. cit.
28. John M. Glionna, “China, US Each Hold Major War Exercises,” Global Policy
Forum, July 20, 2004, <www.globalpolicy.org/empire/intervention/2004/
0721chinaus.htm>.
29. Todd Stein and Steven McIntyre, “China Dumps Dollars for Oil and Gold,”
www.kitco.com, October 18, 2004, <www.kitco.com/ind/Texashedge/
oct182004.html>.
30. Brett Arends, “Economic ‘Armageddon’ Predicted,” Boston Herald, November
23, 2004, http://business.bostonherald.com/businessNews/
view.bg?articleid=55356.613.
31. Jephraim Gundzick, “Investor Demand to Push Gold Price Higher in 2004,”
Middle East Finance and Economy, AME Info, February 2004,
<www.ameinfo.com/news/Detailed/35090.html>.
32. Jeffrey Sommers, “Dollar Crisis and American Empire,” Znet.com, June 20,
2003, http://zmag.org/content/showarticle.cfm?SectionID=10&ItemID=3803.
33. Heather Stewart, “Japan Threatens Huge Dollar Sell-off ,” Observer, December 5,
2004, http://observer.guardian.co.uk/business/story/0,6903,1366578,00.html.
34. Isbell, op. cit.
35. Ibid.
36. Brzezinski, op. cit., pp. 220–221.
37. Carter Announcement Address for the 1976 Democratic Presidential Nomination,
December 12, 1976.
38. President Bush, speech in Trenton, New Jersey, September 23, 2002.
39. Richard Heinberg, “The Choice of the Elites,” Powerdown: Options and Actions
for a Post-Carbon World, New Society Publishers, 2004, pp. 167–172.
40. Robert Freeman, “Will the End of Oil Mean the End of America?”
commondreams.org, March 1, 2004, <www.commondreams.org/views04/
0301-12.htm>.
41. Ibid.
42. Helon Altonn, “Pipeline Nourishes Ocean Tech Park,” starbulletoin.com, January
2, 2002, http://starbulletin.com/2002/01/03/news/story8.html.
43. Michael Ventura, “Letters at 3 am - $4 a gallon,” Austin Chronicle, April 29,
2005.
44. Kenneth S. Dreffeyes, Hubbert’s Peak: The Impending World Oil Shortage,
Princeton University Press, 2001, p. 149.
and International Markets, Cornell University Press, 1999, p. 157.
46. Bob Fitrakis and Harvey Wasserman, Bush and America’s Willing Executioners
Would Be Guilty at Nuremburg, Free Press, March 2, 2003, <www.common-
dreams.org/views03/0302-07.htm>.
47. New Projects Cannot Meet World Demand This Decade, ODAC/The Oil Depletion
Analysis Centre, November 16, 2004.
48. Eamonn Fingleton, In Praise of Hard Industries: Why Manufacturing, Not the
Information Economy, Is the Key to Future Prosperity, Buttonwood Press, 1999.
Fingleton’s website offers insightful articles on “why manufacturing still matters,”
<www.fingleton.net>.
49. Uppsala Hydrocarbon Depletion Study Group, Uppsala University, Sweden,
<www.oilcrisis.com/uppsala/uppsalaProtocol.html>; Uppsala Accord,
<www.globalpublicmedia.com/DOCS/2004/05/RIMINI%
20PROTOCOL.pdf>.
50. Richard Heinberg, op. cit.
51. Duncan, Dollar Crisis: Causes, Consequences, Cures, John Wiley & Sons, 2003, p. 168.
52. Freeman, op. cit.
53. Danny Postel, “Noble Lies and Perpetual War: Leo Strauss, the Neo-cons, and Iraq,”
October 16, 2003, <www.informationclearinghouse.info/article5010.htm>.
54. Michael Hirsh, “Grim Numbers: A US-sponsored Poll Shows Iraqis Have Lost
Confidence in the Occupying Authorities — and that the Majority of Iraqis Want
Coalition Troops out of the Country,” msnbc.com, June 15, 2004 (updated June
16, 2004), <www.msnbc.msn.com/id/5217874/site/newsweek/>.
55. “To Euro or Not: Should Oil Pricing Ditch the Dollar?” EU Business, February
4, 2004, <www.eubusiness.com/afp/040209030947.7x4cldn1>.
56. Zbigniew Brzezinski, speech at the New American Strategies for Security and
Peace Conference, October 28–29, 2003, general website
<www.newamericanstrategies.org/; speech>,
<www.newamericanstrategies.org/transcripts/Brzezinski.asp>.
57. Richard Heinberg defined “Powerdown” in the opening page of his book.
Power-down \\ n. 1. the energy famine that engulfed industrial nations in the
early 21st century 2. the deliberate process of cooperation, contraction, and con-
version that enabled humanity to survive, Powerdown, Options and Actions for a
Post-Carbon World, New Society Publishers, 2004.
Endnotes 255
Epilogue
1. David Frum and Richard Perle, An End to Evil: How to Win the War on Terror,
Random House, 2003.
2. Amy Svitak Klampe, “Former Iraq Administrator Sees Decades Long US Military
Presence in Iraq,” Government Executive Magazine, February 6, 2004,
<www.govexec.com/dailyfed/0204/020604cdam3.htm>.
3. Dan Oberdorfer, The Two Koreas, Basic Books, 2001, p. 7.
Further Resources on Oil and
Natural Gas Depletion
Campbell, Colin J. The Coming Oil Crisis, Multi-Science Publishing, 2004.

Campbell, Colin J. The Essence of Oil and Gas Depletion, Multi-Science
Publishing, 2003.
Campbell, Colin J. The Truth about Oil and the Looming Energy Crisis, Post
Carbon Books, 2005.
Darley, Julian. High Noon for Natural Gas: The New Energy Crisis, Chelsea
Green, 2004.
Dreffeyes, Kenneth S. Beyond Oil: The View from Hubbert’s Peak, Hill and
Wang, 2005.
Dreffeyes, Kenneth S. Hubbert’s Peak: The Impending World Oil Shortage,
Princeton University Press, 2001.
Hamilton-Bergin, S. The No 19 Bus: The Coming Global Energy Crisis,
<www.no19bus.org.uk/>, 2003.
Hartmann, Thomas. The Last Hours of Ancient Sunlight: Waking up to
Personal and Global Transformation, Three Rivers Press, 2000.
Heinberg, Richard. The Party’s Over: Oil, War and the Fate of Industrial
Societies, Revised and Updated Version, Gabriola Island, BC: New Society
Publishers, 2005.
Heinberg, Richard. Powerdown: Options and Actions for a Post-Carbon World,
Gabriola Island, BC: New Society Publishers, 2004.
Klare, Michael T. Blood and Oil: The Dangers and Consequences of America’s
Growing Petroleum Dependency, Metropolitan Books, 2004.
Klare, Michael T. Resource Wars: The New Landscape of Global Conflict, Owl
Books, 2002.
Kunstler, James Howard. The Long Emergency: Surviving the End of the Oil
Age, Climate Change, and Other Converging Catastrophes of the Twenty-
first Century, Atlantic Monthly Press, 2005.
257
Leeb, Stephen and Donna Leeb. The Oil Factor: How Oil Controls the
Economy and Your Financial Future, Three Rivers Press, 2004.
Roberts, Paul. The End of Oil: On the Edge of a Perilous New World, Houghton
Mifflin, 2004.
Ruppert, Michael C. Crossing the Rubicon: The Decline of the American
Empire at the End of the Age of Oil, Gabriola Island, BC: New Society
Publishers, 2004.
Simmons, Matthew R. Twighlight in the Desert: The Coming Saudi Oil Shock
and the World Economy, Wiley, 2005.
Video (VHS or DVD)

The End of Suburbia: Oil Depletion and the Collapse of The American Dream.
Hosted by Barrie Zwicker. Featuring James Howard Kunstler, Peter
Calthorpe, Michael Klare, Richard Heinberg, Matthew Simmons, Michael
C. Ruppert, Julian Darley, Colin Campbell, Kenneth Dreffeyes, Ali Samsam
Bakhtiari, and Steve Andrews. Directed by Gregory Greene. Produced
by Barry Silverthorn, www.endofsuburbia.com, 2004. Greene is working
on a follow-up film, “Escape from Suburbia.”
Additional Recommended Reading on US Media Censorship:

Borjesson, Kristina (ed.). Into the Buzzsaw: Leading Journalist Exposes the
Myth of a Free Press, Promethesus Books, updated and expanded version,
2004.
Internet Resources
Post Carbon Institute, <www.postcarbon.org/>
Hubbert Peak of Oil Production, <www.hubbertpeak.com/>
Association for the Study of Peak Oil and Gas (ASPO), <www.peakoil.net>
Powerswitch (UK site), <www.powerswitch.org.uk/>
Peak Oil Message Board, <www.peakoil.com>
Index
A
Afghanistan, XVI, 48, 49, 60, 71, Blumenthal, Michael, 20
102, 114, 166, 179 Bretton Woods Monetary
Africa, 66-67, 72, 146, 181, 186. Conferences, 17-22, 37, 143,
See also West Africa 199
Al Qaeda, 14, 70, 89, 98, 108-109, British Petroleum (BP), 31, 35, 39,
148, 218 60, 88, 98, 152
terrorism, 3, 15, 47, 88, 105, Brzezinski, Zbigniew, 13, 40, 133,
176-181 199, 207, 219-220
Alaska, 31, 83 Bush, George W., 45, 50, 95, 106,
Alaska National Wildlife Refuge 109, 110, 115, 172, 188, 208
(ANWR), 82-83 administration, 24, 25, 51, 56,
Allawi, Ayad, 129 59, 111, 113-114, 144, 190.
American Enterprise Institute See also United States; Iraq War
(AEI), 99, 102 Bush, H. W., 46, 52, 53
Annan, Kofi, 58
Anglo-Iranian Oil Company, 124. C
See also British Petroleum Campbell, Colin, XIII, 75, 82, 92
anti-Americanism, 173, 182, 188 Canada, 20, 41, 51, 67, 79-83,
Association for the Study of Peak 144, 164, 183
Oil (ASPO), 4, 64, 78-80, 88, Caspian Sea region, 70-71, 184
258 oil, 27, 49, 51, 59-60, 152,
Austria, 20 210, 224
Axis of Evil, 14, 117, 126, 137, Central Intelligence Agency (CIA),
146 80, 110-114, 123, 125, 150-151,
154, 218
B and Afghanistan, xvi, 60, 98
Baker Institute, 51, 52 and Al Qaeda, 3, 15, 177, 179
Bank of International Settlement and Iraq, 3, 103-104, 109,
(BIS), 12, 20, 128, 149 129-130, 189
Bilderberg Group, 19, 21, 28-30 and Russia, 48, 89
Blair, Tony, 14, 68, 88, 96-97, 106, and Saudi Arabia, 30, 49,
156, 198-199 147-148, 186
Blix, Hans, 97, 111, 114, 189 and Soviet Union, 13, 49
259
Cheney, Dick, 16, 24, 41, 49, 50, Eisenhower, Dwight, 123, 125,
55, 61, 89, 95, 104-109, 111, 159, 166, 171-172
113, 141, 167, 224. energy consumption, 5, 87, 208,
See also National Energy Policy 217. See also Oil.
Development Group energy reconfiguration, 92, 208-221
China, 32-33, 38, 92, 98, 165, Energy Return on Energy Invested
185, 202-204, 209, 223 (EROEI), 79, 82-87
and Iran, 126, 155 Energy Task Force. See National
military, 12-13, 28, 219 Energy Policy Development
oil, 35, 39, 47, 50, 58-63, 78, Group (NEPDG),
89, 155, 160, 210 energy technologies, 2, 5, 83-84,
and US, 8, 11, 69, 72-73, 90, 93-94, 209, 214-215
127-128, 155, 196-197, 216 Engdahl, F. William, I, 17-19, 21,
Clark, Wesley, 13-14 23, 26, 29-32, 38, 40, 50
Clark, William, 223, 225 euro, 4-5, 16, 26-28, 62, 70, 127,
Clarke, Richard, 14, 116 199-201
Coalition Provisional Authority - dollar transition, 17, 31-39,
(CPA), 115, 127, 132, 155 116-123, 136-160, 178,
Cold War, XV-XVI, 18, 19, 23, 46- 216-219, 223, 227
49, 54, 166, 182, 186-187, 198 Europe, 32, 34-35, 37-39, 47-48, 60,
Corporate Average Fuel Efficiency 90, 120-121, 183-184, 198-200.
(CAFÉ), 209 See also European Union
Council on Foreign Relations European Central Bank (ECB),
(CFR), 52, 173 128, 137, 150, 174-175, 201,
Counter-Terrorism Evaluation Group 206-207
(CTEG), 104-105, 110, 113 European Defense Force (EDF),
Cuba, 186-187 183-184
currency risk, 33, 34-35, 138, 141 European Union (EU), 37, 40,
Czech Republic, 12 118, 174, 183, 216, 219-221
military, 199-200, 219
D monetary supply, 201, 206, 207,
Dalvell, Tam, 41 212
Darley, Julian, II, 83 oil, 34-35, 42, 73, 120,
Defense Intelligence Agency (DIA), 138-139, 143, 178
16, 103 and US, 17, 27, 41, 126-127,
De Gaulle, Charles, 19, 37 137, 155-157, 175-176.
Dreffeyes, Kenneth, 76, 80, 210 See also Euro; Europe
Dreyfuss, Robert, 104, 116
Duncan, Richard, 11, 22, 216 F
fair trade, 187
E Federal Bureau of Investigation
Economic Policy Institute, 10 (FBI), 148, 179, 180, 189, 225
Index 261
Fineman, Howard, 121 Intercontinental Ballistic Missile

France, 12, 17, 19, 25, 35, 38, (ICBM), 167
61-63, 98, 121, 127, 223 interest rates, 8, 11, 22, 33-38,
Franks, General, 71, 102, 106, 107, 211, 212
191-192, 193 International Atomic Energy
Freeman, Robert, 209, 217 Agency (IAEA), 97, 184
Frum, David, 24, 224 International law, 196-197, 205,
213, 218-119
G International Monetary Fund (IMF),
G-7, 23, 27, 119, 185, 212 18, 22-23, 31, 128, 159, 187
G-8, 27, 92, 184, 216, International Petroleum Exchange
G-10, 20 (IPE), 151-152
gasoline, 34, 82, 168, 214. International Reserve, 22, 38, 157,
See also Oil 207, 216
Germany, 25, 38, 54, 63, 69, 136, Iran, 27, 47, 81, 88, 116, 123-127,
201, 223 150-160, 173, 205
Goff, Stan, 33, 91 Iranian Bourse, 150-156, 158
Gold, 18-20, 22, 29, 30, 33, 120, Iraq, 166-167, 218, 220, 223
205 and democracy, XVI, 119, 129,
Greenspan, Alan, 214 131, 132, 172
Gross Domestic Product (GDP), 8, insurgents, 72, 112, 129, 132,
36, 119-120, 139, 205, 211 133, 173
Gulf War, 46, 88-89, 97-99, 116, military, 12, 46, 128
122, 174 oil, 3-4, 35, 51, 60, 61-65, 81,
98, 114-115, 117, 122
H and petroeuro, 28, 31-32, 38,
Halliburton, 16, 49-50, 167 116-118, 121-122, 136.
hard power policy, 24, 26, 55, 158, See also Oil for Food
175-176 Iraqi National Congress (INC), 98,
Hartmann, Thom, 168 104-105
Heinberg, Richard, 49, 84-86, 94, Iraq War, 32, 65, 89, 113, 119,
208 129, 137, 224
Hentoff, Nat, 188, 189 invasion, 3, 14-17, 23-24,
Hubbert, M. King, 76-79, 210 40-41, 58, 88, 99-103, 115
Hussein, Saddam, 2, 14-15, 28, 31, occupation, 25, 54-55, 61, 123,
38, 62-65, 97-99, 103-136, 128, 132-133, 158, 172-176.
189, 223 See also Iraq; United Nations;
hydrogen, 85-86, 214 Weapons of Mass Destruction
Isbell, Paul, 200, 206-207
I Islam, Faisal, 98, 117
Ibrahim, Yosef, 144, 146 Israel, 12, 147, 156, 173, 178,
India, 25, 50, 60, 73, 92, 153, 209 182, 218
J N
Japan, 12, 17, 23, 33, 62, 86, 128, National Defense Council
203-206 Foundation, 168
Jefferson, Thomas, 1, 2, 6, 7, 42, National Energy Policy
161, 165, 188, 216, 221 Development Group (NEPDG),
Johnson, Chalmers, 13, 171 36, 49-52, 59-60, 71, 87-89,
98, 119, 224
K National Missile Defense (NMD),
Kinzer, Stephen, 124, 125 56, 166
Kissinger, Henry, 21, 31, 45 National Security Strategy (NSS),
Klare, Michael, 15, 51, 69, 71 25, 56-57, 73
Korea. See North Korea; South natural gas, 60, 82-86, 89, 136,
Korea 152, 204
Kuwait, 46, 61-63, 81 neoconservative policy, 23-27, 40-41,
Kwiatkowski, Karen, 110, 114, 45-47, 52-58, 61, 89, 110, 114,
223-228 131, 145, 154, 172-176,
Kyoto Climate Treaty, 187 224-225, 227.
See also Strauss, Leo.
L New York Mercantile Exchange
Laherrere, Jean, 79, 80, 83 (NYMEX), 151-152
Latin America, 27, 47, 71, 157, Nixon, Richard, 20, 30
186 North American Free Trade
Lynch, Michael, 77-78 Agreement (NAFTA), 83
North Atlantic Treaty Organization
M (NATO), 3, 18, 26, 54, 133,
media, 97, 115, 144, 148 154, 183
conglomerates, 2, 4, 31-32, North Korea, 146, 184-185, 205
107-108, 111, 137, nuclear weapons. See Weapons of
162-165, 193 Mass Destruction
US, XVI, 39, 53, 56, 71,
116-118, 121-122, 160, O
177-180, 189-190, 197, O’Neill, John, 148
226-227 O’Neill, Paul, 14, 97, 116, 141
Non-US, 39, 41, 58, 108, Ocean Thermal Energy Conversion
141, 163, 165, 175, 180, (OTEC), 86, 187, 209, 214
189 Office of Special Plans (OSP),
Mexico, 22, 67 103-106, 110, 111-113, 225
Middle East, 27, 45-50, 59, 67, 73, oil
80, 125, 152, 156-158, 173, consumption, 12, 47, 49-52,
185-186 59, 61, 72, 83, 141, 203
Military expenditures, 12-13. post peak, 91-94, 178, 210, 221
See also individual countries. prices, 21-22, 29, 30-35, 45,
Index 263
47-49, 93, 181, 228 recycling, 21-23, 31-32, 33-34,

production, 50, 72, 160, 214 118-120, 136, 148, 150,
reserves, 58-66, 67, 79-82, 88, 152, 157
92-93, 122, 149, 152. petroeuro, 23-26, 31, 159, 163,
See also OPEC; individual 178, 218-219, 227
countries Pew Global Attitudes Project, 41,
oil bill, 33, 34, 138, 139, 178 183
Oil Depletion Analysis Centre Pfeiffer, Dale Allen, 60
(ODAC), 78 Philippines, 12, 179, 226
Oil for Food Program, 31, 117, Phillips, Kevin, 10-11
121, 122, 136, 223 Phillips, Peter, II, XIII
Operation Ajax, 123, 133 Powell, Colin, 14, 95, 104, 126,
Operation Desert Fox, 46, 62 153, 176
Operation Desert Storm, 16, 46, Powers, Thomas, 111-112
109, 145 preventative warfare, 14, 26, 56-57,
Operation Iraqi Freedom, XVI, 72, 58, 97, 209, 213, 218
123-126, 133 Project Censored, II, XIII, 2, 116,
Operation Rockingham, 106 267
Organization of Petroleum Project for a New American
Exporting Countries (OPEC), Century (PNAC), 25, 41, 43,
4, 20-21, 52, 115-123, 52-58, 71, 73, 102
137-150, 220
oil reserves, 80-82 R
quota wars, 80, 88 Rabbitte, Pat, 41
Osama bin Laden (UBL), XVI, 44, “Rebuilding America’s Defenses,”
45, 98, 109, 148, 174, 176-181 25, 41, 43, 53, 56, 131.
See also Project for a New
P American Century
Pakistan, 14, 41, 59, 60, 108 regime change, 24, 27, 58, 88,
Patriot Acts, 188, 189 125, 178, 180
peak oil, 125, 159, 171, 178, in Iraq, 4, 47, 119
208-210, 215 in Iran, 126, 153-155
global, 75-94, 154 Rice, Condoleezza, 106, 107, 225,
in the Soviet Union, 47-48 Rimini Accord. See, Uppsala Accord
in the US, 19, 48, 76 Ritter, Scott, 106, 111, 189
Pentagon, the, 53, 102, 103-106, Roach, Stephen, 10, 11, 204
110-111, 114, 130-131, 153, 167 Rumsfeld, Donald, 14, 16, 41, 55,
Perle, Richard, 16, 24, 55, 56, 100, 98, 102, 103-104, 107,
224 112-114, 199
Persian Gulf, 43-73, 155, 173, 177, Ruppert, Michael, I, XIII, 60, 155
186 Russia, 27, 32, 35, 38, 39, 40, 54,
petrodollar, 26-28, 30, 154 59, 61-63, 98, 108, 127
military spending, 12 U
oil, 48-49, 51, 52, 65, 72, United Kingdom (UK), XVI, 30,
80-81, 89 138, 156, 159, 180
and petroeuro, 136, 146-147 Brent marker, 151, 152
and US foreign policy, 184 and Iraq oil, 35, 62-63, 65, 98,
and WWII, 69-70 114-115, 119
and Iraq War, 2, 3, 27, 40, 46,
S 88, 97, 113, 129, 134
Saudi Arabia, 13, 14, 20, 23, oil production, 31, 88
30-31, 33, 45, 46 United Nations (UN), 2, 13, 54,
and oil, 47, 49, 50, 60, 64, 69, 58, 128, 175, 205, 223
81, 88, 89 inspections, 3, 62, 97, 106, 111,
and US, 120, 147-149, 174, 114-115 121, 189
178, 186 forces, 109, 174
Saudi Arabian Monetary Authority sanctions, 3, 14, 35, 46, 59, 62,
(SAMA), 20, 21, 30-31, 149 63-65, 95, 98, 136
Scheuer, Michael, 113, 177, 181 Security Council, 3, 35, 38, 40,
Scowcroft, Brent, 133 62, 97, 114, 156.
September 11th, 3, 15, 98-99, 102, See also Oil for Food Program
105, 109, 118, 167, 171, 176, United States (US)
182 budget deficit, 8, 11, 36,
Simmons, Matthew, 83, 88, 89 118-119, 139, 141, 150
Simon, William, 30 domestic oil, 47, 49, 50, 69, 76,
soft power policy, 23, 55, 175 82-83, 210
South Korea, 19, 33, 128, 184, jobs, 9-10, 168, 211, 215, 219
185 military basing, 13, 25, 28,
Soviet Union, 13, 17, 18, 39, 46, 43-44, 70, 114, 128, 174
47-49, 108, 171, 183-184 military expenditure, 12-13, 102,
and Afghanistan, 49, 132, 173 168, 210, 212, 213, 218, 219
Spiro, David, 5, 20-21, 118-119, securities, 20, 23, 30-31, 33, 37,
147, 210 120, 204, 205
Stategic Energy Investment Group taxes, 8, 9, 34, 168, 201, 203,
(SEIG), 144, 146 207, 211, 219, 268
Strauss, Leo, 99-103, 104, 107, trade deficit, 8, 20, 36-37, 133,
217, 225 141, 149, 175, 214-215
Suez Canal Crisis, 157-160, 172 US Department of State, 24, 31,
60, 66, 124, 167, 196
T US Federal Reserve, 11, 19, 21-22,
Taliban, 14, 59-60, 179 31, 33, 36-37, 120, 137, 206-
Todd, Emmanuel, 174-175, 196 207, 212
Turk, James, 140-142 US Geological Survey (USGS), 82,
Turkey, 184, 189, 199-200 83
Index 265
US Treasury, 19, 20, 23, 29, 30- 95, 97, 103-112, 114-115,
31, 33, 37, 149, 204, 227 184. See also United Nations
Uppsala Accord, 92, 215 Weiner, Bernard, 57
West Africa, 27, 51, 66-68, 73, 93,
V 146, 181, 186
Venezuela, XVI, 27, 32, 51, 65, 81, Wolfowitz, Paul, 16, 24-25, 52-54,
82, 137, 186 55, 99-100, 104, 224-225
Vietnam War, 19, 20, 120, 130, Woodward, Bob, 102, 109, 126
175, 190, 226-227 World Bank, 11, 18, 37, 177,
Volcker, Paul, 22, 38 World Trade Organization (WTO),
184, 187, 202
W World Reserve Currency, XVII,
war games, 150, 153, 154-155 16-17, 23, 28, 33, 36, 115-123
war on terrorism, 38, 59, 66, 71, WWI, 69
90, 98, 149-150, 179-180, 196, WWII, 45, 48, 141
205
Weapons of Mass Destruction Y
(WMD), 2-3, 14-15, 57, 62, Yergin, Daniel, 48, 70
About the Author
William R. Clark’s ground breaking

research on the Iraq War, oil currency
conflict, and U.S. geostrategy received
a 2003 Project Censored award, pub-
lished in Censored 2004: The Top 25
Censored Stories. His research on Iran’s
upcoming euro-dominated oil Bourse
received a 2005 Project Censored
award, to be published in the forth-
coming Censored 2006. William is an
Information Security Analyst at Argosy
Omnimedia, and he holds a Master of
Business Administration and Master of
Science in Information and Telecommunication Systems from Johns
Hopkins University. He lives in Rockville, Maryland.
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Advance Praise for

William R. Clark’s Petrodollar Warfare is an oracle of our times, exposing

Petrodollar Warfare by William R. Clark is an important contribution

With Petrodollar Warfare, William Clark provides a badly needed,

Copyright © 2005 William R. Clark.

Cover design and composite illustration by Diane McIntosh.

Printed in Canada. First printing June 2005.

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CHAPTER 1: THE AMERICAN CENTURY: POST-WORLD WAR II PERIOD ....7

CHAPTER 2: US GEOSTRATEGY AND THE PERSIAN GULF: 1945-2005..43

CHAPTER 3: GLOBAL PEAK OIL:

CHAPTER 4: MANIFEST SUBTERFUGE: DISGUISING THE

CHAPTER 5: DOLLAR DILEMMA:

CHAPTER 6: SAVING THE AMERICAN EXPERIMENT ...............................161

CHAPTER 7: ENVISIONING PROGRESSIVE GLOBAL

Epilogue by Lieutenant Colonel Karen Kwiatkowski (Retired)...............223

I am grateful to Chris Plant of New Society Publishers who helped transform

seek knowledge in a effort to gain a better understanding of our complex

— William R. Clark, March 2005

The Lost American Century?

T he world changed forever on September 11, 2001. It could have

allies have contributed, part and parcel, to our involvement in attempts to

In addition, on March 19, 2003, we finally and completely discarded the US

prove to be highly injurious to our civilization. We are allowing our leadership

Jeff Wright is a former Naval Security Group (NSG) Cryptologic Tech,

Hegemony, \He*gem`o*ny\, noun \Greek hegemonia, fr. Hegemonia

If a nation expects to be ignorant and free, in a state of civiliza-

T homas Jefferson’s words foreshadowed the unfortunate state of affairs

The American Century:

Overview of US Economic and Military Hegemony:

We, I hope, shall adhere to our republican government and keep

return. The reasons are simple; most US investment in sustainable markets

with other nations, especially China and Japan. In 2003,

world, $1419 and $1551 respectfully.19 Third-highest is Saudi Arabia at $789,

US military planners working on a five-year, seven-war campaign against

conventional power against his neighbors. So in effect, our policies have

In the high-stakes power game of geostrategy, maintaining the dollar as

The American Century: Three Phases

In 1944 the United States government chose the Mount

dominant power in the Western community of nations. As it commanded

Beginning in the mid-1970s the American Century system of global eco-

Despite the financial windfall enjoyed by the US/UK banking and

Neoconservatives and the “Petroeuro” Challenge

began its decline around 1870, at which time the British

government often resorted to increasingly desperate imperial wars in South

Third Stage of the American Century: Petrodollar Warfare

US Dollar: Fiat Currency or Oil-Backed Currency?

Bilderberg policy was to trigger a global oil embargo in order to

At this point he makes an extraordinary claim: ‘I am 100 percent

As previously noted, the crucial shift to an oil-backed currency took place in

Although rarely debated outside arcane discussions of the global political

Authority to establish a petrodollar recycling system via New York and

World Reserve Currency role, which is underpinned by its petrodollar role.

arrangement, in essence US dollar hegemony is strongly underpinned by

elaborate on the significance of what Vice President Cheney’s Energy Task

US Structural Imbalances: Twin Deficits

Hegemony, \Hegem`ony\, noun \Greek hegemonia, fr. Hegemonia