Averting World War III, Ending Dollar Hegemony and US Imperialism

Introduction1

When US President Bush declared in October 2007 that if Iran acquired the knowledge to produce nuclear weapons, we would be plunged into World War III, he was not joking or even exaggerating: he was making his intentions clear. In the same month, Vice-President Dick Cheney repeated the threat that the US would not ‘stand by’ as Iran allegedly pursued a nuclear weapons programme. If the present war in Afghanistan, Iraq and Palestine spreads to Iran, we will indeed have World War III. We have long had circumstantial evidence that the Bush regime was building up to an attack on Iran: the constant allegations (denied by Mohamed El Baradei, chief of the International Atomic Energy Agency [IAEA]) that it was pursuing a nuclear weapons programme, charges (denied by the Iraqi government) that it was sending arms and fighters into Iraq, a US military build-up clearly directed against Iran, the designation of the Islamic Revolutionary Guards Corps of Iran as a terrorist organisation and imposition of sweeping sanctions against Iran.2 But it has now been revealed by two former high-ranking policy experts from the US National Security Council that war against Iran was planned all along, and nothing that Iran offered to do — including giving up its uranium enrichment programme — could have made a difference.3

If the Bush administration has decided to attack Iran militarily, is there any power on earth that can stop it if the people of the US are unable or unwilling to do so? The argument below is that if the USA’s ability to undertake imperial conquests depends on its obvious military supremacy, this in turn is ultimately based on the use of the US dollar as the world’s reserve currency. It is the dominance of the dollar that underpins US financial dominance as a whole as well as the apparently limitless spending power that allows it to keep hundreds of thousands of troops stationed all over the world. Destroy US dollar hegemony, and the “Empire” will collapse.

David Ludden’s article ‘America’s Invisible Empire’4 sums up the problem of the world’s most recent empire with remarkable clarity. Constituting itself at a time when decolonisation was well under way and other empires were disintegrating, US imperialism could never openly speak its name. Initially, it disguised itself as the defender of democracy against communism; when the Soviet Union ceased to exist, the pretext became the “war against terror”. National security and national interest were invoked as the rationale for global dominance.

Ludden’s description evokes the image of US citizens (and a few others) living in a Truman Show world, a bubble of illusion created by state deception and media complicity that prevents them from being aware of the reality of empire, although everyone outside can see it only too clearly. It sounds quite credible that ‘the empire will not be undone until its reality and costs become visible to Americans’ (p.4777). However, Ludden’s claim that ‘US taxpayers and voters pay the entire cost of the US empire’ (p.4776) is less credible. If that were true, many more Americans would see their empire and oppose it; the Democrats would have put up a principled opposition to the occupation of Iraq and threatened war against Iran, and the overwhelming majority of the US electorate would have supported them. But it is the rest of the world that has been paying for the US empire: that is why it is almost invisible within the US.

The history of dollar hegemony

The core advantage of the US economy, the source of its financial dominance, is the peculiar role of the US currency. It is because the dollar has been for decades the world’s reserve currency that the US is able to maintain its twin deficits (fiscal and trade) and depend on the world’s generosity. It needs capital inflows of almost $4 billion from the rest of the world every working day to keep up its level of spending.5 Its military superiority is one reason why it is unlikely ever to face an embargo, but more importantly, it has been able to live beyond its means because of US dollar hegemony.

The dollar mechanism has been described extensively elsewhere,6 this is merely a summary. The strength of the US economy after World War II enabled the US dollar, backed by gold, to become the world’s reserve currency. When the US abandoned the gold standard in 1971, the dollar remained supreme, and its position was further boosted in 1974 when the US came to an agreement with Saudi Arabia that the oil trade would be denominated in dollars.7 Most countries in the world import oil, and it made sense for them to accumulate dollars in order to guard against oil shocks. Third World countries had even more reason to hoard dollars so as to protect their fragile economies and currencies from sudden collapse. With everyone clamouring for dollars, all the US had to do was print fiat dollars and other countries would accept them in payment for their exports. These dollars then flowed back into the US to be invested in Treasury Bonds and similar instruments, offsetting the outflow. The International Monetary Fund (IMF) and World Bank, headquartered in Washington, reinforced dollar hegemony.

As a reserve currency fulfills world needs in addition to the functions of a domestic currency, the favoured country can build up debt for a protracted period on a scale that would wreck any other country’s currency. But this advantage is a double-edged sword.8 It allowed the US economy to decline unnoticed, its fiscal and trade deficits to climb steeply: by 2006 the US trade deficit had reached $763.6 billion, the current account deficit $850 billion, the gross national debt around $9 trillion. Globalization destroyed the US as a manufacturing nation; the outsourcing of services means that even this sector is gradually being shifted out of the US.8 Only its pre-eminence in the global financial services industry remains intact.9 And this is underpinned by US dollar hegemony.

Dollar hegemony is what concealed the costs of its empire, which were effectively being paid for by the rest of the world, from US citizens. Other countries were compelled to accept fiat dollars because they had no choice. It was the world’s only reserve currency.

A “currency” reason for the Iraq war

When the euro came into being, even then the choice was only a potential one, as the euro initially lost value, making it unattractively risky as a reserve currency. The first non-European countries that made a move in its direction did so for political rather than economic reasons. When Saddam Hussein switched to the euro in late 2000 and converted Iraq’s $10 billion reserve fund at the UN to euro, some analysts commented that this political gesture would have a heavy economic cost.10 But against all expectations, he actually made a profit when the euro staged a recovery.11 Iran is another country which in 2002 converted more than half its foreign exchange reserves to euros.12 Both Iraq and Iran being oil-producing countries, the impact of their shifting currency allegiances would be significant. By contrast, North Korea’s official shift to the euro for trade in December 200213 was negligible from the standpoint of the world economy, yet it signified a trend that US imperialism had to stop at all costs. Suddenly George Bush’s diatribe against the ‘Axis of Evil’, which seemed so arbitrary and laughable at the time, doesn’t appear quite so funny. Add to this picture the fact that Hugo Chavez — against whom the US supported a coup in April 2002, and who continues to be under attack by the Bush regime — has taken a large part of Venezuela’s oil trade out of the orbit of the US dollar, and the economic compulsions driving US foreign policy become clearer. Military might alone does not seem to be a sufficient basis for sustaining an empire: economic power is crucial. And for the declining US economy, US dollar supremacy is essential for maintaining its economic clout.

Thus, there seems to be good reason to believe that the main purpose of the invasion of Iraq was to change the denomination of its oil sales back to dollars,14 especially given that one of the first actions of the US occupying forces was to do precisely that. But the action backfired badly. Anti-war protesters immediately began campaigns to boycott the dollar,15 and the campaign spread, with the call being taken up by the Boycott Bush campaign after the 2004 World Social Forum.16 Former Prime Minister of Malaysia Mahathir Mohamed took up the call in 2004 and again in 2006, arguing that Israel would not be able to oppress the Palestinians and Lebanese without the financial and military support of the US, which would be put under pressure by a dollar boycott.17 In December 2006, Iran announced it was going to shift the rest of its foreign exchange reserves from dollars to euro, using the euro for most of its oil deals, and in July 2007 asked the Japanese to pay for their oil in yen.18

Habit and inertia might have prevailed against these political initiatives to undermine the dollar as the world’s reserve currency, if continuing US belligerence and mismanagement of its economy had not helped to push the value of the dollar lower. As the dollar steadily lost value due to the massive US debt, George Soros pulled his money out of dollar assets, and other US investors followed suit.19 An article in China Daily on 28 September 2004 by Jiang Ruiping, the director of International Economics at the China Foreign Affairs University, pointed out that China was already losing due to the dollar slide and would lose even more if it crashed; he recommended moving out of dollars into euros and possibly also yen, as well as using its dollar reserves to stock up on oil.20 In fact, only about 15 per cent of China’s additional foreign exchange reserves acquired in the first three quarters of 2004 were in US Treasury holdings, and OPEC countries reduced the dollar assets in their reserves from 75 to 60 per cent.21 In July 2005, the fixed exchange rate of the yuan to the dollar was abandoned, followed closely by the Malaysian ringgit, with both currencies being allowed to float in a tight band against a basket of foreign currencies.22 The Japanese government indicated it might diversify its reserves portfolio, and the Reserve Bank of India started buying euro-denominated securities.23 In March 2005, the Bank for International Settlements in Basle announced that Asian central and commercial banks held only 67 per cent of their deposits in dollars in September 2004, compared with 81 per cent three years earlier; Indian banks were down from 68 to 43 per cent, while Chinese dollar holdings were down from 83 to 68 per cent, with the euro and yen being the most popular alternatives.24 Holdings in more exotic currencies also grew rapidly, albeit from much lower levels: Chinese renminbi (yuan) by 530 per cent, Indonesian rupaiah by 283 per cent, Taiwanese dollars, Korean won and Indian rupees by 129,117 and 114 per cent respectively, presumably on the expectation that they would grow in importance.25

By the end of 2005, euro-denominated securities had overtaken dollar-denominated ones as a medium for international investors.26 In 2006, the Swedish central bank cut its dollar holdings from 37 per cent to 20 percent, the Russian central bank from around two-thirds to 40 per cent, while Italy switched a quarter of its foreign currency reserves from dollars to sterling; Russian President Vladimir Putin also called for a ruble-denominated oil and natural gas exchange in Russia.27 The Gulf Cooperation Council (GCC), planning to launch a common currency in 2010, was thrown off-course when Kuwait abandoned the dollar peg in May 2007 in order not to continue importing inflation via a devaluing dollar; later, as the subprime mortgage crisis struck in the US, and the Federal Reserve cut interest rates by 0.5 per cent, Oman, Saudi Arabia and Bahrain did not cut their rates in unison, amidst reports that there was an ongoing debate on a more flexible alternative to the dollar peg in all six GCC countries.28 Data released by the US Federal Reserve showed that between late July and early September 2007, foreign central banks reduced their holdings of US Treasury Bonds by $48 billion.29 Meanwhile, plans to establish the Banco del Sur by seven Latin American countries (with others likely to join), in order to provide an alternative to US-dominated funds like the IMF, World Bank and Inter-American Development Bank,30 would be an even greater threat to the dollar if they included the use of a regional currency. An interesting result of the dollar’s declining value is that while the rich turn to euro, the less wealthy, from Russia to the Maldives and Mexico to Vietnam, prefer their local currency to the dollar.31

It is easy to agree with Xu Jian, a vice-director of China’s Central Bank, that the dollar is ‘losing its status as the world currency,’32 especially when the same sentiment is expressed by American analysts.33 What this means is that the US dollar is no longer the sole world currency; this position is now shared with other currencies. But it is still dominant, for a number of reasons. So long as the oil sales of most countries continue to be denominated in dollars, the US dollar will still be in demand; this could change, of course, if Russia were to launch its ruble-denominated oil and gas exchange. And countries like China and Japan, which between them hold trillions of dollars, would be unwilling to dump them because that would hit the value of their own reserves. Moreover, like other countries that rely heavily on the US market, they would prefer to keep their currencies low against the dollar, even though by November 2007 the yuan had appreciated by 11.6 per cent against the dollar since the peg was dropped, and the yen by 7.7 per cent since the beginning of the year.34 On the other hand, building up dollar reserves would simply increase their losses as it declined. Other countries with smaller dollar reserves would also face the same dilemma.35

The gradual decline in the value of the dollar that is occurring would have been the best option, if not for the urgency of the situation facing us. Millions have died in Iraq and Afghanistan as a result of the US-led occupations, and the carnage continues; meanwhile, the apartheid state of Israel, fully supported by the US, has occupied the whole of historical Palestine, herding the original inhabitants into ghettoes in the West Bank and one big ghetto in Gaza, and subjecting them to ethnic cleansing and daily killings.36 If Iran is attacked, the conflict would become a nuclear war, at least in the sense that it would involve bombing Iran’s nuclear facilities; but it might also involve nuclear weapons. Apparently ‘The only thing standing in the way of a preemptive attack on Iran’s nuclear facilities is foot-dragging by the US military,’ but there is frightening evidence of attempts by the government to get around this resistance from the US military.37 Several cruise missiles armed with nuclear warheads were secretly flown across the US in violation of all standard procedures on 29/30 August 2007, and several military personnel who might have known about the incident or been involved in it died under mysterious circumstances shortly before or after it, leading to speculation that the missing nukes incident was connected to US war plans against Iran.38 It hardly needs to be pointed out that such a war, in which Russia and China might get involved, would be catastrophic, mainly for Iran and West Asia, but also for the rest of the world.

Among the side effects of US military aggression is the expansion of fundamentalist forces; the Taliban has not only made a come-back in Afghanistan, but is now spreading in Pakistan, while Al Qaeda, which had no presence in Iraq under Saddam Hussein’s rule, is now well entrenched there. Democracy in Iran has yet to recover fully from the US-inspired regime change in 1953, and it is likely that a US military attack will set it back by another half-century. But can such an attack be prevented?

What to do: non-violent economic non-cooperation

This brings us back to the dilemma posed by David Ludden. The costs of empire will become apparent to the US public only when they have to pay those costs, and this will happen only when (a) other nations stop colluding in its imperial adventures, and (b) the dollar loses its role as the world’s reserve currency.

For citizens of the world who are opposed to US imperialism, that suggests several possible courses of action. The ‘world’s second super-power’, world public opinion, made a hugely impressive showing prior to the invasion of Iraq, yet it failed to stop the invasion itself; stronger action is required. But the armed struggle taking place in Iraq is killing and maiming hundreds of thousands of Iraqis and thousands of Americans, most of them from poor families; surely this is not desirable. The alternative proposed here is non-violent non-cooperation with the imperial monster. For example:

1) We should put pressure on all other governments not to participate in the occupation of Iraq and Afghanistan, or any attack on Iran or sanctions against it, and/or vote out candidates who are colluding in this aggression and vote in alternatives. This will leave the burden of running their empire fairly and squarely on the shoulders of the US administration.

2) We should refuse to use the US dollar except within the US itself. Given the current weakness of the dollar, this could undermine its reserve currency role even if it is done on an individual basis. For example, large numbers of people from developing countries cross international borders every day, for work, business, tourism, pilgrimages or to visit relations; since their own currencies are not accepted internationally, they have to buy ‘hard’ currencies, and if they were to refuse to use the US dollar in this capacity, it would certainly make an impact. Economic actors like the fair trade movement should also shift to other currencies for their international trade. Both academics and activists should stop using dollar equivalents to measure incomes and GDP; for the moment, the euro can be used as a standard. Mass action of this sort played a major role in ending British rule in India and thus the British empire; employed on a much wider scale, it can help to end the US empire.

3) People in Third World countries should put pressure on their governments to shift foreign currency assets out of dollars, and to create regional currencies to strengthen regional commercial and economic ties. This would not only be a gesture of solidarity to the beleaguered peoples of Afghanistan, Iraq, Palestine, Iran and others oppressed or threatened by the US empire, but would also make good economic sense. The dollar is sliding, and developing countries which hold all or most of their foreign exchange reserves in dollars are losing money as it loses value. If it crashes, their reserves could be wiped out.

4) We should appeal to governments in oil-producing countries not to denominate their oil trade in US dollars. This does not necessarily involve a wholesale shift to the euro. Venezuela has concluded several barter deals with other Latin American countries including Cuba, giving them oil in exchange for goods and services,39 and this is a pattern other oil-producing countries could consider; if a regional currency is established by the Banco del Sur, that too could be used for oil sales. Russia could denominate its oil sales in rubles, and the GCC countries in their new currency, which would enable the remittances of hundreds of thousands of migrant workers from South and Southeast Asia in Gulf countries to be used directly for oil imports. Barter deals which do not involve oil could also be concluded between developing countries.

5) World trading patterns would also need to change. If the dollar sinks drastically with world trade unchanged, many countries which now rely on exports to the US will be affected adversely by its inability to import their goods with a weakened dollar. A reorientation of trade away from the US would therefore be necessary. For example, plans to constitute the South Asia Free Trade Area as a regional bloc free of tariff and immigration barriers should be pursued at greater speed, and trade with other countries promoted at the same time. MERCOSUR in Latin America has the potential to develop into an institution similar to the European Union. China and Japan, the biggest creditors of the US, suffer most from the decline of the dollar, and would have to work out alternative trade patterns to safeguard their economies.

6) For many Third World countries, including India and China, expanding domestic mass markets would be an important component of any strategy. This would involve campaigning nationally and internationally for policies of employment creation, protection of workers’ rights, shorter working hours, and enforced payment of minimum wages that are adequate to support a decent standard of living. Such a redistribution of resources from militarism and wasteful consumption of the rich and powerful to productive consumption of working people would play a positive economic role, not only in Third World countries but also in Europe and North America.

7) In addition to these economic measures, ending US imperialism would require pressing for the development and implementation of international humanitarian law, international law and multilateral treaties (such as the Geneva Conventions, Rome Treaty of the International Criminal Court, Chemical Weapons Convention, Biological Weapons Convention, Comprehensive Test Ban Treaty, Land Mine Treaty, ILO Core Conventions, CEDAW and the Kyoto Protocol), and the strengthening and democratization of multilateral institutions (like the UN, ILO and WTO).

8) It must be emphasized that none of these actions are aimed at ordinary US citizens, a large and growing number of whom are opposed to US imperialism, and all of whom are affected adversely by it, whether they realize it or not. On the contrary, it is an open secret that the US Treasury and Federal Reserve are encouraging the decline of the dollar because it is seen as the best cure for the ailing US economy, since it slashes the foreign debt and makes American products more competitive.40 A cheaper dollar would expand employment and increase the bargaining power of workers, enabling them to fight against the current policies of tax cuts for the rich, wage and welfare cuts for workers and the poor. Taxpayers would also regain power as their contributions to government spending increased in importance; the war could continue indefinitely so long as foreigners fund it, but once tax-payers are funding it, a tax strike could bring the troops home.

Even if all possible adjustments are made, there is no doubt that the decline and fall of the dollar as the sole world currency will cause pain, both within and outside the US. But the alternative is incomparably worse. The world order cannot much longer survive having a heavily armed rogue state on the rampage in violation of all international law and multilateral treaties. The world economy cannot afford to depend on the currency of a bankrupt nation with a colossal military budget. And the earth itself is put at risk by a country which devours massive quantities of fossil fuels and spews out greenhouse gases at a catastrophic rate.

US imperialism would not be able to pursue its destructive policies without the unlimited supply of blank cheques extended to it by the rest of the world, so it is the responsibility of the rest of the world to withdraw that source of funding. The beast has to be killed by attacking it at the point where it is most vulnerable. Meanwhile, if enough people in the US work to ensure that the next elections install a president and representatives who undertake to abandon the pursuit of Empire and instead seek to reintegrate the US into the international community as a law-abiding, fiscally-responsible, non-polluting member, the result will be a far safer and more stable global order, world economy and environment.

  1. In this article I have incorporated sentences and paragraphs from the article I wrote with Marinella Correggia after the 2004 World Social Forum in Bombay, entitled ‘US Dollar Hegemony: the Soft Underbelly of Empire (and What Can Be Done to Use It!). []
  2. See Peter Symonds, ‘Stepped Up US Preparations for War Against Iran,’ 2 February 2007 and Abbas Edalat and Mehrnaz Shahabi, ‘Turning Truth on its Head,’ 29 October 2007. []
  3. John H.Richardson, ‘The Secret History of the Impending War With Iran that the White House Doesn’t Want You to Know,’ Esquire, 18 October 2007. []
  4. David Ludden, ‘America’s Invisible Empire,’ Economic and Political Weekly Vol.XXXIX No.44, Bombay, 30 October 2004, pp.4776-77. []
  5. C.Fred Bergsten, ‘The Current Account Deficit and the US Economy,’ Testimony before the Budget Committee of the United States Senate February 1, 2007. []
  6. See Henry C.K.Liu, ‘US dollar hegemony has got to go,’ Asia Times, 11 April 2002 and Rohini Hensman, ‘A Strategy to Stop the War, Economic and Political Weekly, Vol.38 No.16, 19 April 2003, pp.1556-1561. []
  7. David E.Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Cornell University Press, 1999. []
  8. Paul Craig Roberts, ‘The coming currency shock,’ Counterpunch, 16 November 2004. [] []
  9. Lawrence G.Franko, ‘US Competitiveness in the Global Financial Services Industry,’ October 2004. []
  10. See for example Charles Recknagel, ‘Iraq: Baghdad Moves to Euro,’ Radio Free Europe, 1 November 2000. []
  11. Faisal Islam, ‘Iraq nets handsome profit by dumping dollar for euro,’ The Observer, 16 February 2003. []
  12. ‘Forex Fund Shifting to Euro’, Iran Financial News, 25 August 2002. []
  13. Caroline Gluck, ‘North Korea embraces the euro,’ BBC News, 1 December 2002. []
  14. William Clarke in particular makes an impressive case, with a great deal of evidence, in his web-based essay ‘Revisited: The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth’ (January 2004), which is a revised version, with addenda, of his original essay of January 2003. Many of the references in this article are taken from him. See also Gavin R.Putland, ‘The War to Save the US Dollar,’ 18 April 2003. []
  15. See Rohini Hensman, ‘Boycott the Dollar to Stop the War!’ 27 March 2003, and Dave Emory, ‘For the Record #407’ 21 April 2004, quoting Robert Block, ‘Some Muslims Advocate Dumping the Dollar for the Euro,’ Wall Street Journal, 15 April 2003: In Nigeria, anti-war demonstrators shouted “Euro yes! Dollar No!’ []
  16. See www.boycottbush.org. []
  17. Dr M Tells World to Use Dollar Weapon to Pressure Washington,’ 29 July 2006. []
  18. Dollar dropped in Iran asset move,’ 18 December 2006, and ‘Iran demands Japan’s oil payments in yen, not US dollars,’ 14 July 2007. []
  19. Jennifer Hughes, ‘Dollar gets sinking feeling as investor confidence fades,’ Business Standard, 24-25 May 2003; ‘US appetite for foreign stock takes toll on $,’ Economic Times, 20 December 2004. []
  20. Gary North, ‘Asian doubts regarding the dollar’, 1 October 2004. []
  21. A.V.Rajwade, ‘Asia’s dollar dilemma,’ Business Standard, 20 December 2004. []
  22. Peter S.Goodman, ‘China ends fixed-rate currency,’ Washington Post, 22 July 2005; ‘Malaysia too ends dollar peg,’ Dawn, 22 July 2005. []
  23. ‘RBI may diversify into Chinese yuan,’ Economic Times, 12 March 2005. []
  24. Steve Johnson, ‘Asian banks cut exposure to dollar,’ Economic Times, 11 March 2005. []
  25. Gayatri Nayak, ‘Dragon raises its head in the forex market too,’ Economic Times, 28 March 2005. []
  26. Francis Cripps, John Eatwell and Alex Izurieta, ‘Financial Imbalances in the World Economy,’ Economic and Political Weekly, Vol.XL No.52, 24 December 2005, pp.5453-56. []
  27. Ambrose Evans-Pritchard, ‘Bank of Italy slashes dollar holdings in favour of UK pound,’ 3 August 2006; Julian D.W.Phillips, ‘Russian Rouble to attack the $ – Exchange Controls in the US?’ 16 May 2006. []
  28. ‘Gulf could unite to drop dollar peg,’ 31 October 2007. []
  29. Ambrose Evans-Pritchard, ‘Is China quietly dumping US Treasuries?’ 6 September 2007. []
  30. Jeb Blount, ‘South American Countries Agree to Found Banco Del Sur (Update6),’ 8 October 2007. []
  31. Demising US dollar gives way to euro cash in Russia,’ Pravda, 17 February 2005; William Pesek, ‘Dollar’s Demise Can Be Seen Even in the Maldives,’ Bloomberg.com, 29 October, 2007. []
  32. Agnes Lovasz and Stanley White, ‘Dollar Slumps to Record on China’s Plans to Diversify Reserves,’ Bloomberg.com, 7 November 2007. []
  33. Paul Craig Roberts, ‘The End Is Near! – Gisele Bundchen Dumps Dollar,’ Countercurrents.org, 8 November 2007; Mike Whitney, ‘Plummeting Dollar, Credit Crunch…,’ Countercurrents.org, 15 September 2007. []
  34. Belinda Cao, ‘Yuan Heads for Biggest Weekly Advance Since July 2005,’ Bloomberg.com, 12 November 2007; Stanley White and David McIntire, ‘Yen Rises to 1 ½ Year High Against Dollar on Risk Reduction,’ Bloomberg.com, 12 November 2007. []
  35. See, for example, Mike Dolan, ‘Dollar fall will come at a price for all,’ 21 November 2004 and Ila Patnaik, ‘Day of the declining dollar – How should India be responding to this trend?’ Indian Express, 18 December 2004. []
  36. See Gideon Polya, ‘Two Million Iraq Deaths, Eight Million Bush Asian Holocaust Deaths and Media Holocaust Denial,’ Countercurrents.org, 7 October 2007. []
  37. Ray McGovern, ‘Attacking Iran for Israel?Consortiumnews.com, 1 November 2007. []
  38. Mahdi Darius Nazemroaya, ‘Missing Nukes: Treason of the Highest Order,’ Global Research, 29 October 2007. []
  39. Hazel Henderson, ‘Beyond Bush’s Unilateralism: Another Bi-polar World or a New Era of Win-Win?’ InterPress Service,June 2002. []
  40. Dollars, Debt and the Trade Gap, Thoughts on the Dropping Dollar,’ Wall Street Journal Online, 19 December 2006. []
Rohini Hensman is an an idependent scholar, writer, and activist based in India and Sri Lanka. Read other articles by Rohini.

11 comments on this article so far ...

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  1. rgaylor said on November 16th, 2007 at 10:27am #

    Excellent analysis.
    However, I suspect that the hubris of the empire will ‘solve’ the problem as the dollar weakens and thus results in a world wide move away from the dollar. In a perverse sort of way, Afghanistan and Iraq have contributed to the weakening of the dollar … and the move off of the gold standard, a successful short term goal, is now beginning to pay us back for our greed.

  2. Deadbeat said on November 16th, 2007 at 11:25am #

    Tying the reason for the invasion of Iraq to the dollar is extremely dubious. The oil companies wanted to do business with Huessein and encouraging the oil companies to do business with Huessein would easily maintained the dollar hegemony.

    However the U.S. was hellbent on invading Iraq and essentially destroying Iraq. Iraq posed a competitive threat to Israel and destroying and disrupting Iraq benefit Israel power and hegemony in the region.

    The war itself and threats to Iran is the main reason for the decline of the dollar and the spike in oil prices. The greatest threat to the dollar is expansion of Zionism and the use of U.S. power to expand the interest of Zionism.

  3. Leroy said on November 16th, 2007 at 1:04pm #

    Great analysis – just a couple points.

    I agree with how Dollar Hegemony masks the true cost empire for its citizenry, but I always believed that any drastic move would trigger A. Global Depression and/or B. US Military Goes Berserk

    I was surprised at how much movement that has already been away from the US Dollar, but key players, especially China, have yet to diversify their reserve currency holdings, regardless of what commercial banks do or how many dollars they are currently accepting, which is particularly subject to change. The point is, there has been no major movement away from the dollar, and when a big player makes a big move, all countries and investors will scramble to unload the dollar, unleashing a worldwide depression. Of course, it is in everybody’s interest to avoid this outcome; thus, the slow movement we have witnessed.

    Secondly, nobody gives up their power without a fight. I think the US would find itself at war far before the larger part of the US decided that they shouldn’t support imperialism.

    So I think the Dollar Hegemony and moving away from it is complicated by potentially disastrous outcomes.

    On an off-point, the FED looks out for the best interest of the US economy. It doesn’t always encourage inflation because that isn’t good economic policy. For example, Paul Volcker, the Chairman of the FED under Reagan, started a recession with higher interests in order to counter inflation. The reason the FED can’t act in the economy’s best interest right now is because it is too close to the next election to make daring moves on the economy.

  4. Thomas Victor said on November 16th, 2007 at 5:34pm #

    Leroy’s point that the US will not give up without a fight is very very important.

    We see all these projections re. future dominance of China, India, Brazil that are really just current economic growth rates extrapolated into the future. No guarantee it wll happen.

    But the US is committed to remaining the dominant superpower militarily and economically by doing “whatever it takes” . And if you take a calm amoral look at the track record, the Powers That Be are VERY GOOD at this. There have been innumerable predictions of US economical collapse over the years which all seem to make perfect sense but the PTB has effectively staved off disaster each time.

    Before the first Gulf War the economy was in trouble. I think the military card was played then and will continue to be played.

  5. Espresso said on November 16th, 2007 at 10:39pm #

    The ROAD to bombing Iran began in Israel. Look who the top recipients from the Israel Lobby are (in particular #s 1, 3, 5):

    TOP RECIPIENTS FROM ISRAEL LOBBY:
    1. Lieberman, Joe (I-CT) – $1,204,890
    2. Cardin, Ben (D-MD) – $441,373
    3. Clinton, Hillary (D-NY) – $328,873
    4. Nelson, Bill (D-FL) – $327,941
    5. Kyl, Jon (R-AZ) – $310,596

    http://opensecrets.org/industries/recips.asp?Ind=Q05&cycle=2006

  6. Rev. José M. Tirado said on November 17th, 2007 at 10:02am #

    What the criticis´s of Rohini´s article miss is simply stated in the last paragraph. While we may quibble with empire and its best manifestattions, and while there are no universal solutions to be applied by everyone, a clear effort should be made using one of the last remaining tools we have–the ballot–and systematically demonstrate we will no longer support empire and its apologists. Just make a list of every Senator and Representative whose record supports this or who has done nothing to stop it and send your checks to their opponents. Rally your friends to defeat them. It really does not matter who replaces them–politicians are a craven bunch and if voted out of office find the face of God in the visages of those mobilized around them–make sure yours is there. Start with basic ones: Pelosi and Feinstein. If every reader of DV sent 5-50$ to Sheehan or to whomever opposes Feinstein (again, Socialist, Green, whoever) there might be a little movement. Those are two biggie, symbolic options but that carry alot of weight in the MSM. Defeat those two and people will say a “movement” has begun. Then keep going. The Dems are not an opposing party and their military adventurism is just as evil as anything Reps have done (remember Vietnam and LBJ?) Defeat the warmongers and that is a start. Vote in a causuc of Green or Independent congresspeople and that is a start. Reelect those whose work for peace and defeat those who don´t. It´s quite simple. But constantly voting for Dems (or Reps) will take us nowhere.

    You can´t get the system you want by always voting for people who don´t want that system.

    You can´t.

  7. JAGDISH PATEL said on November 17th, 2007 at 12:43pm #

    IF A HUMAN IS NOT PREPARED TO BELIEVE IN ANOTHER HUMAN”S EXISTANCE,THEN THAT PERSON IS NOT HUMAN BUT THE LOWEST OF ALL LIVING CREATURES.

  8. ERIC said on February 28th, 2008 at 9:27am #

    ITS OBVIOUS THAT WILL WILL REVAMP, CRASH ,OR INCULCATE OUR WAYS THROUGH EURO ADAPTATION. BUT I WILL SAY THIS MORE… WE ARE AMERICAN..DIVERSE AND UNIQUE. WE HAVE PROVIDED POLICING THE WORLD AND THROUGH THE MAJOR WARS WE ARE THE X-FACTOR THAT GIVES THE STEADY FLOW OF ECONOMY. SO WE KNOW WHAT WORKS. BY ALL MEANS THE WORLD RECOGNIZES THAT BUT NOW ARE TAKING IT FOR GRANTED. SO THEY PILLAGE OUR ECONOMY BY THEIR INDUCTIONS OF NEW CURRENCY AND HOLDINGS OF RESOURCES BY RAISING THE PRICES. IT IS NOW INOLUCTABLE THAT ANOTHER WAR PROCEEDS US BUT IN RESPECT TO OUR ALLIES WHEN WE ARE NOT THERE TO PROTECT YOU WILL REALIZE WHY THE AMERICAN SYSTEM WORKS. MAYHAPS YOU REALIZE YOUR ANTICS WILL FAIL AND STABILIZE THE HEGEMONY ECONOMY. IF NOT WHEN YOUR ENEMIES ATTACK YOU WE WILL SIDELINE ONCE AGAIN AND WAIT TIL WE KNOW YOU RECOGNIZE WHOS IN CHARGE. THEN WE WILL HELP YOU IF ITS NOT TOO LATE. REMEBER YOU GUYS DID IT TOO YOURSELF DONT BLAME US. HINDSIGHT, WE AMERICANS MAY SUFFER IN THE SHORT RUN BUT WE WILL GET IT ALL BACK PLUS MORE ON THE BACK END.

  9. mike3 said on March 7th, 2008 at 1:54am #

    Well, the dollar is now collapsing like crazy. (I think we’re now (as of this writing) at 1.5 dollars to the euro or something) It’s happening: the hegemony is breaking, the empire is collapsing. The global economy is breaking down and it’s time for something new to come up to replace it.

    Some things that should be done include cutting the military budget to a fifth or less of what it is now, abandoning all foreign military operations (that means withdrawing from Iraq, from Afghanistan, and all other territory that we have no moral or legal rights to), transitioning from a standing army (aggressive force) to state militias (defensive force), quit the guzzling of fossil energy (although the rest of the world still eats 75% of the fuels… we can’t do anything about that but abandoning it here means we’d be able to continue on after the rest of the world goes to ruin running out of gas and maybe if we quit some of those other countries will be more inclined to quit as well), and move to an alternative economic system that is not dependent on endless growth.

  10. mike3 said on March 7th, 2008 at 2:04am #

    Dollar hegemony will end when the dollar crashes. It mgiht be hard for a bit, but it is certainly nowhere near as bad as having a massive global Empire running everything. Dollar crash? Now that’s happening. The whole housing and real-estate industry, which is intimately tied to the banking system and therefore the heart of the economy, is falling apart. (And disruptions of one obviously disrupt the other, so they bounce back and forth amplifying in a big feedback loop.) America may try to wage wars and other military campaigns against outside threats but it cannot save itself from the threats eating away at it from within.

  11. locust said on January 29th, 2009 at 6:00pm #

    I am absolutely ecstatic how the new world is forming before our eyes – the collapse of global capitalism is here and how neatly it happens just when the ethnic tension is growing in western societies. It is as if all this was a product of some heavenly Hollywood script writer who brings all the plot lines to a climax right at the end of the movie. To an unsuspecting viewer these different plots are accidental and have nothing to with each other—BUT WE, THE FEW, THE OUTCASTS OF THE STUDIO SYSTEM, who knew the script even before it was written know that all the crises and plot lines stem from the same source. Unlike most people we can see the big picture and we can recognize the pattern.

    An unsuspecting viewer is also equally unaware of how the movie will end but once again WE, THE FEW will know the end of this movie. And luckily for those viewers with a very short attention span everything is going fast forward. This is not the rise and fall of Rome—the pace of collapse is so quick that the global economy can be wrecked by the time you have finished watching an episode of Friends. Chaos theory in action makes the world an interesting place – when tension has reached its height a flutter of butterfly’s wing may bring everything to an end. WE,THE FEW saw this coming, of course, but still it was difficult to estimate the exact time when everything would change. Now, however the dominos are falling and there is no turning back.

    The current economic crisis will wipe out the structures of global liberal capitalism, the current economic crisis will bring the corporate world on its knees and crush the hubris of the economists and corporate captains – these high priests of liberal capitalism will have to admit that they know nothing and that their god is dead. The current economic crisis will destroy the naive optimism of middle class and deprive the working class of any hope for stability and prosperity. The current economic crisis will ruin the western societies and drive them to chaos so that in the end the Europeans will have nothing left but hate, fear and despair. All the symptoms are clearly visible: The out break of FUROR EUROPEICUS is nigh.

    Everything that happens today serves our cause – the old dying world cannot save itself and the elite of the dying world cannot do even one thing right. Everything the elite does will only prepare ground for its own downfall. The elite is always the mirror image of the world it rules – in a world that is destined to die, a reverse evolution takes place and only inept fools will rule – Louis XVI and Nicholas II were no unfortunate accidents but examples of a pattern in history.

    Soon the elite of the western civilization will taste the bitter pill of dialectics in history: Force creating its counterforce! Everything we have been doing in the white western world since 1945 and especially since the mid 60’s has been a counterreaction to the horrors of the Second World War and the Third Reich. The dominance of left-green humanism is the residue of the generation conflict of the 60’s between the baby boomers and their parents. The more the Europeans have tried to escape the ghosts of nationalism, racism and militarism the more feverishly they have embraced leftist humanism spiced with a hefty dose of self-hatred.

    LOCUST: What does all of this mean? Keep reading…
    I have also been coming to similar conclusions as of late. A few observations from my perch in multiracial America.
    1) The Left has lost its patience and abandoned all prudence in its desire to liquidate the West, and its organic race, immediately. Pronto. The safe bet would have been to continue its brainwashing regimen at a reasonable pace while continuing to install White male puppets. The consequences for such an overreach, especially at this critical juncture for international capitalism, could be as profound as Germany’s military overreach in WWII.

    2) By denying all legitimacy to those who would preserve the Euro-White heritage(s) the Left has been fostering the creation of monsters who will give back a double portion for what has been done to us when our cages are finally loosed. The consequences for what they have done will be the permanent eradication of the humanist Left from the Western cosmos, the first order of business when anything resembling our views reclaims political power.

    3) By foolishly excusing the barbaric behavior of non-White ethnics while simultaneously encouraging their immigration the Left is brewing nothing less then the very societal chaos and disorder that will be its own undoing. History will not stand such a contradiction in governance to go interminably unpunished.

    4) The societal breakdown, and the chaos that it will unleash, is only being staved off by shared consumerist habits and economic fears, once the end comes it will seem obvious (in hindsight) that the economy was always the Left’s countdown clock. On that note, middle class White America may be unhappy with their situation but they aren’t about to risk the destruction of the very consumerist society that they rely upon for their daily bread (esp. at the urgings of nationalists). Time, Providence, and internal contradictions will have to be the undoing of this arrangement.

    5) America is the lynchpin, the spiritual center, for the West’s professed faith in Left humanism [cultural Bolshevism]. The collapse of our government will do for the soft totalitarian Left what the collapse of the U.S.S.R. did for the hard totalitarian Left and herald the disintegration of the modern Left everywhere within the enervated West.
    Recent events make it hard not to feel optimistic; however it is still our responsibility to envision a future political system that will intelligently absorb the technological innovations of the 20th century. We must find a way to properly integrate our technological innovations into a society that is spiritually meaningful and politically protected from malevolent influence.

    I want Obama to do everything he and his anti-white communist elites have planned, I want them to break the economic back of this nation with massive spending, I want him to fire all white heterosexual males currently working within the government and only hire minorities, I want Obama to push every liberal agenda to mainstream and break the moral and linguistic heritage of this nation. I want this nation to die, a slow and painful death. I want Obama to weaken our nation militarily, I want Obama to break down our central intelligence agency, making it easier for terrorists to infiltrate this nation. I want communist and islamists to run freely over the landscape, I want the islamists terrorists to detonate a nuclear bomb in ten major metropolitan cities. I want Obama to declare our constitution illegal, and no longer needed in the brave new world order. The left in the west are moving towards the creation of a communist block federation of nations once called the western world. I want them to open the borders and allow every illegal alien to enter this nation from all over the world, and bankrupt and destroy the local and state economies.

    Why do I want these things? Because these events will destroy this nation, economically first, riots and crime will skyrocket. Second they will destroy this nation socially, education will collapse, madness and insanity will reign supreme. The left will destroy this nation there is nothing we can do about, only when whites realize that non-white males must go, will we even begin to wake the hell up, and I have one thing to fall back on, my 12 gauge shot gun, my 6.8 spc AR-15 assault rifle, other planned weapons, and my various home made weapon systems. Not to mention multiply levels of body armor, and other homemade defensive systems.

    This nation must die politically, socially and economically, so that the white males who own 95% of the fire arms in this nation can do something about it. The nation must die so when can rebuild, 1 in 3 of us must sacrifice our lives, we must embrace the destruction of the west, only then will the white males rise up and destroy our enemies, take back what’s rightfully ours, and kill everyone who moved against us. A world wide race war is what’s needed, and America is the lynch pin of the liberal democracies within the west, when America goes, the west will follow, and then the rise of white Nationalist is all but assured.

    White Nationalist government will come to power after the collapse of the west!!! Think about it, don’t fight it, buy guns and ammo, buy food and water, buy body armor and NBC gear for you and your family, get ready and be prepared, and when the time comes my brothers, I will see you on the battlefield from the streets of L.A. to New York’s Central park, it will not occur in the next 4-5 years, but soon afterwards, we will retake what is ours, allow the world to see the first African Dictator of America, allow this nation to die, be joyful when terrorist attack us, allow this nation to die, and then and only then will we rise to power. Many of us will die, but the West will be reborn, and our constitution will be reborn in our image, it will protect the ethnic nature of our nation and that of the west, and we must make ready for time is coming when you will no longer be able to purchase what you need to survive. Be ready, buy plenty of guns and ammo, our organization will come when it is intended to occur, when we need it to save our people, and not a moment sooner. Obama will fail, liberalism will fail, you cannot defy human nature for very long, until you face the consequences of your defiance.