I’ll get to a debate topic here in just a minute, but first some facts and assumptions.
[ul]
[li]Nation-state: a political entity which taxes its citizens in exchange for providing policies and services for their benifit.[/li][li]Empire: A political unit which taxes other nation-states in order to provide for its own citizens.[/li][li]Petroleum: A naturally occuring, and remarkably versatile hydrocarbon used for the majority of the industrialized world’s energy needs.[/li][li]US Dollar: Official currency of the United States of America, the value of which is determined by the Federal Reserve. It’s value is not tied to any commodity such as gold, however it is the only currency used on the world’s petroleum markets.[/li][li]Iraq: A republic in southwest Asia, rich in petroleum reserves and the focus of major American military activity since March of 2003. Also in 2000 became the only oil producer willing to sell petroleum on the international market for currency other than the US Dollar.[/li][/ul]
Now given that the United States controls the value of the dollar, the dollar is the only viable currency on the international petroleum market, the entire world depends on petroleum to fuel their economies, one could then safely assume that the United States of America is a truly global empire. Every nation on earth must maintain vast reserves of US Dollars in order to purchase the oil that fuels their economy. The US can therefore effectively levy “tax”, if you will, on other nation-states by controling inflation through the Federal Reserve. It makes one wonder if perhaps imperial economics was the real reason for the neo-conservative fascination with the Saddam Hussein regime. If nations could use currencies other than the dollar to purchase petroleum, the US would gradually lose control over global industry and commerce. It is this control that balances out other inequities America has with the world. Take for example the trade deficit with China. It is true that we are dumping vast ammounts of currency into the Chinese economy in exchange for cheaply produced goods and resources. On the surface it looks like the Chinese are clearly the benificiaries of this arrangement. Closer inspection reveals what is really going on. The United States is importing manufactured goods, refined resources, etc, and in exchange the Chinese economy is accumulating small, green, paper certificates of largely imaginary value. Since the dollar is not tied to any commodity as has been the case with currencies of the past, its value is whatever the Chairman of the Federal Reserve says it is. Were it his will, that massive Chinese reserve of dollars could be worth practically nothing as of tomorrow morning. The reason the Chinese are accumulating more and more dollars is they need more and more oil to fuel an economy that has to provide jobs to over a billion people. As these workers find jobs in the industrialized workplace their incomes increase and the general trend at present in China is an increasingly consumer driven economy, which means China has to produce more to satisfy the demands of its increasingly affluent society, which increases the demand on oil, which increases the demand on the dollar. The US gladly obliges China, exchanging small, green, paper certificates for real tangible goods. In order for China to hold up their end of the bargain they must maintain numerous factories, distrobution centers, legions of workers etc. For America it’s a matter of running a printing press. Perhaps I’ve oversimplified this situation but nonetheless, China and other nations find themselves in a seemingly eternal cycle of chasing dollars. Back to my point about Iraq. If we did go to war in Iraq to maintain the power of the dollar and American hegemony, why didn’t we just say it? Sure it sounds like a superficial cause to spend human lives on, but nature abhors a vaccum. If America loses her standing as the global empire, who will take her place? An Islamist Iran, a Nationalist Russia, a Communist China? And what kind of suffering will the world face in the ensuing scramble for power? Perhaps a more important question is what happens when the oil runs out. Even if its not for centuries more eventually petroleum will become an nonviable solution to the worlds energy needs, either due to financial or ecological costs. What can America do now to start preparing for the end of the petrodollar’s primacy?
Here are a few outside resources to go with my statements.
The Daily Kos
Krassimir Petrov’s article on the Iranian Oil Bourse
William Clark’s article on the cause of the war in Iraq
