The Petrodollar

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In many ways the world is still locked into the conditions that began after WWI. The Ottoman Empire existed before the war, from Turkey down to the strategic centres of what is now called Saudi Arabia, eastward to the Mediterranean Sea and westward through Mesopotamia to what is now called Iraq and to the Persian Gulf. Many different people groups existed in this region, but they existed in relative unity, the majority being Muslims.

Oil had been discovered and marketed in the USA and by Russia in the previous century and before WWI began to be utilized in transport. Britain had decided that its vast naval fleet must be modernised to be powered by oil and determined that it must secure reliable oil fields for its strategic security to maintain its broad empire.

Turkey was an ally of Germany and enemy to Britain in the war and was beginning to effectively undermine Britain’s success in the war. Britain then turned to the Saudi tribal leaders and asked them to help in fighting against Turkey as Britain’s ally. Britain promised the Saudis that after the war Britain would give them Palestine, the whole of greater Syria and Mesopotamia through to Iraq and the Persian Gulf. Finally, the Saudis agreed and began to fight against the Turkish forces.

As the war continued, Britain went into secret talks with France over dividing the Middle East after the war. Eventually they agreed that France would have the land from Syria, north to Turkey, and Britain would have land from the Mediterranean Sea through Mesopotamia to Bagdad and the Persian Gulf. They also agreed with Russia that Russia would have access through Istanbul to the Mediterranean Sea. Russia signed onto the agreement between France and Britain on dividing the Middle East. Meanwhile the Saudis knew nothing of this agreement until after the war was over. A further aspect of the agreement was that Palestine would be designated an international region, due to its holy places, so this region also was not given to the Saudis as promised.

After the war, Britain also meddled in the affairs of Iran to secure the oil interests there. Iran democratically elected a leader who nationalised Iranian oil, ending British control. Britain and America stepped in and orchestrated the overthrow of the Iranian leader, to install the Shah of Iran, who acted as a puppet ruler for Western interests, allowing them control over the oil. The Shah of Iran corruptly used the proceeds of the oil for his personal enrichment, while many in Iran suffered. The Iranians blamed the Western powers for this and eventually the Iranian Revolution overthrow the Shah and installed the Islamic government that we see to this day.

After WWI America also needed to secure its own oil interests in the region and it searched for oil in the Arabian territory, where much oil was found and developed by American owned oil companies. Saudi Arabia became the largest oil producer in the world, and slowly overtime the Saudis took ownership of their oil fields. However, other factors meant that their relationship with America remained very important for both nations and has continued strongly to this day.

Going back to WWI, during the war Britain had entered into another agreement to secure Jewish favour in the war. For this, they promised part of the region of Palestine as a homeland for the Jewish people, to have as their own state. Before this time, the Jews lived in other nations scattered in many regions. The agreement between Britain and certain representatives among the Jewish people was also secret and was called the Balfour Declaration. This was also unknown to the Saudi people, to whom Britain had promised the Palestine region.

After the war, Britain dragged their feet somewhat with the Jews, due to the difficult nature of the situation in Palestine. Some Jews organised themselves in activism and terrorism to push the process forward. Eventually, in 1948 Israel became a state and when the Palestinians rose against them, great numbers of Palestinians lost their homes and were driven out into the Gaza Strip and the West Bank. Since then, Israel has continued to take possession over more of the land, resulting in large numbers of refugees, and its sanctions upon the Gaza Strip has brought immeasurable suffering to the population there. At the same time there has been terrorism against the Israeli state, which has often been minimal compared to Israeli fire power.

In the Yom Kipper War of 1973, an alliance of Middle Eastern nations launched an attack against Israel which was compelled and defeated. This angered the Saudis, however America had plans to keep them as friends and bring them to accept the Israeli State and its actions against the Palestinians.

These plans were to do with the problems America had with their own dollar currency.  After WWI, the victorious powers had agreed that the American dollar should be the global currency of trade. The dollar was linked to gold, so that any nation who held dollars could exchange them for gold whenever they wanted. This worked, and so long as America honoured its gold exchange, nations had confidence in the dollar. However, by the 1970’s America began to default on their gold exchange. Their industrial growth and exports began to slow, and their gold reserves began to diminish. This meant that their currency was in danger of crashing and this could greatly destabilise the American economy and all other economies that were America’s allies. This is where America’s new agreement with the Saudis came in.

Saudi Arabia was the leading oil producer in OPEC, a consortium of oil producers. America struck a deal with the Saudis to link oil to the American dollar. Any nation buying oil from OPEC would buy the oil in American dollars. These dollars would be funded through banks, like the Chase Manhattan Corporation, with chairman David Rockefeller. American banks would issue treasury bills in exchange for oil sales in its currency. America was affectively building debt, with their government backed guarantee that it would honour its treasury bills with cash.  This was called the “petrodollar,” with all sales of oil linked to the dollar. It meant the dollar could hold its value and place as the currency of world trade so long as the global demand for oil remained strong.

What did Saudi Arabia get from the petrodollar deal? It was able to secure a stable market for the global sale of its oil, which has greatly enriched the nation. Part of the agreement was also that America would sell major levels of military arms to the Saudis. This agreement is intact until the present day, with the most recent arms deal being worth $ 350 billion over ten years. This makes the Saudis one of the strongest military powers in the Middle East region. The Saudis not only agreed to the petrodollar, but also to accept Israel’s position in Palestine as America defined it. This also brought Egypt into peace with Israel (both of these nations being armed by major arms purchases from America), with the only real remaining enemy of Israel being Iran, who was not part of the Saudi alliance.

After the Iranian Revolution (1979), America funded Saddam Hussein of Iraq and Western nations helped his development of chemical weapons, which were used against Iranian troops in the Iraq – Iran war of 1980-1988. The total soldiers’ lives lost in the war was one million and this left a lot of hurt and pain among the Iranian people.

In the years that followed, Iran worked on a policy of supporting the Palestinians and competing with Saudi Arabia for influence in the wider region of the Middle East. Iran worked with Syria and especially had influence over Lebanon through the Hezbollah militant organisation, through which they tried to support the causes of the PLO (Palestinian Liberation Organization) against Israel. Their purpose wasn’t to spread militant Islam but was more secular, to support the PLO’s in its bid for human rights. Iran also had Soviet, and later Russian, support, which still exists to this day. An alliance developed between Russia, Iran and Syria on one hand, and Britain, America and the Saudis on the other. This wider conflict continues to this day.

In more recent years we had the rise of a new phenomenon, the Sunni militant groups, with a militant Islamic cause. These were financed partly by the Saudis, buying off the groups so they would not destabilise the Saudi government. These groups spread aggressive “Islamisation” in other nations and launched Hamas as a new militant group against Israel, much more aggressive than the PLO. They also evolved into many other groups, associated with the Taliban in Afghanistan (which was birthed by American support in its fight against the Soviets in Afghanistan in the 1980’s) and with the later groups like Al Qaeda and ISIL.

The Sunni militant groups have supported Saudi and American aspiration in the wider area. The Saudis still think they should have control over the wider region, as originally promised them by Britain, and America is still trying to gain dominance in the area, pushing out Russian influence with its allies Syria and Iran. The Saudi/ American cause also continues to uphold the petrodollar agreement, which is upheld so long as this alliance strengthens. To some extent, the world economy, as we know it in its present structure, depends on this Saudi/ American alliance and its victory. These militant groups, with Western support, have caused the greatest numbers of displaced persons and refugees in the history of humanity.

Both Saddam Hussein and Muammar Gaddafi became a threat to the petrodollar, making moves to exchange their rich oil reserves for currencies other than America’s dollar. Though Hussein and Gaddafi are now gone, this threat to the petrodollar continues and might be even gaining strength through an economic alliance of China, Russia, India, Iran, Venezuela and Brazil. There is a heightened sense of concern about the petrodollar, future world trade and the American economy, which is bringing anxiety in world relations and prospects for ongoing peace. The fall of the dollar would also greatly impact the Saudi’s balance of power in the world, meaning there is a lot at stake in our current global situation.

The sanctions that have been used as implements in coercion in these global matters have also taken a huge toll on innocent populations. These include nations like Nigeria in its past, and nations in the Middle East. The cost in human suffering from sanctions, wars and terrorism in nations like Iraq, Iran, Libya, Syria, Nigeria and Venezuela have been enormous. They have brought unrepaired mass destruction to infrastructure, mass poverty, a destruction of health care and education and ongoing displacement to hundreds of millions of people. The recent onslaught of ISIL has only made this much worse, continuing the destruction in regions where Western wars have brought power vacuums. This is the price others pay for the current global economic structure, which is holding down interest rates and inflation in Western nations, improving living standards for the rich.

The recent contribution of Iran in defeating ISIL in Iraq and Syria has strengthened their influence in these nations. Russia also stood by the government of Syria during one of the worst periods of destruction to visit a nation. Nothing has been achieved in this horrific period in stabilizing the region under American leadership. Rather, it seems that Russian and Iranian influence may come out stronger than before, after millions have been killed, as these powers have offered the most stabilising influences through this trouble. The recent killing of General Qassem Soleimani by America may have been an attempt to curtail Iranian influence in the region, or part of a series of acts that are designed towards this purpose of Iranian containment. But Iran’s influence among the Shia Muslims in Iraq may be growing, after Saddam’s power in holding these Shia at bay was toppled by America’s war against him. Iraq may be shifting towards an Iranian/ Russia friendship, which they may find more stabilising. We don’t know yet, but it is clear, once again, that there is much at stake, from the point of view of strategic competitive national interests.

We don’t know the extent America may go to maintain the current “world order,” especially given their far superior military economy. It’s also hard to estimate what economic pressure they can bring upon China to curtail its growth and stifle its emerging power in the world. It’s also hard to know how America will finally respond to the “climate change” lobby that is insisting more and more on moving away from fossil fuels, including moving the world economy away from oil. This would challenge the petrodollar and current world trade around the American dollar, with potential drastic consequences for America and its allies. Moving away from fossil fuels would bring about a new “world order,” and whether or not America would allow this to happen is another nervous question that we are facing at our present time in history.

When we are talking about the “climate change lobby,” the phrase comes to mind, “Follow the money.” Those supporting the “climate change lobby” are hugely wealthy and are building investments in new technologies outside of oil. They have huge amounts of money to invest in the “climate change lobby” and they stand to make huge amounts of future profits from the new industries that will emerge from new “climate friendly technologies,” especially if they can develop a more global trade system that isn’t dominated by a dollar that is in serious risk of collapsing. On the other hand, the current world order is making huge profits from the fossil fuel and oil sector and many wealthy people have a vested interest in keeping oil technologies central to our global economy. On either hand, this is about business, and the lobbying going on is not about the best interests of the poor, the refugee, humanity or the environment.

What are some other factors that characterise the current “world order?”

  1. Oil companies pollute provinces where oil is mined. This is evident in places like the Nigerian delta, where the fishing industry for hundreds of thousands of people has been largely affected, bringing increase poverty to many. This also brings instability to the region, including the rise of militancy and crime to unliveable levels.
  2. Mining companies (and this would be the case no matter what is mined, whether fossil fuels or other resources) do not rehabilitate the region they mine. Promises of land restoration are not kept or kept only in part. Companies save money by ruining environments, habitats, animal life and ecosystems. We see this in Nigeria, for example, where mining companies have left large areas of erosion and unfarmable land, bringing more conflict to places where farming resources are in decline. In Australia, for example, licences are given to mining companies that ruin large areas of land, forestation, farming regions, water reservoirs, and animal habitat. In other nations, crucial forestation is cleared and indigenous peoples and displaced.
  3. Foreign companies buy up natural resources for next to nothing compared to their true value, effectively stealing from the millions of people in those nations, with no effective health care, pensions or education for much of the world’s population. The injustice this brings to local nations often results in militancy and anarchy, which, just in recent decades, has brought the loss of hundreds of thousands of lives.
  4. European banks receive fraudulent deposits to the tune of billions of dollars, which have been stolen from nations where millions of people suffer the consequences. These European banks hold the money, bringing liquidity to Western economies, even after those who deposited the funds have died. Much of this money is never paid back to the nations it was taken from.
  5. Huge amounts of financial loans to struggling economies are not forgiven. This has a crippling effect on those local economies, with hyperinflation, making pension funds worthless. Millions of elderly people have suffered deprivation as a result of their nation’s massive interest payments abroad, which the Old Testament speaks specifically against. Millions of youth in these nations go uneducated and unemployed due to their economies being destroyed by its interest payments to Western nations. At the same time, wealthy Western banks are forgiven their debts in times of crisis, like that of 2008 banking crash. Banks were bailed out to the tune of $ 1 trillion.
  6. Trillions of dollars are kept in offshore tax havens by the wealthy of this world, while hundreds of millions of people live in abject poverty, hunger and disease. Over half of the world’s total wealth is now owned by 1% of the world’s population.
  7. Governments allow the richest people in the world to go tax free, with many of the largest corporations paying no, or minimal tax. These governments then turn to the mases of workers in Western countries to foot the nation’s tax bill.
  8. “Austerity” is a policy in some Western nations, where governments cut back on helping the poor, uneducated, and many of the sick and disabled members of their society, claiming not to have the funds available. Homelessness in these nations is growing and home ownership is falling.
  9. Workers that are made redundant as one industry closes are not retrained and redeployed in new emerging industries, with government or corporate sponsorship. The wealthy people simple move their capital to new markets, without any sense of responsibility for those left behind in the former markets and industries. This makes the debate between fossil fuels and climate friendly technologies a “do or die” affair for many people, whose lives are tied to farming or jobs in industries that are at threat of being closed.
  10. Rich nations are significantly reducing their aid to poorer nations. Former aid levels were never as high as what rich countries took from poorer nations in terms of resources, market share, interest payments for debt, and fraudulent deposits in Western banks. The aid given in return was always far less than what was extracted from these nations. But recently aid has dropped considerably, with rich nations abandoning the poor, “investing aid” only in regions that benefit them strategically, or that give some payback to the richer economy.

We could keep enlarging this list, but this brief sketch shows us the kind of world we have made. This brings two things to mind considering the current climate debates that dominate our times:

  1. Those who invest in the “climate change lobby,” who sponsor a shift to new technologies, do not invest anything like as much in addressing any of the major concerns and injustices above. This does bring into serious doubt the ethics and “moral high ground” of the very wealthy climate lobby.
  2. Many Christians do not support the “climate change lobby,” but instead support the current “world order.” The 10 points above show the kind of “world order” those Christians are supporting and the fact that there is no “moral high ground” at all in supporting such an order.

The tragedy of the last 100 years since WWI to this present time is that the world has followed a deepening division in relationships, that was firmly established by the secret deals for the Middle East between Britain and France, and the growing strategic interest tussles between the Soviet/ Russia and America. This has been the cause of the rise of fundamentalism on both Christian and Islamic sides, which is having a detrimental impact on relationships around the world. This has brought decimation to environments, peoples and nations. “End-times” teaching, so rampant in many churches, around issues in the Middle East, has fed into this history as propaganda. These “end-times” ideas are as false and destructive as they were in days of Jesus, when many of the Jews then sought the destruction of their enemies. Jesus was explicitly against that kind of worldview.

Jesus taught us to seek renewed community by caring for our neighbours and enemies. This is the exact opposite of the propaganda and strategic logic that rules many sermons today, bringing a philosophy of division and destruction into all our relationships. We must pull back from a fundamentalism that does no more than attempt to protect our market interests and personal wealth, and instead seek healing for our global relationships. Only when this is achieved, when we can live and work cooperatively again, can issues of the environment be addressed. And issues of the environment are vital to address, before habitats and ecosystems on land in the sea are further destroyed. Improving peace means we stop destroying the world to compete with our “enemies.” This peace is not an antichrist doctrine, as some teach, but is the way of the cross and reconciliation that Jesus told us to follow. It is his kingdom that has come into our lives, to make all things new. Like Jesus said before the world powers killed him, “If only you knew the ways of peace.” If we don’t learn them, “Our house will be made desolate.”

To say we can’t live in peace with Muslims is propaganda, told by those who don’t want to take up their cross and serve. We have often lived in peace before, and the life of peace Jesus calls us to live among others, including our enemies, is the gospel we are sent to spread. Without seeking to achieve this, we have no gospel to share and are denying our Great Commission to take up our cross among the peoples of the world.