Controlling the Global Economy:
Bilderberg, the Trilateral Commission and the Federal Reserve
Global Power and Global Government:
Part 3
by Andrew Gavin Marshall
http://globalresearch.ca/, August
3, 2009
_The Bilderberg Group and the European
Union Project
_In 1954, the Bilderberg Group was founded
in the Netherlands, which was a secretive meeting held once a
year, drawing roughly 130 of the political-financial-military-academic-media
elites from North America and Western Europe as "an informal
network of influential people who could consult each other privately
and confidentially."[1] Regular participants include the
CEOs or Chairman of some of the largest corporations in the world,
oil companies such as Royal Dutch Shell, British Petroleum, and
Total SA, as well as various European monarchs, international
bankers such as David Rockefeller, major politicians, presidents,
prime ministers, and central bankers of the world.[2]
_Joseph Retinger, the founder of the Bilderberg
Group, was also one of the original architects of the European
Common Market and a leading intellectual champion of European
integration. In 1946, he told the Royal Institute of International
Affairs (the British counterpart and sister organization of the
Council on Foreign Relations), that Europe needed to create a
federal union and for European countries to "relinquish part
of their sovereignty." Retinger was a founder of the European
Movement (EM), a lobbying organization dedicated to creating a
federal Europe. Retinger secured financial support for the European
Movement from powerful US financial interests such as the Council
on Foreign Relations and the Rockefellers.[3] However, it is hard
to distinguish between the CFR and the Rockefellers, as, especially
following World War II, the CFR's main finances came from the
Carnegie Corporation, Ford Foundation and most especially, the
Rockefeller Foundation.[4]
_The Bilderberg Group acts as a "secretive
global think-tank," with an original intent to "to link
governments and economies in Europe and North America amid the
Cold War."[5] One of the Bilderberg Group's main goals was
unifying Europe into a European Union. Apart from Retinger, the
founder of the Bilderberg Group and the European Movement, another
ideological founder of European integration was Jean Monnet, who
founded the Action Committee for a United States of Europe, an
organization dedicated to promoting European integration, and
he was also the major promoter and first president of the European
Coal and Steel Community (ECSC), the precursor to the European
Common Market.[6]
_Declassified documents (released in 2001)
showed that "the US intelligence community ran a campaign
in the Fifties and Sixties to build momentum for a united Europe.
It funded and directed the European federalist movement."[7]
The documents revealed that, "America was working aggressively
behind the scenes to push Britain into a European state. One memorandum,
dated July 26, 1950, gives instructions for a campaign to promote
a fully-fledged European parliament. It is signed by Gen William
J Donovan, head of the American wartime Office of Strategic Services,
precursor of the CIA." Further, "Washington's main tool
for shaping the European agenda was the American Committee for
a United Europe, created in 1948. The chairman was Donovan, ostensibly
a private lawyer by then," and "The vice-chairman was
Allen Dulles, the CIA director in the Fifties. The board included
Walter Bedell Smith, the CIA's first director, and a roster of
ex-OSS figures and officials who moved in and out of the CIA.
The documents show that ACUE financed the European Movement, the
most important federalist organisation in the post-war years."
Interestingly, "The leaders of the European Movement - Retinger,
the visionary Robert Schuman and the former Belgian prime minister
Paul-Henri Spaak - were all treated as hired hands by their American
sponsors. The US role was handled as a covert operation. ACUE's
funding came from the Ford and Rockefeller foundations as well
as business groups with close ties to the US government."[8]
_The European Coal and Steel Community
was formed in 1951, and signed by France, West Germany, Italy,
Belgium, Luxembourg and the Netherlands. Newly released documents
from the 1955 Bilderberg meeting show that a main topic of discussion
was "European Unity," and that "The discussion
affirmed complete support for the idea of integration and unification
from the representatives of all the six nations of the Coal and
Steel Community present at the conference." Further, "A
European speaker expressed concern about the need to achieve a
common currency, and indicated that in his view this necessarily
implied the creation of a central political authority." Interestingly,
"A United States participant confirmed that the United States
had not weakened in its enthusiastic support for the idea of integration,
although there was considerable diffidence in America as to how
this enthusiasm should be manifested. Another United States participant
urged his European friends to go ahead with the unification of
Europe with less emphasis upon ideological considerations and,
above all, to be practical and work fast."[9] Thus, at the
1955 Bilderberg Group meeting, they set as a primary agenda, the
creation of a European common market.[10]
_In 1957, two years later, the Treaty
of Rome was signed, which created the European Economic Community
(EEC), also known as the European Community. Over the decades,
various other treaties were signed, and more countries joined
the European Community. In 1992, the Maastricht Treaty was signed,
which created the European Union and led to the creation of the
Euro. The European Monetary Institute was created in 1994, the
European Central Bank was founded in 1998, and the Euro was launched
in 1999. Etienne Davignon, Chairman of the Bilderberg Group and
former EU Commissioner, revealed in March of 2009 that the Euro
was debated and planned at Bilderberg conferences.[11] This was
an example of regionalism, of integrating an entire region of
the world, a whole continent, into a large supranational structure.
This was one of the primary functions of the Bilderberg Group,
which would also come to play a major part in other international
issues.
Interdependence Theory
_The theoretical justifications for integration and regionalism
arrived in the 1960s with what is known as "interdependence
theory." One of its primary proponents was a man named Richard
N. Cooper. Two other major proponents of interdependence theory
are Robert Keohane and Joseph Nye. Interdependence theory and
theorists largely expand upon the notions raised by Keynes.
_Richard Cooper wrote that, during the
1960s "there has been a strong trend toward economic interdependence
among the industrial countries. This growing interdependence makes
the successful pursuit of national economic objectives much more
difficult." He also identified that "the objective of
greater economic integration involves international agreements
which reduce the number of policy instruments available to national
authorities for pursuit of their economic objectives."[12]
Further, "Cooper argues that new policies are needed to address
the unprecedented conditions of international interdependence."[13]
_Cooper also opposed a return to mercantilist
pursuits in order for nations to secure economic objectives, arguing
that, "economic nationalism invited policy competition that
is doomed to fail," and thus concludes "that international
policy coordination is virtually the only means to achieve national
economic goals in an interdependent world."[14]
_Keohane and Nye go into further analysis
of interdependence, specifically focusing on how interdependence
transforms international politics. They tend to frame their concepts
in ideological opposition to international relations realists,
who view the world, like mercantilists, as inherently anarchic.
Keohane and Nye construct what is known as "complex interdependence,"
in which they critique realism. They analyze realism as consisting
of two primary facets: that states are the main actors in the
international arena, and that military force is central in international
power. They argue that, "global economic interdependence
has cast doubt on these assumptions. Transnational corporations
and organizations born of economic integration now vie with states
for global influence."[15]
_Keohane and Nye also discuss the relevance
and importance of international regimes in the politics of interdependence,
defining regimes as "networks of rules, norms, and procedures
that regularize behavior." They argue that, "Regimes
are affected by the distribution of power among states, but regimes,
in turn, may critically influence the bargaining process among
states."[16] Again, this contests the realist and mercantilist
notions of the international sphere being one of chaos, as a regime
can produce and maintain order within the international arena.
_Interdependence theorists tend to argue
that interdependence has altered the world order in that it has
become based upon cooperation and mutual interests, largely championing
the liberal economic notion of a non-chaotic and cooperative international
order in which all nations seek and gain a mutual benefit. Ultimately,
it justifies the continued process of global economic integration,
while realist and mercantilist theorists, who interdependence
theorists contest and debate, justify the use of force in the
international arena in terms of describing it as inherently chaotic.
In theory, the notions of mercantilism and liberalism are inimical
to one another however, they are not mutually exclusive and are,
in fact, mutually reinforcing. Events throughout the 1970s are
a clear example of this mutually reinforcing nature of mercantilist
behaviour on the part of states, and the "interdependence"
of the liberal economic order.
_As early mercantilist theorist Frederick
List wrote in regards to integration and union, "All examples
which history can show are those in which the political union
has led the way, and the commercial union has followed. Not a
single instance can be adduced in which the latter has taken the
lead, and the former has grown up from it."[17] It would
appear that the elites have chosen the road less traveled in the
20th century, with the Bilderberg Group pursuing integration and
union in Europe by starting with commercial union and having political
union follow. This concept is also evident in the notions of interdependence
theory, which focuses on global economic integration as changing
the realist/mercantilist notions of a chaotic international order,
as states and other actors become more cooperative through such
economic ties.
Trilateralism
In the late 1960s, Western European economies (in particular West
Germany) and Japan were rapidly developing and expanding. Their
currencies rose against the US dollar, which was pegged to the
price of gold as a result of the Bretton Woods System, which,
through the IMF, set up an international monetary system based
upon the US dollar, which was pegged to gold. However, with the
growth of West Germany and Japan, "by the late 1960s the
system could no longer be expected to perform its previous function
as a medium for international exchange, and as a surrogate for
gold." On top of this, to maintain its vast empire, the US
had developed a large balance-of-payments deficit.[18]
_Richard Nixon took decisive, and what
many referred to as "protectionist" measures, and in
1971, ended the dollar's link to gold, which "resulted in
a devaluation of the dollar as it began to float against other
currencies," and "was meant to restore the competitiveness
of the US economy,"[19] as with devaluation, "U.S.-made
goods would cost less to foreigners and foreign-made goods would
be less competitive on the U.S. market." The second major
action taken by Nixon was when he "slapped a ten percent
surcharge on most imports into the United States," which
was to benefit U.S. manufacturing firms over foreign ones in competition
for the U.S. market. The result was that less imports from Asia
were coming into the US, more US goods were sold in their markets
at more competitive prices, forcing Japan and the European Economic
Community (EEC) to relax their trade barriers to US products.[20]
_An article in Foreign Affairs, the journal
of the Council on Foreign Relations, referred to Nixon's New Economic
Policy as "protectionist," encouraging a "disastrous
isolationist trend,"[21] and that Nixon shattered "the
linchpin of the entire international monetary system- on whose
smooth functioning the world economy depends."[22] Another
article in Foreign Affairs explained that the Atlanticist, or
internationalist faction of the US elite were in particular, upset
with Nixon's New Economic Policy, however, they "agreed on
the diagnosis: the relative balance of economic strengths had
so changed that the United States could no longer play the role
of economic leader. But they also argued that further American
unilateralism would fuel a spiral of defensive reactions that
would leave all the Western economies worse off. Their suggested
remedy, instead, was much more far-reaching coordination among
all the trilateral [North American, European and Japanese] governments."[23]
_There was a consensus within the American
ruling class that the Bretton Woods System was in need of a change,
but there were divisions among members in how to go about changing
it. The more powerful (and wealthy) international wing feared
how US policies may isolate and alienate Western Europe and Japan,
and they advocated that, "The world economic roles of America
must be reconciled with the growth to power of Europe and Japan.
There must be fundamental reform of the international monetary
system. There must be renewed efforts to reduce world trade barriers.
The underlying U.S. balance of payments has deteriorated."
However, Nixon "went much too far" as he alienated Western
Europe and Japan.
_In 1970, David Rockefeller became Chairman
of the Council on Foreign Relations, while also being Chairman
and CEO of Chase Manhattan. In 1970, an academic who joined the
Council on Foreign Relations in 1965 wrote a book called Between
Two Ages: America's Role in the Technetronic Era. The author,
Zbigniew Brzezinski, called for the formation of "A Community
of the Developed Nations," consisting of Western Europe,
the United States and Japan. Brzezinski wrote about how "the
traditional sovereignty of nation states is becoming increasingly
unglued as transnational forces such as multinational corporations,
banks, and international organizations play a larger and larger
role in shaping global politics." David Rockefeller had taken
note of Brzezinski's writings, and was "getting worried about
the deteriorating relations between the U.S., Europe, and Japan,"
as a result of Nixon's economic shocks. In 1972, David Rockefeller
and Brzezinski "presented the idea of a trilateral grouping
at the annual Bilderberg meeting." In July of 1972, seventeen
powerful people met at David Rockefeller's estate in New York
to plan for the creation of the Commission. Also at the meeting
was Brzezinski, McGeorge Bundy, the President of the Ford Foundation,
(brother of William Bundy, editor of Foreign Affairs) and Bayless
Manning, President of the Council on Foreign Relations.[24] So,
in 1973, the Trilateral Commission was formed to address these
issues.
_A 1976 article in Foreign Affairs explained
that, "Trilateralism as a linguistic expression-and the Trilateral
Commission-arose in the early 1970s from the reaction of the more
Atlanticist part of the American foreign policy community to the
belligerent and defensive unilateralism that characterized the
foreign economic policy of the Nixon Administration."[25]
The Commission's major concerns were to preserve for the "industrialized
societies," in other words, seek mutual gain for the Trilateral
nations, and to construct "a common approach to the needs
and demands of the poorer nations." However, this should
be read as, "constructing a common approach to [dealing with]
poorer nations." As well as this, the Commission would undertake
"the coordination of defense policies and of policies toward
such highly politicized issues as nuclear proliferation, terrorism,
and aerial hijacking, and such highly politicized geographic areas
as the Middle East or Southern Africa."[26]
_Interestingly, interdependence theorist
Joseph Nye is a member of the Trilateral Commission, as is Richard
N. Cooper.[27] Today, Joseph Nye is a member of the Board of Directors
of the Council on Foreign Relations,[28] and Richard N. Cooper
was a Director of the Council on Foreign Relations from 1993-1994.[29]
_The end of the link of the dollar to
gold meant that, "the US was no longer subject to the discipline
of having to try to maintain a fixed par value of the dollar against
gold or anything else: it could let the dollar move as the US
Treasury [and ultimately, the Federal Reserve] wished and pointed
towards the removal of gold from international monetary affairs."
This created a dollar standard, as opposed to a gold standard,
which "places the direction of the world monetary policy
in the hands of a single country," which was "not acceptable
to Western Europe or Japan."[30] Addressing this issue was
among the reasoning behind the creation of the Trilateral Commission.
The Oil Crisis
The May 1973 meeting of the Bilderberg Group occurred five months
prior to the extensive oil price rises brought about by the Yom
Kippur War. However, according to leaked minutes from the meeting,
a 400% increase in the price of oil was discussed, and meeting
participants were creating a "plan [on] how to manage the
about-to-be-created flood of oil dollars."[31] Oil is no
issue foreign to the interests of the Bilderberg Group, as among
the 1973 participants were the CEOs of Royal Dutch Shell, British
Petroleum (BP), Total S.A., ENI, Exxon, as well as significant
banking interests and individuals such as Baron Edmond de Rothschild
and David Rockefeller, and the US Secretary of State at the time,
Henry Kissinger.[32]
_In 1955, Henry Kissinger, a young scholar
at the time, was brought into the Council on Foreign Relations,
where he distinguished himself as a prominent Council member and
became a protégé to Nelson Rockefeller, one of David
Rockefeller's brothers. In 1969, Kissinger became Richard Nixon's
National Security Adviser.[33] This Bilderberg meeting was taking
place during a time of great international instability, particularly
in the Middle East.
_Kissinger, as National Security Adviser,
was in a power struggle with Secretary of State William Rogers
over foreign policy. Nixon even referred to the continual power
struggle between Kissinger as National Security Advisor and Secretary
of State William Rogers, saying that, "Henry's personality
problem is just too goddamn difficult for us to deal [with],"
and that Kissinger's "psychopathic about trying to screw
[Secretary of State William] Rogers." Nixon even said that
if Kissinger wins the struggle against Rogers, Kissinger would
"be a dictator." Nixon told his Chief of Staff, Haldeman,
that Kissinger feels "he must be present every time I see
anybody important."[34]
_At the time of the Yom Kippur War, Nixon
was in the middle of major domestic issues, as the Watergate scandal
was breaking, leading to an increase in the power and influence
of Kissinger, as "The president was deeply preoccupied, and
at times incapacitated by self-pity or alcohol."[35] By 1970,
Kissinger had Rogers "frozen out of policy-making on Southeast
Asia," during the Vietnam War, so Rogers "concentrated
on the Middle East." Eventually, Nixon had Rogers resign,
and then Henry Kissinger took the position as both National Security
Advisor and Secretary of State.[36]
_As Kissinger later said in a speech marking
the 25th anniversary of the Trilateral Commission, "In 1973,
when I served as Secretary of State, David Rockefeller showed
up in my office one day to tell me that he thought I needed a
little help," and that, "David's function in our society
is to recognize great tasks, to overcome the obstacles, to help
find and inspire the people to carry them out, and to do it with
remarkable delicacy." Kissinger finished his speech by saying,
"David, I respect you and admire you for what you have done
with the Trilateral Commission. You and your family have represented
what goes for an aristocracy in our country-a sense of obligation
not only to make it materially possible, but to participate yourself
in what you have made possible and to infuse it with the enthusiasm,
the innocence, and the faith that I identify with you and, if
I may say so, with your family."[37]
_Kissinger sabotaged Rogers' peace negotiations
with Egyptian President Anwar Sadat, who, at the time, was trying
to rally other Arab leaders against Israel. In 1972, King Faisal
of Saudi Arabia had "insisted that oil should not be used
as a political weapon." However, "in 1973, Faisal announced
that he was changing his mind about an oil embargo." Faisal
held a meeting with western oil executives, warning them. Sadat
told Faisal of the plan to attack Israel, and Faisal agreed to
help both financially and with the "oil weapon." Days
later, the Saudi oil minister, Sheik Ahmed Yamani, "began
dropping hints to the oil companies about a cutback in production
that would affect the United States." Yamani said Henry Kissinger
had been "misleading President Nixon about the seriousness
of Faisal's intentions."[38]
_On October 4, the US National Security
Agency (NSA) "knew beyond a shadow of a doubt that an attack
on Israel would take place on the afternoon of October 6."
However, the Nixon White House "ordered the NSA to sit on
the information," until the US warned Israel a few hours
before the attack, even though "Nixon's staff had at least
two days' advance warning that an attack was coming on October
6."[39] Hours before the attack on Israel by Syria and Egypt,
the U.S. warned its Israeli counterparts, however, "the White
House insisted that the Israelis do nothing: no preemptive strikes,
no firing the first shot. If Israel wanted American support, Kissinger
warned, it could not even begin to mobilize until the Arabs invaded."
Israeli Prime Minister Golda Meir stood Israeli defences down,
citing "Kissinger's threats as the major reason." Interestingly,
Kissinger himself was absent from his office on the day of the
attack, and he knew days before when it was set to take place,
yet, still went to the Waldorf Astoria in New York. Further, he
waited three days before convening a U.N. Security Council meeting.[40]
The attack needed to go forward, as directed by the backdoor diplomacy
of Kissinger.
_With the outbreak of the Yom Kippur War
on October 6, 1973, Kissinger "centered control of the crisis
in his own hands." After the Israelis informed the White
House that the attack on them had taken place, Kissinger did not
consult Nixon or even inform him on anything for three hours,
who was at his retreat in Florida. After talking to Nixon hours
later, Kissinger told him that, "we are on top of it here,"
and "the president left matters in Kissinger's hands."
Alexander Haig, Kissinger's former second in command in the National
Security Council, then Chief of Staff to Nixon, was with the President
on that morning. Haig told Kissinger "that Nixon was considering
returning to Washington, [but] Kissinger discouraged it-part of
a recurring pattern to keep Nixon out of the process." For
three days, it was Kissinger who "oversaw the diplomatic
exchanges with the Israelis and Soviets about the war. Israeli
prime minister Golda Meir's requests for military supplies, which
were beginning to run low, came not to Nixon but to Kissinger."
On October 11, the British Prime Minister called asking to speak
to Nixon, to which Kissinger responded, "Can we tell them
no? When I talked to the President he was loaded," but the
British were told, "the prime minister could speak to Kissinger."[41]
_On October 12, the major American oil
companies sent a letter to Nixon suggesting the Arab countries
"should receive some price increase," and Nixon, following
Kissinger's advice, sent arms to Israel, which precipitated the
Arab OPEC countries to announce a 70% increase in the price of
oil on October 16th, and announce an oil embargo against the US
on the 17th.[42]
_The Bilderberg meeting five months prior
involved participants planning "how to manage the about-to-be-created
flood of oil dollars." At the meeting, an OPEC Middle East
oil revenue rise of over 400% was predicted. A Bilderberg document
from the meeting stated that, "The task of improving relations
between energy importing countries should begin with consultations
between Europe, the US and Japan. These three regions, which represented
about 60 per cent of world energy consumption, accounted for an
even greater proportion of world trade in energy products, as
they absorbed 80 per cent of world energy exports." The same
document also stated that "an energy crisis or an increase
in energy costs could irremediably jeopardize the economic expansion
of developing countries which had no resources of their own,"
and the "misuse or inadequate control of the financial resources
of the oil producing countries could completely disorganize and
undermine the world monetary system."[43]
_As economist F. William Engdahl noted
in his book, A Century of War, "One enormous consequence
of the ensuing 400 per cent rise in OPEC oil prices was that investments
of hundreds of millions of dollars by British Petroleum, Royal
Dutch Shell [both present at Bilderberg] and other Anglo-American
petroleum concerns in the risky North Sea could produce oil at
a profit," as "the profitability of these new North
Sea oilfields was not at all secure until after the OPEC price
rises."[44] In 2001, the former Saudi representative to OPEC,
Sheik Ahmed Yamani, said, "'I am 100 per cent 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 borrowed
a lot of money and they needed a high oil price to save them."
When he was sent by King Faisal to the Shah of Iran in 1974, the
Shah said that it was Henry Kissinger who wanted a higher price
for oil.[45]
_An article in Foreign Policy, the journal
published by the Carnegie Endowment for International Peace, concluded
from exhaustive research, that, "Since 1971, the United States
has encouraged Middle East oil-producing states to raise the price
of oil and keep it up." This conclusion was based upon State
Department documents, congressional testimony and interviews with
former policy-makers.[46] At the Eighth Petroleum Congress of
the League of Arab States (Arab League) in 1972, James Akins,
head of the fuel and energy section of the State Department, gave
a speech in which he said that oil prices were "expected
to go up sharply due to lack of short-term alternatives to Arab
oil," and that this was, "an unavoidable trend."
A Western observer at the meeting said Akins' speech was essentially,
"advocating that Arabs raise the price of oil to $5 per barrel."
The oil industry itself was also becoming more unified in their
position. The National Petroleum Council (NPC), "a government
advisory body representing oil industry interests, waited until
Nixon was safely re-elected before publishing a voluminous series
of studies calling for a doubling of U.S. oil and gas prices."[47]
_The summer before the Yom Kippur War,
in 1973, James Akins was made U.S. Ambassador to Saudi Arabia.
He also happened to be a member of the Council on Foreign Relations.[48]
Saudi Arabian minister for petroleum and representative to OPEC,
Sheik Ahmed Yamani, stated in February of 1973, that, "it
is in the interests of the oil companies that prices be raised,"
as "their profits are collected from the production stage."
It was also in the interests of the US, as OPEC will have a massive
increase in revenues to be invested, likely in the US, itself.[49]
_The oil companies themselves were also
fearful of having their business facilities in OPEC countries
nationalized, so they "were anxious to engage OPEC countries
in the oil business in the United States, in order to give them
an interest in maintaining the status quo." Weeks before
war broke out, the National Security Council, headed by Kissinger,
issued a statement saying that military intervention in the event
of a war in the Middle East was "ruled out of order."[50]
_U.S. Ambassador to Saudi Arabia, James
Akins, later testified in congress on the fact that when, in 1975,
the Saudis went to Iran to try to get the Shah to roll back the
price of oil, they were told that Kissinger told the Iranians
that, "the United States understood Iran's desire for higher
oil prices."[51] Akins was removed from Saudi Arabia in 1975,
"following policy disputes with Secretary of State Henry
Kissinger."[52]
_The OPEC oil price increases resulted
in the "removal of some withholding taxes on foreign investment"
in the United States, "unchecked arms sales, which cannot
be handled without U.S. support personnel, to Iran and Saudi Arabia,"
as well as an "attempt to suppress publication of data on
volume of OPEC funds on deposit with U.S. banks."[53] Ultimately,
the price increases "would be of competitive advantage to
the United States because the economic damage would be greater
to Europe and Japan." Interestingly, "Programs for sopping
up petrodollars have themselves become justifications for the
continued flow of U.S. and foreign funds to pay for higher priced
oil. In fact, a lobby of investors, businessmen, and exporters
[was] growing in the United States to favor giving the OPEC countries
their way." Outside the United States, it is "widely
believed" that the high-priced oil policy was aimed at hurting
Europe, Japan, and the developing world.[54] There was also "input
from the oil industry" which went "into the formulation
of U.S. international oil policy."[55]
_In 1974, when a White House official
suggested to the Treasury to force OPEC to lower the price of
oil, his idea was swept under, and he later stated that, "It
was the banking leaders who swept aside this advice and pressed
for a 'recycling' program to accommodate to higher oil prices."
In 1975, a Wall Street investment banker was sent to Saudi Arabia
to be the main investment adviser to the Saudi Arabian Monetary
Agency (SAMA), and "he was to guide the Saudi petrodollar
investments to the correct banks, naturally in London and New
York."[56]
_In 1974, another OPEC oil price increase
of more than 100 percent was undertaken, following a meeting in
Tehran, Iran. This initiative was undertaken by the Shah of Iran,
who just months before was opposed to the earlier price increases.
Sheikh Yamani, the Saudi oil minister, was sent to meet with the
Shah of Iran following his surprise decision to raise prices,
as Yamani was sent by Saudi King Faisal, who was worried that
higher prices would alienate the US, to which the Shah said to
Yamani, "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."[57]
_As Peter Gowan stated in The Globalization
Gamble, "the oil price rises were the result of US influence
on the oil states and they were arranged in part as an exercise
in economic statecraft directed against America's 'allies' in
Western Europe and Japan. And another dimension of the Nixon administration's
policy on oil price rises was to give a new role, through them,
to the US private banks in international financial relations."
He explained that the Nixon administration was pursuing a higher
oil price policy two years before the Yom Kippur War, and "as
early as 1972 the Nixon administration planned for the US private
banks to recycle the petrodollars when OPEC finally did take US
advice and jack up oil prices."[58] Ultimately, the price
rises had devastating impacts on Western Europe and Japan, which
were quickly growing economies, but which were heavily dependent
upon Middle eastern oil. This is an example of how the US, while
championing a liberal international economic order, acted in a
mercantilist fashion, depriving competitors through improving
its own power and influence.
_In 1973, David Rockefeller set up the
Trilateral Commission to promote coordination and cooperation
among Japan, Western Europe, and North America (namely, the US),
yet, in the same year, his good friend and close confidante, Henry
Kissinger, played a key role in promoting and orchestrating the
oil price rises that had a damaging impact upon Japan and Western
Europe. Also it should be noted, David Rockefeller's Chase Manhattan
Bank, of which he was CEO at the time, profited immensely off
of the petrodollar recycling system promoted by Henry Kissinger,
where the OPEC countries would reinvest their new excess capital
into the American economy through London and New York banks.
_How does one account for these seemingly
diametrically opposed initiatives? Perhaps the oil crisis, having
a negative effect on Japan and Western European economies, could
have spurred the necessity for cooperation among the trilateral
countries, forcing them to come together and coordinate future
policies.
_It is of vital importance to understand
the global conditions in which the price rises and its solutions
arose, particularly in relation to the Third World. Africa, since
the late 1800s, had been under European colonial control. It was
from the 1950s to the 1960s that almost all African countries
were granted independence from their European metropoles. Africa
is a very significant case to look at, as it is extremely rich
in many resources, from agriculture to oil, minerals, and a huge
variety of other resources used all around the world. If African
nations were able to develop their own economies, use their own
resources, and create their own industries and businesses, they
could become self-sufficient at first, and then may become a force
of great competition for the established industries and elites
around the world. After all, Europe does not have much to offer
in terms of resources, as the continent's wealth has largely come
from plundering the resources of regions like Africa, and in becoming
captains of monetary manipulation. A revitalized, vibrant, economically
independent and successful Africa could spell the end of Western
financial dominance. "Between 1960 and 1975 African industry
grew at the annual rate of 7.5 per cent. This compared favourably
with the 7.2 per cent for Latin America and 7.5 per cent for South-East
Asia."[59] In Africa, "the 1960-73 period witnessed
some important first steps in the process of industrialization,"
however, "[t]he dramatic decline in rates of industrialization
began to show after the first 'oil crisis'. Between 1973 and 1984,
the rate of growth" rapidly declined.[60]
_So, by manipulating the price of oil,
you can manipulate the development of the Third World, which was
beginning to look as if it could grow into significant competition,
as it was experiencing exponential growth. There were two oil
shocks in the 1970s; one in 1973 and another in 1979. Following
the price rises, there was a need for the developing countries
of the world to borrow money to finance development.
_The banks that were getting massive amounts
of petrodollars deposited into them from the oil producing countries
needed to "recycle" the dollars by investing them somewhere,
in order to make a profit. Luckily for the banks, "[d]eveloping
countries were desperate for funds to help them industrialize
their economies. In some cases, developing countries were oil
consumers and required loans to help pay for rising oil prices.
In other cases, a decision had been made to follow a strategy
of indebted industrialization. This meant that states borrowed
money to invest in industrialization and would pay off the loans
from the profits of their new industries. Loans were an attractive
option because they did not come with the influence of foreign
transnational corporations that accompanied foreign direct investment
and most states had few funds of their own to invest."[61]
_The oil price rises "changed the
face of world finance," as: "In the new era of costly
energy, scores of countries, not all of them in the Third World,
were too strapped to pay their imported-oil bills. At the same
time, Western banks suddenly received a rush of deposits from
oil-producing nations. It seemed only logical, even humane, that
the banks should recycle petrodollars." This is where the
true face of Trilateralism began to show: "It became an everyday
event for one or two lead banks in the U.S. or Western Europe
to round up dozens of partners by telephone to put together so-called
jumbo syndicates for loans to developing countries. Some bankers
were so afraid of missing out that during lunch hours they even
empowered their secretaries to promise $5 million or $10 million
as part of any billion-dollar loan package for Brazil or Mexico."
Interestingly, these banks argued, "that their foreign loans
were encouraged by officials at the U.S. Treasury and Federal
Reserve Board. They feared that developing countries would become
economically and politically unstable if credit was denied. In
1976 Arthur Burns, chairman of the Federal Reserve, began cautioning
bankers that they might be lending too much overseas, but he did
nothing to curb the loans. For the most part, they ignored the
warning. Financiers were confident that countries like Mexico,
with its oil reserves, and Brazil, with abundant mineral resources,
were good credit risks."[62]
_According to a report produced by the
Federal Reserve, prior to the 1973 oil crisis, "the private
Japanese financial system remained largely isolated from the rest
of the world. The system was highly regulated," and, "various
types of banking firms and other financial service firms were
legally and administratively confined to a specified range of
activities assigned to each." However, the "OPEC oil
shock in 1973 signaled a turning point in the operation of the
Japanese financial system."[63] As part of this turning point,
the Bank of Japan (the central bank of Japan), relaxed "monetary
control by lending more generously to the major banks. The result
was a growing budget deficit and a rapid rise in inflation."[64]
The deregulation of Japanese banking access to foreign markets
went hand-in-hand with the deregulation of domestic markets. It
was a two-way street; as Japanese industry and banks gained access
to foreign markets, foreign industry and banks gained access to
the Japanese market. This led to the growth of Japanese banks
internationally, of which today many are among the largest banks
in the world. This was a result of the Trilateral Commission's
efforts. Also evident of the Trilateral partnership was that western
banks "made loans so that poor countries could purchase goods
made in Western Europe and North America."[65]
_Of great significance was that, "the
new international monetary arrangements gave the United States
government far more influence over the international monetary
and financial relations of the world than it had enjoyed under
the Bretton Woods system. It could freely decide the price of
the dollar. And states would become increasingly dependent upon
developments in Anglo-American financial markets for managing
their international monetary relations. And trends in these financial
markets could be shifted by the actions (and words) of the US
public authorities, in the Treasury Department and the Federal
Reserve Board (the US Central Bank)."[66] This new system
is referred to as the Dollar-Wall Street Regime (DWSR), as it
is dependent upon the US dollar and the key actors on Wall Street.
_The Federal Reserve's response to the
initial 1973-74 oil price shock was to keep interest rates low,
which led to inflation and a devalued dollar. It's also what allowed
and encouraged banks to lend massive amounts to developing countries,
often lending more than their net worth. However, in 1979, with
the second oil shock, the Federal Reserve changed policy, and
the true nature of the original oil crisis, petrodollar recycling
and loans became apparent.
The Rise of Neo-Liberalism
In the early 1970s, the government of Chile was led by a leftist
socialist-leaning politician named Salvador Allende, who was considering
undertaking a program of nationalization of industries, which
would significantly affect US business interests in the country.
David Rockefeller expressed his view on the issue in his book,
Memoirs, when he said that actions taken by Chile's new government
"severely restricted the operations of foreign corporations,"
and he continued, saying, "I was so concerned about the situation
that I met with Secretary of State William P. Rogers and National
Security Advisor Henry Kissinger."[67]
_As author Peter Dale Scott analyzed in
his book, The Road to 9/11, David Rockefeller played a pivotal
role in the events in Chile. After a failed attempt at trying
to solve the 'situation' by sending David's brother Nelson Rockefeller,
the Governor of New York, down to Latin America, David Rockefeller
attempted a larger operation. David Rockefeller told the story
of how his friend Agustin (Doonie) Edwards, the publisher of El
Mercurio, had warned David that if Allende won the election, Chile
would "become another Cuba, a satellite of the Soviet Union."
David then put Doonie "in touch with Henry Kissinger."[68]
_In the same month that Kissinger met
with Edwards, the National Security Council (of which Kissinger
held the top post) authorized CIA "spoiling operations"
to prevent the election of Allende. David Rockefeller had known
Doonie Edwards from the Business Group for Latin America (BGLA),
which was founded by Rockefeller in 1963, later to be named the
Council of the Americas. Rockefeller founded it initially, in
cooperation with the US government, "as cover for [CIA's]
Latin American operations." The US Assistant Secretary of
State for Latin American Affairs at the time was Charles Meyer,
formerly with Rockefeller's BGLA, who said that he was chosen
for his position at the State Department "by David Rockefeller."
When Allende was elected on September 4, 1970, Doonie Edwards
left Chile for the US, where Rockefeller helped him "get
established" and the CEO of PepsiCo, Donald Kendall, gave
him a job as a Vice President. Ten days later, Donald Kendall
met with Richard Nixon, and the next day, Nixon, Kissinger, Kendall
and Edwards had breakfast together. Later that day, Kissinger
arranged a meeting between Edwards and CIA director, Richard Helms.
Helms met with both Edwards and Kendall, who asked the CIA to
intervene. Later that day, Nixon told Helms and Kissinger to "move
against Allende."[69]
_However, before Edwards met with the
CIA director, Henry Kissinger had met privately with "David
Rockefeller, chairman of the Chase Manhattan Bank, which had interests
in Chile that were more extensive than even Pepsi-Cola's."
Rockefeller even allowed the CIA to use his bank for "anti-Allende
Chilean operations."[70] After Allende came to power, "commercial
banks, including Chase Manhattan, Chemical, First National City,
Manufacturers Hanover, and Morgan Guaranty, cancelled credits
to Chile," and the "World Bank, Inter-American Development
Bank, Agency for International Development, and the Export-Import
Bank either cut programs in Chile or cancelled credits."
However, "military aid to Chile, which has always been substantial,
doubled in the 1970-1974 period as compared to the previous four
years."[71]
_On September 11, 1973, General Augusto
Pinochet orchestrated a coup d'état, with the aid and participation
of the CIA, against the Allende government of Chile, overthrowing
it and installing Pinochet as dictator. The next day, an economic
plan for the country was on the desks of "the General Officers
of the Armed Forces who performed government duties." The
plan entailed "privatization, deregulation and cuts to social
spending," written up by "U.S.-trained economists."[72]
These were the essential concepts in neoliberal thought, which,
through the oil crises of the 1970s, would be forced upon the
developing world through the World Bank and IMF.
_In essence, Chile was the neo-liberal
Petri-dish experiment. This was to expand drastically and become
the very substance of the international economic order.
Globalization: A Liberal-Mercantilist Economic Order?
Neo-Liberals Take the Forefront
In 1971, Jimmy Carter, a somewhat obscure governor from Georgia
had started to have meetings with David Rockefeller. They became
connected due to Carter's support from the Atlanta corporate elite,
who had extensive ties to the Rockefellers. So in 1973, when David
Rockefeller and Zbigniew Brzezinski were picking people to join
the Trilateral Commission, Carter was selected for membership.
Carter thus attended every meeting, and even paid for his trip
to the 1976 meeting in Japan with his campaign funds, as he was
running for president at the time. Brzezinski was Carter's closest
adviser, writing Carter's major campaign speeches.[73]
_When Jimmy Carter became President, he
appointed over two-dozen members of the Trilateral Commission
to key positions in his cabinet, among them, Zbigniew Brzezinski,
who became National Security Adviser; Samuel P. Huntington, Coordinator
of National Security and Deputy to Brzezinski; Harold Brown, Secretary
of Defense; Warren Christopher, Deputy Secretary of State; Walter
Mondale, Vice President; Cyrus Vance, Secretary of State; and
in 1979, he appointed David Rockefeller's friend, Paul Volcker,
as Chairman of the Federal Reserve Board.[74]
_In 1979, the Iranian Revolution spurred
another massive increase in the price of oil. The Western nations,
particularly the United States, had put a freeze on Iranian assets,
"effectively restricting the access of Iran to the global
oil market, the Iranian assets freeze became a major factor in
the huge oil price increases of 1979 and 1981."[75] Added
to this, in 1979, British Petroleum cancelled major oil contracts
for oil supply, which along with cancellations taken by Royal
Dutch Shell, drove the price of oil up higher.[76]
_However, in 1979, the Federal Reserve,
now the lynch-pin of the international monetary system, which
was awash in petro-dollars (US dollars) as a result of the 1973
oil crisis, decided to take a different action from the one it
had taken earlier. In August of 1979, "on the advice of David
Rockefeller and other influential voices of the Wall Street banking
establishment, President Carter appointed Paul A. Volcker, the
man who, back in August 1971, had been a key architect of the
policy of taking the dollar off the gold standard, to head the
Federal Reserve."[77]
_Volcker got his start as a staff economist
at the New York Federal Reserve Bank in the early 50s. After five
years there, "David Rockefeller's Chase Bank lured him away."[78]
So in 1957, Volcker went to work at Chase, where Rockefeller "recruited
him as his special assistant on a congressional commission on
money and credit in America and for help, later, on an advisory
commission to the Treasury Department."[79] In the early
60s, Volcker went to work in the Treasury Department, and returned
to Chase in 1965 "as an aide to Rockefeller, this time as
vice president dealing with international business." With
Nixon entering the White House, Volcker got the third highest
job in the Treasury Department. This put him at the center of
the decision making process behind the dissolution of the Bretton
Woods agreement.[80] In 1973, Volcker became a member of Rockefeller's
Trilateral Commission. In 1975, he got the job as President of
the New York Federal Reserve Bank, the most powerful of the 12
branches of the Fed.
_In 1979, Carter gave the job of Treasury
Secretary to Arthur Miller, who had been Chairman of the Fed.
This left an opening at the Fed, which was initially offered by
Carter to David Rockefeller, who declined, and then to A.W. Clausen,
Chairman of Bank of America, who also declined. Carter repeatedly
tried to get Rockefeller to accept, and ultimately Rockefeller
recommended Volcker for the job.[81] Volcker became Chairman of
the Federal Reserve System, and immediately took drastic action
to fight inflation by radically increasing interest rates.
_The world was taken by shock. This was
not a policy that would only be felt in the US with a recession,
but was to send shock waves around the world, devastating the
Third World debtor nations. This was likely the ultimate aim of
the 1970s oil shocks and the 1979 Federal Reserve shock therapy.
With the raising of interest rates, the cost of international
money also rose. Thus, the interest rates on international loans
made throughout the 1970s rose from 2% in the 1970s to 18% in
the 1980s, dramatically increasing the interest charges on loans
to developing countries.[82]
_In the developing world, states that
had to import oil faced enormous bills to cover their debts, and
even oil producing countries, such as Mexico, faced huge problems
as they had borrowed heavily in order to industrialize, and then
suffered when oil prices fell again as the recession occurring
in the developed states reduced demand. Thus, in 1982, Mexico
declared that it could no longer pay its debt, meaning that, "they
could no longer cover the cost of interest payments, much less
hope to repay the debt." The result was the bursting of the
debt bubble. Banks then halted their loans to Mexico, and "Before
long it was evident that states such as Brazil, Venezuela, Argentina,
and many sub-Saharan African countries were in equally difficult
financial positions."[83]
_The IMF and World Bank entered the scene
newly refurnished with a whole new outlook and policy program
designed just in time for the arrival of the debt crisis. The
IMF "negotiated standby loans with debtors offering temporary
assistance to states in need. In return for the loans states agreed
to undertake structural adjustment programs (SAPs). These programs
entailed the liberalization of economies to trade and foreign
investment as well as the reduction of state subsidies and bureaucracies
to balance national budgets."[84] Thus, the neoliberal project
of 1973 in Chile was expanded into the very functioning of the
International Financial Institutions (IFIs).
_Neoliberalism is "a particular organization
of capitalism, which has evolved to protect capital(ism) and to
reduce the power of labour. This is achieved by means of social,
economic and political transformations imposed by internal forces
as well as external pressure," and it entails the "shameless
use of foreign aid, debt relief and balance of payments support
to promote the neoliberal programme, and diplomatic pressure,
political unrest and military intervention when necessary."[85]
Further, "neoliberalism is part of a hegemonic project concentrating
power and wealth in elite groups around the world, benefiting
especially the financial interests within each country, and US
capital internationally. Therefore, globalization and imperialism
cannot be analysed separately from neoliberalism."[86]
_Joseph Stiglitz, former Chief Economist
of the World Bank, wrote in his book, Globalization and its Discontents,
"In the 1980s, the Bank went beyond just lending for projects
(like roads and dams) to providing broad-based support, in the
form of structural adjustment loans; but it did this only when
the IMF gave its approval - and with that approval came IMF-imposed
conditions on the country."[87] As economist Michel Chossudovsky
wrote, "Because countries were indebted, the Bretton Woods
institutions were able to oblige them through the so-called 'conditionalities'
attached to the loan agreements to appropriately redirect their
macro-economic policy in accordance with the interests of the
official and commercial creditors."[88]
_The nature of SAPs is such that the conditions
imposed upon countries that sign onto these agreements include:
lowering budget deficits, devaluing the currency, limiting government
borrowing from the central bank, liberalizing foreign trade, reducing
public sector wages, price liberalization, deregulation and altering
interest rates.[89] For reducing budget deficits, "precise
'ceilings' are placed on all categories of expenditure; the state
is no longer permitted to mobilize its own resources for the building
of public infrastructure, roads, or hospitals, etc."[90]
_Joseph Stiglitz wrote that, "the
IMF staff monitored progress, not just on the relevant indicators
for sound macromanagement - inflation, growth, and unemployment
- but on intermediate variables, such as the money supply,"
and that "In some cases the agreements stipulated what laws
the country's Parliament would have to pass to meet IMF requirements
or 'targets' - and by when."[91] Further, "The conditions
went beyond economics into areas that properly belong in the realm
of politics," and that "the way conditionality was imposed
made the conditions politically unsustainable; when a new government
came into power, they would be abandoned. Such conditions were
seen as the intrusion by the new colonial power on the country's
own sovereignty."[92]
_"The phrase 'Washington Consensus'
was coined to capture the agreement upon economic policy that
was shared between the two major international financial institutions
in Washington (IMF and World Bank) and the US government itself.
This consensus stipulated that the best path to economic development
was through financial and trade liberalization and that international
institutions should persuade countries to adopt such measures
as quickly as possible."[93] The debt crisis provided the
perfect opportunity to quickly impose these conditions upon countries
that were not in a position to negotiate and with no time to spare,
desperately in need of loans. Without the debt crisis, such policies
may have been subject to greater scrutiny, and with a case-by-case
analysis of countries adopting SAPs, the world would become quickly
aware of their dangerous implications. The debt crisis was absolutely
necessary in implementing the SAPs on an international scale in
a short amount of time.
_The effect became quite clear, as the
result "of these policies on the population of developing
countries was devastating. The 1980s is known as the 'lost decade'
of development. Many developing countries' economies were smaller
and poorer in 1990 than in 1980. Over the 1980s and 1990s, debt
in many developing countries was so great that governments had
few resources to spend on social services and development."[94]
With the debt crisis, countries in the developing world were "[s]tarved
of international finance, [and] states had little choice but to
open their economies to foreign investors and trade."[95]
The "Third World" was recaptured in the cold grasp of
economic colonialism under the auspices of neo-liberal economic
theory.
A Return to Statist Theory
Since the 1970s, mercantilist thought had re-emerged in mainstream
political-economic theory. Under various names such as neo-mercantilism,
economic nationalism or statism, they hold as vital the centrality
of the state in the global political economy. Much "Globalization"
literature puts an emphasis on the "decline of the state"
in the face of an integrated international economic order, where
borders are made illusory. However, statist theory at least helps
us understand that the state is still a vital factor within the
global political economy, even in the midst of a neo-liberal economic
order.
_Within the neo-liberal economic order,
it was the powerful western (primarily US and Western European)
states that imposed neo-mercantilist or statist policies in order
to protect and promote their interests within the global political
economy. Some of these methods were revolved around policy tools
such as export subsidies, imposed to lower the price of goods,
which would make them more attractive to importers, giving that
particular nation an advantage over the competition.
_For example, the US has enormous agriculture
export subsidies, which make US agriculture and grain an easily
affordable, attractive and accessible commodity for importing
nations. Countries of the global south (the Lesser-Developed Countries,
LDCs), subject to neo-liberal policies imposed upon them by the
World Bank and IMF were forced to open their economies up to foreign
capital. The World Bank would bring in heavily subsidized US grain
to these poor nations under the guise of "food aid,"
which would have the affect of destabilizing the nation's agriculture
market, as the heavily subsidized US grains would be cheaper than
local produce, putting farmers out of business. Most LDCs are
predominantly rural based, so when the farming sector is devastated,
so too is the entire nation. They plunge into economic crisis
and even famine.
_With the statist approach, theorists
examine how the state is still relevant in shaping economic outcomes
and still remains a powerful entity in the international arena.
One theorist who is prominent within the statist school is Robert
Gilpin. Gilpin, a professor at the Woodrow Wilson School of Public
and International Affairs at Princeton, is also a member of the
Council on Foreign Relations. In his book, Global Political Economy,
Gilpin postulated that multinational corporations were an invention
of the United States, and indeed an "American phenomenon"
upon which European and Asian states responded by internationalizing
their own firms. In this sense, his theory postulated to a return
to the competitive nature of mercantilist economic theory, in
which one state gains at the expense of another. He also addresses
the nature of the international economy, in that both historically
and presently, there was a single state acting as the main enforcer
and manager of the global economy. Historically, it was Britain,
and presently, it was the United States.
_One cannot deny the significance of the
state in the global political economy, as it has been, and still
remains very relevant. The events of 1973 are exemplary of this,
however, more must be examined in order to better understand the
situation. Though states are still prominent actors, it is vital
to address in whose interest they act. Mercantilist and statist
theorists tend to focus on the concept that states act in their
own selfish interest, for the benefit of the state, both politically
and economically. However, this is somewhat linear and diversionary,
as it does not address the precise structure of the state economy,
specifically in terms of its monetary and central banking system.
_States, most especially the large hegemonic
ones, such as the United States and Great Britain, are controlled
by the international central banking system, working through secret
agreements at the Bank for International Settlements (BIS), and
operating through national central banks (such as the Bank of
England and the Federal Reserve). The state is thus owned by an
international banking cartel, and though the state acts in such
a way that proves its continual relevance in the global economy,
it acts so not in terms of self-interest for the state itself,
but for the powerful interests that control that state. The same
international banking cartel that controls the United States today
previously controlled Great Britain and held it up as the international
hegemon. When the British order faded, and was replaced by the
United States, the US ran the global economy. However, the same
interests are served. States will be used and discarded at will
by the international banking cartel; they are simply tools.
_In this sense, interdependence theory,
which presumes the decline of the state in international affairs,
fails to acknowledge the role of the state in promoting and undertaking
the process of interdependence. The decline of the nation-state
is a state-driven process, and is a process that leads to a rise
of the continental state and the global state. States, are still
very relevant, but both liberal and mercantilist theorists, while
helpful in understanding the concepts behind the global economy,
lay the theoretical groundwork for a political economic agenda
being undertaken by powerful interests. Like Robert Cox said,
"Theory is always for someone and for some purpose."
Hegemonic-Stability Theory
In his book, Global Political Economy, Gilpin explained that,
"In time, if unchecked, the integration of an economy into
the world economy, the intensifying pressures of foreign competition,
and the necessity to be efficient in order to survive economically
could undermine the independence of a society and force it to
adopt new values and forms of social organization. Fear that economic
globalization and the integration of national markets are destroying
or could destroy the political, economic, and cultural autonomy
of national societies has become widespread."[96]
_However, Gilpin explains that the "Creation
of effective international regimes and solutions to the compliance
problem require both strong international leadership and an effective
international governance structure." Yet, he explains, "Regimes
in themselves cannot provide governance structure because they
lack the most critical component of governance - the power to
enforce compliance. Regimes must rest instead on a political base
established through leadership and cooperation."[97] This
is where we see the emergence of Hegemonic Stability Theory.
_Gilpin explains that, "The theory
of hegemonic stability posits that the leader or hegemon facilitates
international cooperation and prevents defection from the rules
of the regime through use of side payments (bribes), sanctions,
and/or other means, but can seldom, if ever, coerce reluctant
states to obey the rules of a liberal international economic order."
As he explained, "The American hegemon did indeed play a
crucial role in establishing and managing the world economy following
World War II."[98]
_The roots of Hegemonic Stability Theory
(HST) lie within both liberal and statist theory, as it is representative
of a crossover theory that cannot be so easily placed in either
category. The main concept champions the liberal notion of the
open international economic system, guided by liberal principles
of open-markets and free trade, while bringing in the statist
concept of a single hegemonic state representing the concentration
of political and economic power, as it is the enforcer of the
liberal international economy.
_The more liberal-leaning theorists of
HST argue that a liberal economic order requires a strong, hegemonic
state to maintain the smooth functioning of the international
economy. One thing this state must do is maintain the international
monetary system, as Britain did under the gold standard and the
United States did under the Dollar-Wall Street Regime, following
the end of the Bretton-Woods dollar-gold link.
Regime Theory
_Regime Theory is another crossover theory between liberal and
mercantilist theorists. Its rise was primarily in reaction to
the emergence of Hegemonic Stability Theory, in order to address
the concern of a perceived decline in the power of the US. This
was due to the rise of new economic powers in the 1970s, and another
major purveyor of this theory was Robert Keohane. They needed
to address how the international order could be maintained as
the hegemonic power declined. The answer was in the building of
international organizations to manage the international regime.
_In this sense, Regime Theory has identified
an important aspect of the global political economy, in that though
states have upheld the international order in the past, never
before has there been such an undertaking to institutionalize
the authority over the international order through international
organizations. These organizations, such as the World Bank, IMF,
UN, and WTO, though still controlled and influenced by states,
predominantly the international hegemon, the United States, represent
a changing direction of internationalization and transnationalism.
Regime Theorists tend to justify the formation of a more transnational
apparatus of power, beyond just a single hegemonic state, into
a more internationalized structure of authority.
Notes
[1]CBC, Informal forum or global conspiracy? CBC News Online:
June 13, 2006: http://www.cbc.ca/news/background/bilderberg-group/
[2]Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. (South End Press: 1980),
161-171
[3]Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. (South End Press: 1980),
161-162
[4]CFR, The First Transformation. CFR History: http://www.cfr.org/about/history/cfr/first_transformation.html
[5]Glen McGregor, Secretive power brokers meeting coming to Ottawa?
Ottawa Citizen: May 24, 2006: http://www.canada.com/topics/news/world/story.html?id=ff614eb8-02cc-41a3-a42d-30642def1421&k=62840
[6]William F. Jasper, Rogues' gallery of EU founders. The New
American: July 12, 2004: http://findarticles.com/p/articles/mi_m0JZS/is_14_20/ai_n25093084/pg_1?tag=artBody;col1
[7]Ambrose Evans-Pritchard, Euro-federalists financed by US spy
chiefs. The Telegraph: June 19, 2001: http://www.telegraph.co.uk/news/worldnews/europe/1356047/Euro-federalists-financed-by-US-spy-chiefs.html
[8]Ambrose Evans-Pritchard, Euro-federalists financed by US spy
chiefs. The Telegraph: June 19, 2001: http://www.telegraph.co.uk/news/worldnews/europe/1356047/Euro-federalists-financed-by-US-spy-chiefs.html
[9]Bilderberg Group, GARMISCH-PARTENKIRCHEN CONFERENCE. The Bilderberg
Group: September 23-25, 1955, page 7:
http://wikileaks.org/leak/bilderberg-meetings-report-1955.pdf
[10]Who are these Bilderbergers and what do they do? The Sunday
Herald: May 30, 1999: http://findarticles.com/p/articles/mi_qn4156/is_19990530/ai_n13939252
[11]Andrew Rettman, 'Jury's out' on future of Europe, EU doyen
says. EUobserver: March 16, 2009: http://euobserver.com/9/27778
[12]George T. Crane, Abla Amawi, The Theoretical evolution of
international political economy. Oxford University Press US, 1997:
page 110
[13]George T. Crane, Abla Amawi, The Theoretical evolution of
international political economy. Oxford University Press US, 1997:
page 107
[14]George T. Crane, Abla Amawi, The Theoretical evolution of
international political economy. Oxford University Press US, 1997:
pages 107-108
[15]George T. Crane, Abla Amawi, The Theoretical evolution of
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[16]George T. Crane, Abla Amawi, The Theoretical evolution of
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[17]George T. Crane, Abla Amawi, The Theoretical evolution of
international political economy. Oxford University Press US, 1997:
pages 50-51
[18]Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. South End Press: 1980:
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[19]Robert O'Brien and Marc Williams, Global Political Economy:
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215
[20]Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. South End Press: 1980:
pages 66-67
[21]Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. South End Press: 1980:
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[22]C. Fred Bergsten, The New Economics and US Foreign Policy.
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[23]Richard H. Ullman, Trilateralism: "Partnership"
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[24]Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. South End Press: 1980:
pages 76-78
[25]Richard H. Ullman, Trilateralism: "Partnership"
For What? Foreign Affairs: October, 1976: page 3
[26]Richard H. Ullman, Trilateralism: "Partnership"
For What? Foreign Affairs: October, 1976: page 5
[27]Congressional Research Service, TRILATERAL COMMISSION. The
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[28]CFR, Joseph S. Nye, Jr.. Board of Directors: http://www.cfr.org/bios/1330/joseph_s_nye_jr.html
[29]Annual Report, The Council on Foreign Relations. Historical
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[30]Peter Gowan, The Globalization Gamble: The Dollar-Wall Street
Regime and its Consequences. Page 19-20
[31]William Engdahl, A Century of War: Anglo-American Oil Politics
and the New World Order. (London: Pluto Press, 2004), 130-132
[32]William Engdahl, A Century of War: Anglo-American Oil Politics
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134
[33]CFR, "X" Leads the Way. CFR History: http://www.cfr.org/about/history/cfr/x_leads.html
[34]Robert Dallek, The Kissinger Presidency. Vanity Fair: May
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[35]Ibid.
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Griffin: 1994: pages 304-307
[39]John Loftus and Mark Aarons, The Secret War Against the Jews:
How Western Espionage Betrayed the Jewish People. St. Martin's
Griffin: 1994: pages 308-310
[40]John Loftus and Mark Aarons, The Secret War Against the Jews:
How Western Espionage Betrayed the Jewish People. St. Martin's
Griffin: 1994: pages 310-311
[41]Robert Dallek, The Kissinger Presidency. Vanity Fair: May
2007: http://www.vanityfair.com/politics/features/2007/05/kissinger200705
[42]John Loftus and Mark Aarons, The Secret War Against the Jews:
How Western Espionage Betrayed the Jewish People. St. Martin's
Griffin: 1994: pages 312-313
[43]F. William Engdahl, A Century of War: Anglo-American Oil Politics
and the NewWorld Order. London: Pluto Press, 2004: pages 130-132
[44]F. William Engdahl, A Century of War: Anglo-American Oil Politics
and the NewWorld Order. London: Pluto Press, 2004: pages 136-137
[45]The Observer, Saudi dove in the oil slick. The Guardian: January
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[46]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: page 24
[47]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 31-33
[48]IPC, James Akins. Iran Policy Committee: Scholars and Fellows:
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[49]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 35-36
[50]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 37-38
[51]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: page 44
[52]Time, The Cast of Analysts. Time Magazine: March 12, 1979:
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[53]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: page 48
[54]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: pages 50-51
[55]V.H. Oppenheim, Why Oil Prices Go Up (1) The Past: We Pushed
Them. Foreign Policy: No. 25, Winter, 1976-1977: page 53
[56]F. William Engdahl, A Century of War: Anglo-American Oil Politics
and the NewWorld Order. London: Pluto Press, 2004: page 137
[57]The Observer, Saudi dove in the oil slick. The Guardian: January
14, 2001: http://www.guardian.co.uk/business/2001/jan/14/globalrecession.oilandpetrol
[58]Peter Gowan, The Globalization Gamble: The Dollar-Wall Street
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[59]Dharam Ghai, ed., The IMF and the South: The Social Impact
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[62]Gisela Bolte, et. al., Jumbo Loans, Jumbo Risks. Time Magazine:
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[64]A. W. Mullineux, International Banking and Financial Systems:
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[65]Robert K. Schaeffer, Understanding Globalization: The Social
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[66]Peter Gowan, The Globalization Gamble: The Dollar-Wall Street
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[67]David Rockefeller, Memoirs. New York: Random House: 2002:
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[68]Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the
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[70]Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the
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[73]Holly Sklar, ed., Trilateralism: The Trilateral Commission
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[74]Holly Sklar, ed., Trilateralism: The Trilateral Commission
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[75]Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the
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88
[76]F. William Engdahl, A Century of War: Anglo-American Oil Politics
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[77]F. William Engdahl, A Century of War: Anglo-American Oil Politics
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[78]Joseph B. Treaster, Paul Volcker: The Making of a Financial
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[93]Robert O'Brien and Marc Williams, Global Political Economy:
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224
[94]Robert O'Brien and Marc Williams, Global Political Economy:
Evolution and Dynamics, 2nd ed. Palgrave Macmillan: 2007: page
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[95]Robert O'Brien and Marc Williams, Global Political Economy:
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225
[96]Robert Gilpin, Global Political Economy: Understanding the
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[97]Robert Gilpin, Global Political Economy: Understanding the
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[98]Robert Gilpin, Global Political Economy: Understanding the
International Economic Order, Princeton University Press, 2001:
pages 97-98___
Andrew Gavin Marshall is a Research Associate with the Centre
for Research on Globalization (CRG). He is currently studying
Political Economy and History at Simon Fraser University.
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