The Oil Weapon
The present Anglo-American financial domination of virtually the entire world was achieved through a series of coldly calculated and brilliant, yet sinister steps. These steps are explained in the book A Century of War by F. William Engdahl. This hard-to-find but crucially important historical work explores how the Anglo-American Establishment has used its control of oil, the resource that powers the economies of the world, to advance its agenda of global control.
Engdahl explains that in 1928 the previously competing major world oil cartels signed an agreement known as the Achnacarry Agreement, (signed in Achnacarry Scotland), that divided the world's oil resources and markets between the seven major British and American controlled cartels, the legendary 'Seven Sisters.' These seven were Esso (Standard Oil of New Jersey, now Exxon), Mobil (Standard Oil of New York), Gulf Oil, Texaco, Standard Oil of California (Chevron), Royal Dutch Shell, and the Anglo-Persian Oil Company (British Petroleum).
Engdahl writes that after the Achnacarry Agreement the Seven Sisters "were effectively one institution," and that with it, "British and American oil majors agreed to accept the existing market divisions and shares, to set a secret world cartel price, and end the destructive competition and price wars of the last decade." He says that since this 1928 agreement, "the Anglo-American grip over the world's oil reserves has been hegemonic," and that "threats to break that grip have been met with ruthless response..." Engdahl's book documents a number of instances throughout history where this ruthlessness was displayed.
After World War II the global economic system was created at Bretton Woods, New Hampshire, and the American dollar became the world's foundational currency, pegged to gold at $35/ounce. Engdahl writes that the Bretton Woods system was built upon the 'three pillars' of the IMF, the World Bank, and the General Agreement on Tariffs and Trade (GATT), which eventually evolved into the World Trade Organization. Because of the primacy of the dollar, the US Federal Reserve became the real master of the entire system, and the Federal Reserve, of course, is a private enterprise that is not 'Federal,' that possess no reserves, that is owned and controlled by the New York banks.
These same New York banks were, and are, also tightly interlocked with the major American oil cartels. After World War II the Rockefeller faction controlled Chase Manhattan Bank, National City Bank, Chemical Bank, the Bank of New York, Kuhn-Loeb, and others, and also many of the major oil companies including the various Standard Oil franchises and Mobil Oil. It is significant, then, that after the Marshall Plan for rebuilding western Europe was begun, the single greatest European expenditure was on American oil. Engdahl writes that of the hundreds of different commodities purchased through the Marshall Plan, fully 10% of the aid went to buy American oil, and by 1947 the Big Five American oil companies supplied half of western Europe's oil. Big Oil used its monopoly to an advantage and doubled the price of oil between 1945 and 1948, while at the same time refusing to allow European countries to use Marshall Plan aid to rebuild European oil refining capacity.
Over the next two decades western Europe was able to rebuild, and the Third World was able to modernize and industrialize a great deal as well. The Anglo-American problem, however, was that as Europe and the rest of the world became increasingly independent and self-sufficient they became less and less dependent upon American dollars. As the US refused to devalue the dollar against gold, many nations found it worthwhile to cash in their dollars for gold, and by 1971 US gold reserves "represented less than one quarter of her official liabilities."
The Wall Street establishment persuaded President Nixon to abandon fruitless efforts to support the dollar against the flood of international demand to redeem for gold. But, unfortunately, they did not want the required dollar devaluation against gold which had been intensely sought for almost a decade.
On August 15, 1971, Nixon took the advice of a close circle of key advisers... That sunny quiet August day, the President of the United States announced a move which rocked the world: formal suspension of dollar convertibility into gold, effectively putting the world completely onto a direct dollar-standard, with no gold backing. By doing this, the US unilaterally ripped the central provision of the 1944 Bretton Woods system apart. Foreign holders of US dollars could no longer redeem their paper for US gold reserves.
After Nixon took the US off the gold standard he then announced that the Fed would pay 8% more for gold, offering $38/ounce. This half-hearted attempt to "devalue" the dollar was ineffective, and in February of 1973 the dollar was again devalued by 10% and the Fed's price for gold was set at $42.22/ounce. This action was also ineffective, and by the end of March the value of the US dollar had plummeted around the world, dropping 40% against the German Deutschmark. However, the Anglo-American financial establishment had an Ace up its sleeve, a card that was first revealed in May of 1973 at the Bilderberg meeting held at Saltsjoebaden, Sweden.
The annual Bilderberg meetings had started at the Bilderberg Hotel near Arnheim in 1954, at the initiative of Prince Bernhard of Holland, and these meetings included the cream of the crop of the Anglo-American establishment, as well as any potential candidates who wanted to join the club and had something to offer. In 1973 the meeting was attended by 84 of the world's top financiers, corporate executives and politicians including Robert O. Anderson of ARCO petroleum, Lord Greenhill of British Petroleum, George Ball of Lehman Brothers, and of course David Rockefeller, who brought along one of his top strategists Zbigniew Brzezinski. Engdahl writes that the high point of the 1973 meeting occurred when CFR member Walter Levy outlined a "scenario" for a 400% increase in the international price of oil. According to Engdahl, "The purpose of the secret Saltsjoebaden meeting was not to prevent the expected oil price shock, but to plan and manage the about-to-be-created flood of oil dollars, a process US Secretary of State Kissinger later called 'recycling the petro-dollar flows.'"
In 1973, the powerful men grouped around Bilderberg decided 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 interests. 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 trade had, by international custom, been priced in dollars. American oil companies dominated the postwar market. A sharp sudden 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 establishment resolved to use their oil power in a manner no one could imagine possible. Their scheme was utterly outrageous, and that was their chief advantage, they clearly reckoned.
The Establishment's number one engineer of the planned global hike in oil prices was Henry Kissinger. It was he who manipulated Egypt and Syria into invading Israel on Yom Kippur in 1973, and it was he who facilitated the Arab oil embargo that ensued. Engdahl writes,
Kissinger, who was by then Nixon's intelligence "czar", consistently suppressed US intelligence reports, including intercepted communications from Arab officials confirming the buildup for war. Washington scripted the war and its aftermath, including Kissinger's infamous "shuttle diplomacy," along the precise lines of the Bilderberg deliberations of the previous May in Saltsjoebaden, some six months before the outbreak of the war. 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.
From 1949 to 1970 the global price of oil, dictated by OPEC from the early 1960s, remained steady at about $1.90/barrel. From 1970 to 1973 it gradually rose, and in early 1973, near the time of the Bilderberg meeting, it jumped to $3.01/barrel. The Yom Kippur war began on October 6, 1973, and on October 16 OPEC members met in Vienna and raised the price of oil by a staggering 70% to $5.11/barrel. This massive price hike was then dwarfed on January 1, 1974, when OPEC raised the price of oil by more than 100% to $11.65/barrel. Overall, from early 1973 to January of 1974 the price of oil jumped over 400%.
To put this price hike in perspective, let's compare it to the current price of gas. Right now gas is somewhere close to $1.90 a gallon. Imagine that it jumped to $3.01 a gallon. Then imagine that a year after that you had to pay $11.65 a gallon for gas. The 1973 oil shock was a hike in oil prices on a similar scale. It was premeditated economic warfare against the entire world.
Throughout the whole affair Nixon remained on the sidelines, unsure of what was happening and unsure of what to do. In 1974 he attempted to put together a plan with the US Treasury to force OPEC to lower prices, but according to a memo from a Nixon official at the time, "It was the banking leaders who swept aside this advice and pressed for a 'recycling' program to accommodate to higher oil prices. This was the fatal decision..."
There were many losers in the new era of high-priced oil, but the "banking leaders" who guided the US Treasury were clear winners. Initially Saudi Arabia was one of the first of the oil producers to ally with the Anglo-American banks, and then by 1975 the new paradigm was secure. At that time OPEC ministers agreed to accept only US Dollars as payment for OPEC-produced oil. In effect, the stable gold standard had been exchanged for the erratic, but for Anglo-American banks highly profitable, oil standard. As a result, global demand for the "petro-dollar" was greatly increased and Anglo-American domination of the global economy was confirmed. The Anglo-American financial establishment and the oil-producing nations were winners, but the rest of the world was the big loser.
...the impact of an overnight price increase of 400% in their primary energy source was staggering. The vast majority of the world's less-developed economies, without significant domestic oil resources, were suddenly confronted with an unexpected and unpayable 400% increase in costs of energy imports, to say nothing of costs of chemicals and fertilizers for agriculture derived from petroleum.
In 1973, India had a positive balance of trade, a healthy situation for a developing economy. By 1974, India had total foreign exchange reserves of $629 millions with which to pay -- in dollars -- an annual oil import bill of almost double that or $1,241 million. In 1974, Sudan, Pakistan, Philippines, Thailand, Africa and Latin America country after country was faced with gaping deficits in its balance of payments. As a whole, over 1974 developing countries incurred a total trade deficit of $35 billion according to the IMF, a colossal sum in that day, and, not surprisingly, a deficit precisely 4 times as large as in 1973, or just in proportion to the oil price increase.
Following the several years of strong industrial and trade growth of the early 1970s, the severe drop in industrial activity throughout the world economy in 1974-75 was greater than any such decline since the war.
Up into the 1970s many developing nations had depended upon the World Bank's low-interest loans to help them industrialize and modernize. However, with the oil shock, the money that went to development was eaten up by the high energy costs. Nations had a choice to make: either stop developing, betray the hopes of their own people, and forget the long-term profits from development that the World Bank's loans were to be paid back with, or borrow money from the IMF to buy oil, service their debts and try to keep developing. This was no easy choice for nations to make and both paths led to even more indebtedness. Engdahl summarizes the situation prior to the pre-engineered "free market revolution" propaganda that flooded the world by 1980,
If the methods reminded us of a perverse variation of the old mafia "protection racket" game, it is understandable. The same Anglo-American interests which manipulated political events to create a 400% increase in oil prices, then turned to the countries which were the victim of their assault, and "offered" to lend them petrodollars to finance the purchase of costly oil and other vital imports, at vastly inflated interest cost, of course.
For the vast majority of the world living in less-developed regions, real industrial and agricultural development suffered the consequences of the Anglo-American oil policy. Petrodollars went to simply refinance deficits, rather then to finance creation of new infrastructure, agriculture, or to improve the living standards of the world's population.
During 1975, the policy organ of the Anglo-American liberal establishment, the New York Council on Foreign Relations, under the direction of New York attorney Cyrus Vance, drafted a series of policy blueprints for the 1980s, much as they had done at the critical turning point in the late 1950s recession. In their account of the future of the global monetary order, the Council stated, "A degree of 'controlled dis-integration' in the world economy is a legitimate objective for the 1980s." What was disintegrating, however, was the entire fabric of traditional industrial and agricultural development, most clearly in the developing sector