[OPE-L:6038] petrodollarism, not oilism: reply to Fred

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Tue Oct 02 2001 - 14:57:50 EDT

I am not subbed to pen-l, and just saw fred's reply.   i'll put my reply on 
ope-l and cc a message to michael. 

Basically Fred does not agree with Cyrus Bina when the latter writes
"The real U.S. incentive, 
however, can be explained in terms of the channeling of massive Saudi oil 
revenues toward the U.S. regional (Middle East) as well as global strategic 

Fred writes:

I agree that petrodollars are crucial to US hegemony, and thanks for the 
reminder of this important point. 
Fred, those petrodollars were important in staving off the falling US profit 
rate in the 70s and 80s. While as you have importantly shown the US has been 
able to rely on market forces for a stimulative inflow of capital in recent 
years,  Spiro shows how the US had to in effect use state coercion to ensure 
that oil remained priced in dollars and that petrodollars were recycled in 
accordance with US objectives in the 70s and 80s. The internatinal operation of 
the imperialist state in staving off the US profit rate has not been recognized 
by you before. 
Fred writes: But the actual oil itself is essential
for the very existence of the US economy (as least in its current
Yes, and as Marx emphasized, the value of raw material forms 
an ever growing component of the value of the commodity product...which does 
mean that low price of raw materials are important for the industrial 
economies. But it is far from clear the US state has always pushed for low 
prices. In fact Spiro provides evidence of how the US opted out of coalitions 
to put pressure on OPEC; the Nixon doctrine required a high price of oil so 
that client regimes could engage in orgies of military spending. 

Fred writes: If the supplies of Middle Eastern oil were cut off, then the US 
economy could not continue for very long as it normally does.  
but why would a radical arab islamicist regime cut off supply--it would need 
revenue to carry out its self proclaimed revolutionary objectives. without oil 
revenue, how would food be purchased--the arab world has suffered from the 
worst kind of dependent development.  a radical regime may even increase the 
supply of oil. 

And it is the US that has worked to cut off or at least control the voluminous 
Iraqi supply of oil.   Has Iran cut off its supply of oil since the overthrow 
of the Shah? 

as for price, according to bina--if I have understood him--the 
internationalization of the oil industry is such today that even control of 
Saudi Arabia is not sufficient to determine  prices at the global level. So I 
do not think there is a threat of a radical Arab regime in Saudi Arabia hiking 
the price of oil. 

worries about supply and price seem to me to be secondary to the problem of 
channeling massive the revenue from dollar denominated oil, as bina has argued. 
this is also clear from spiro's account as well.  


Fred writes:

This was
the lesson of the Arab oil boycott of 1973-74 and the ensueing

According to Spiro, the rise in the price of oil then was mostly a result of 
OPEC members turning to independents and circumventing the Seven Sisters who 
had successfully conspired in suppressing the purchasing price of crude only to 
make super profits at the pump. The recession was a result of the seven sisters 
attempting to maintain their super-profits.  To the extent that there was an 
attempt to choke off the supply of oil, this was a result of Arab-Israeli 
tensions:  US military presence there actually exacerbates the threat of a 
supply cut-off. 

Fred writes:

  From which followed the "Kissinger Doctrine" and the "Carter
Doctrine", according to which US troops should be stationed in the Middle
East and should be deployed as necessary to guarantee the outflow of

You make it sound as if the US was doing the world a service in guaranteeing 
the flow of oil...i think you are playing on fears here that without US 
millitary occupation OPEC would choke the world to death. 

Fred writes: 

 Which in turn has led to so much resentment and conflict. 


You are not clear as to what has caused resentment and conflict. Simply the US 
presence at the holy sites. But then why does Osama bin Laden rail...with much 
popular support...about the US robbery of oil wealt as well?  Why did the 
terrorists attack a major economic symbol? 
US troops are not in Saudi Arabia to ensure the flow of oil--that's the story 
the US tells the world; the troops are there to ensure that the House of Saud 
continues to rob the Arabs for the benefit of American capital. 

Fred writes:
The US military forces are in the Middle East to enforce the ouflow of oil
to US refineries and markets, not to enforce the flow of petrodollars
through US banks.  Troops are not necessary for the latter.

I don't know why you say this.  I think you underestimate the popular 
resentment against the outflow of wealth to the US. 


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