1. The world is again subjected to rising oil prices and interest rates. An escalation of US war in Middle East is looming. The US, wielding oil and dollar politics, is causing further global tensions. American global oil monopoly companies are reaping huge profits through price manipulation, raising crude oil prices, at will, to more than $70 a barrel. Meanwhile the US Federal Reserves has increased interest rate to 5%, which is highest since 2001 as the US congress enacted another round of tax cuts for the benefit of the American ruling class. The US is creating troubles everywhere and is bullying nations that assert their sovereignty. The US threat of war against Iran is a brazen scheme of escalating war to control the world’s oil and gas resources is also directed against USA’s competitors and all countries that are dependent on imported oil and those that have substantial oil resources and have export capacity. And, since oil is the principally traded commodity worldwide, US monopoly on oil and gas resources is therefore necessary to keep the world economy “dollarized”.
2. The latest upward adjustment of interest rate by the US Federal Reserves as a counter-inflationary measure is intended at mopping-up excess dollars to artificially stabilize the value of the dollar and the rate of profits of American monopoly capitalists particularly the monopoly finance capitalists. This move, which could further bloat the US economic bubble, is counter-productive. The rate of consumption of the American people, which has significantly reduced, will further decrease. The American market would further shrink and this would hurt the exports of China, Japan and the rest of East Asian countries. The US dominance over the world rests on a dollar ruled and denominated global financial and trading system. This exercise, which is mainly political, solely belongs to the US federal state and is secured by US superpower military might. Any dent in this system is a threat to the “security” of US imperialist interests.
3. It should be remembered, what is least known, that the urgent reason for the US aggression and occupation of Iraq is never of course its non-existent weapons of mass destruction (WMD). Iraq, the second largest natural repository of oil, was trading with Europe and other countries in Euro. Trade in Euro, besides oil, is also the immediate reason why the US is fomenting chaos in OPEC member Venezuela. Iran, the neighbor of Iraq, long before it pursued its nuclear program, has been a target of the US. The US carrier task force that was deployed in the Persian Gulf since the 1991 Dessert Storm is not just intended to subject Iraq. Long before the US launched its aggression and occupation of Iraq its sights are trained not only on Iran but the whole Middle East. US aggression and occupation of Iraq is the prelude to US subjugation of the whole Middle East. The occupation of Afghanistan and the US-backed “revolutions” in Georgia, Ukraine, Kyrgyzstan and the secessionist movement in Chechnya are for US control of oil- rich Central Asia and for intervention in Russia.
4. The control of oil, natural gas and other strategic resources through extra-economic means is linked with keeping US Dollar supremacy. This supremacy was unchallenged until the Euro was instituted as the EU currency. Before the Euro was instituted as EU currency, it was already known that there is a plan to set up the Teheran Oil Bourse. The proposal was not actually Iran’s. According to the internet-posted article “Is the Iran Oil Bourse the Casus Belli?” by F. William Engdahl, the proposal was actually Britain’s. According to Engdahl, “The idea of creating a new trading platform in Iran to trade oil and to create a new oil benchmark crude apparently originated with the former Director of the London International Petroleum Exchange, Chris Cook.”
5. Even before the US armed assault against Iran can commence, the prices of crude oil have gone up due to price manipulation by top giant oil companies led by American global oil companies-ExxonMobil, Chevron and ConocoPhilipps— the British-American BP Amoco; the British-Dutch Royal Dutch Shell and Total of France. Consequently surging future and present prices of crude oil is making monstrous oil companies the most profitable firms. ExxonMobil, for one, was the biggest global company in 2005 raking $300 billion in gross sales and $36.1 billion in profits. In the first quarter of the present year 2006, it has already earned $ 8.4 billion in profits.
6. The contest for control of world’s oil and other strategic mineral resources has long been being decided militarily and by financial dominance. The US has clear edge militarily and American oil monopoly companies have grown bigger after having undergone series of mergers and acquisitions since 1998 and giant construction companies of the type of Halliburton specializing in building oil wells, oil rigs and other oil related structures are reaping profits in the plunder and the armament industries in the destruction of living and non-living forces of production and other assets.
Above all, after the US through then President Richard Nixon unilaterally abrogated the Bretton Woods system of fixed exchange rate of $35 per ounce of gold in August 1971, the US dollar from then became the global fiat currency. The US Dollar is not convertible into gold or is not gold based any longer. The dollar was floated and its value from then is determined by the US Federal Reserves and US Treasury based on the economic performance of the US. Whenever the US Federal Reserves adjusts interest rates, the value or price of the dollar in relation to other currencies also changes. But more than this, the dollar is backed by US superpower military might which it wields considerably. It is not remote to surmise that the US objective of monopolizing the world’s oil and gas resources is farther aimed at propping-up the dollar of the moribund, decadent and parasitic capitalist system led by the US.
7. The control of oil and natural gas resources, other than keeping the US oil monopolies’ profits and the US dollar’s hegemony over the world’s financial and trading system, is also directed against imported oil dependent and oil producing and exporting nations that assert their sovereignty. Until now despite advances in use of non-fossil energy sources, oil, coal and natural gas are still the chief fuels for energy generation in the world. This is so because monopolies in oil and internal combustion engine industries are the biggest stumbling blocks to progress in the utilization of non-fossil fuels. China and India, the present leaders in economic growth rates are both pursuing further industrialization. However both are not self-sufficient in oil and natural gas, which are very vital in pursuing their industrialization.
8. The US is aware that China and India, aside from being oil and gas importers from Russia, have oil and natural gas based relations with Iran. China is now the world’s second biggest consumer of oil. India for one is building a natural gas pipeline from Iran. China, on the other hand, has contracts to explore and develop the offshore oil resources of Iran. A US war on Iran could mean confrontation with these two Asian economic behemoths which are both nuclear capable. Last year the US, through State Secretary Condoleeza Rice attempted to block the natural gas pipeline project but only to be publicly rebuked by India. This year President Bush himself visited India (and Pakistan) in a continuing US attempt to win it over and draw it away from its strengthening cooperation with China and Russia.
9. The threat of war against Iran is also meant to ricochet on Russia. By using Iran’s nuclear program as the alibi, the US is extending the threat to Russia, which has supplied Iran with the technology it needs for its nuclear program. The United States is supporting moves by Britain and France to win Security Council approval for a UN resolution that would threaten possible further measures if Iran does not suspend uranium enrichment. On the other hand Russia and China, the two other veto-holding members of the Security Council members, oppose sanctions.
With US occupying Iraq and threatening war against Iran, USA’s rivals in Europe and Asia know too well that Washington is seeking control of Middle Eastern oil and natural gas. Since no one, at least presently, dare to challenge the US militarily China, Japan, India, the European and other East Asian countries look for alternative oil and gas supplies. And Russia is their best option and this poses threat to US hegemony.
According to the International Energy Agency, gas is currently providing 21 percent of global energy and is expected to overtake coal as the world’s second largest energy source by 2030. The world’s gas reserves are largely concentrated in three countries: Russia, Iran and Qatar.
Russia is the world’s second largest oil producer and holds the biggest reserves of natural gas. Russia supplies 70% of Europe’s gas needs. This position is giving Russia an edge to wield. Meanwhile China, which is the second biggest oil consumer and looming 4th biggest economy in the world, is a ready market for both Russian oil and gas.
Last March 20-21, Russian President Vladimir Putin visited China. The state visit is seen as a further sign that Moscow and Beijing are getting closer with one another in response to Washington’s increasingly hostile stance against them. A central issue in the strengthening relationship between the two erstwhile enemies of the US was oil and gas. The most significant of the 29 agreements signed between the two countries was the construction of 2 gas pipelines from eastern and western Siberia to China by 2011 at the total cost of $10 billion. Russia has also agreed to supply China with 60-80 billion cubic meters of gas annually. This is double China’s gas consumption in 2004.
The magnitude of this gas deal has already raised concerns in Europe about its impact on the Russian gas supply to Europe. In response Russia promised to fulfill existing contracts with Europe. But Russia warned that, “Future increases in gas supplies to Europe would be subject to arbitrage between China and European countries”.
Putin and Chinese President Hu stated clearly their “shared interests” in a joint communiqué, which reaffirmed the sovereignty of independent nations-that is, opposition to US intervention in regions vital to Chinese and Russian interests. It called for a “political and diplomatic” solution of the Iranian nuclear standoff, in opposition to the US push for economic sanctions and military action against Tehran.
A particularly significant portion of the communiqué is the declaration for a “triangular cooperative mechanism” with India. China and Russia are wooing India away from the US geo-political scheme to encircle and contain China. An earlier move towards this is when the two countries granted India an observer status in the Shanghai Cooperation Organization (SCO) of Central Asian states. In its last year’s meeting in Kazakhstan, the SCO issued a statement calling on the US to set a deadline to shut down its military bases in Central Asia.
This visit stands in contrast with China’s president Hu Jintao’s visit to the US last month. The US media captured in detail the series of diplomatic snubs, ranging from trivial to flagrant, and outright disrespect wrought by Bush White House on the visit. Hu’s session at the White House was not accorded full state visit. When China’s national anthem was played, the White House announcer wrongly announced “Republic of China” which refers to Taiwan rather than the correct title “People’s Republic of China”. It was not a diplomatic blooper as evidenced by a succeeding misdemeanor. A prominent New York based activist of the banned Falun Gong quasi-religious organization, named Wengyi Wang was permitted into the joint press conference of Hu and Bush. It took several minutes before Secret Service agents were able to stop Wang from shouting anti-Beijing slogans from atop a camera platform and to finally remove Wang from the scene. But the most threatening sign of US-China conflict is in the statement the Pentagon issued on the day of Hu’s visit. The statement clearly indicated US military’s views on China as, “a dangerous potential adversary and (the US military) is repositioning its forces to deal with a future military confrontation with Beijing.”
10. The more expedient context of the US wars of aggression, war threats and gangster diplomacy is the continuing problems in its economy. At the core of these problems are the increasing deficit in the balance of payments and external debt of the US. Last year (2005) the US incurred a balance of trade deficit of $726 billion, more than $200 billion of this is with China alone. The consistent deficit in balance of trade and increasing US defense expenditures, which will reach $663 billion in 2007, are the major factors to US balance of payments deficit and debt. To finance these shortfalls, the US is relying on external borrowing through sale of its debt papers (US Treasury notes). And this irony, the biggest economy is also the biggest debtor in the world is also the biggest or the main source of global financial, economic and political instability.
11. The US current account deficit last year (2005) was 6.4% of its GDP or roughly $600 billion. This year (2006) it is projected to balloon to 7.5% of US GDP or about $700 billion. Around 75%-80% of surpluses of the rest of the world, or more than $2 billion on a daily basis, are required to finance US payments deficits. At this rate of growth of US payments gap, economist William R. Cline estimates that the current account deficit could increase to $1.2 trillion by 2010 and US liabilities (external debt), which is $2.2 trillion at present, could soar to $8 trillion or around 50% of the total GDP of the US.
12. The biggest US creditors are its major trading partners namely Japan, China and other East Asian countries. These countries, which depend much on the US market for their exports, hold the biggest dollar reserves outside the US. The surpluses they earn in trading with the US are invested in US debt papers and in the US financial market in general. From the time the US became a net debtor and net importer by the end of 1980s the world financial system that is ruled by the dollar has turned into an ever-growing financial anomaly. The dollar dominated and denominated global financial and trading system is a political exercise by the US federal state.
This absurdity, which was built on the US sole dominance after World War II and has become absolutely absurd after 1971, manifests not only the contradictions of the US economy particularly but of the capitalist system in its monopoly stage generally. The maintenance of this financial and trading system is key in the survival of monopoly capitalism. The role of imperialist states and their neo-colonial and client states is central to this survival.
13. Nothing perpetuates this moribund system but the fact that the dollar is the US currency secured by its military might which is yet unparalleled by any of its competitors, not even by the EU which owns the Euro. The US maintains and sustains the North Atlantic Treaty Organization (NATO), which has expanded coverage beyond the members of EU, to keep the EU under its sway. The combined defense outlays of EU members for 2007 that amount to $75 billion pales before the $663 US defense budget for the same year. The US has expanded Security Agreement with Japan that includes, among others, Japan spending for US bases in its territory and bankrolling US protective military cover for Taiwan.
14. The American people and the rest of the world are reeling under the weight of US military adventurism disguised as anti-terrorism. The cost is not just financial and economic, as in the loss of jobs and decreasing nominal and real wage; increasing household and per capita debt; loss of personal savings; etc. The cost, moreover, is political and social, as in the subjugation or colonization of whole nations and systematic attack on civil and democratic rights of peoples and abrogation of all the gains the working class have won in past struggles. However, systematic repression is also earning for the imperialists the wrath of the people. Young Americans are resisting military recruitment despite offers of higher compensation and other perks. The new entrants into the labor force of France have determinedly struggled against a government scheme to use them as threat and competitors to present workers. Everywhere in the world people are waging struggles against imperialist wars and wholesale violations of human rights.
15. The intensification of the systemic contradictions of imperialism as exemplified by the US problems is making the capitalist system more and more unbearable for the world’s working class, in particular and people, in general. The integration of the world’s economies under the sway of monopoly finance capital, which hitherto is principally monetized in dollar, has intensified the contradictions between the US and other imperialist countries; between imperialist powers and nations of the world; between imperialism and peoples of the world; and, between the international monopoly bourgeoisie and the world’s working class. But the resolution of these contradictions would not come until their maturity, when the forces of socialism, the antithesis of capitalism, are strong enough to seize power and the world would experience real peace and progress.
16. Until that time, the world would suffer a series of imperialist crises and wars. The developing “Eastern Axis” led by the “triangular cooperative mechanism” of Russia, China and India is a great force that the US has to reckon with. But the resolution of the intensifying conflicts between the US and the “Eastern Axis” does not promise to end imperialism. But imperialism is far from experiencing another period of relative stability like it had after World War II until 1971. Presently a regime of rising oil prices and interest rates come with the scramble for the world’s oil and gas resources. Another financial crisis of greater magnitude than the “Asian” financial crisis of 1997-1998 or another “stagflation” far greater than those of 1974 and 1979-1981 is in the offing. The world’s laboring masses, in particular, and people in general gird for intense struggles.
Marxist-Leninist Party of the Philippines (MLPP)