VHeadline.com commentarist Karl B. Koth writes: The recent verbal threats from the imperialist titan made by US sub-secretary of State Robert Noriega and reiterated by Otto Reich [i] recently raise the question of not what the USA is trying to accomplish with its hostility towards Venezuela, but the more important question why.

We know, for example, that the US wishes to get rid of constitutionally-elected President Hugo Chavez Frias, but what precisely is behind this goal is less clear.

Let us first eliminate some of the more obvious perceived reasons behind the US attitude:

1) We know that the claim that Venezuela is undemocratic does not hold water. Venezuela just happens to be one of the models in the Americas for an unsurpassed adherence to democratic constitutional principles and practices. Besides, the US, at least considering their incumbent rascal’s own election four years ago, is no shining example of democracy in action.

2) We know also that charges that President Chavez is “a communist” are as ridiculous as calling George W. Bush an enlightened ruler.

3) We know that the reasons have nothing to do with the allegations that President Chavez is a dictator, since first, the charge is idiotic, and second, the US has never had a problem cozying up to the vilest of tyrants.

4) We also know that the hostility has little to do with controlling the supply of oil to the US, because Venezuela has never considered cutting off that supply. It would not be in its own interest to do so!! One might argue here that the US wants to ensure the supply of oil because of the latent threat from a very successful Chinese economy. However, even were it to control Venezuelan oil production, the pressures on the oil patch are going to increase so drastically in the near future, that controlling one country’s output would not help either. Still, that is not a good argument since maintaining good relations with Venezuela would be the far cheaper and easier way of ensuring that supply.

So, what then is the reason? What is behind the constant manipulation, the virulent hostility, the verbal abuse, and the probable (I admit, not yet proven) support to Colombian paramilitaries who recently invaded the country? I believe that the answer, albeit complicated, is to be found in the interesting thesis constructed by a Californian lawyer by the name of William Clarke, and which, obviously, has not been given wide coverage in the news media [ii]. I say interesting, because this plausible and well-constructed analysis allows us inter alia to understand primarily the real reasons behind the attack on Iraq, as well the hostility towards Iran and North Korea, the so-called Axis of Evil. What we are dealing with, in fact, is geo-politics in its most serious strategic implications!

The Clark Thesis : Clark’s thesis was first made public via the Internet about a year ago. He deftly argues that the economic problem plaguing the US at the moment is the financing of a huge external trade deficit (almost $500 billion per annum), not to speak of the total debt, which has reached more than US $7 trillion [iii]. His thesis is made more plausible when one considers that other countries, especially China, now hold an economic club over the head of the US because of their holdings of US treasury bills [iv].

But how has the US managed to live so “high off the hog” and run up such a massive debt? Primarily, it has been made possible by the use of the US dollar as the favored petro-currency. In other words, all oil bought and sold on the world market is done through the exchange of the commodity for US dollars, allowing the US to run this huge deficit. Basically a long-term strategy, it began with a deal struck with Saudi Arabia in the 1970s. Writes Clark:

“According to research by Dr. David Spiro, in 1974 the Nixon administration negotiated assurances from Saudi Arabia to price oil in dollars only, and invest their surplus oil proceeds in U.S. Treasury Bills. In return the U.S. would protect the Saudi regime. According to his book, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, these purchases were done in relative secrecy. These agreements created the phenomenon known as "petrodollar recycling." In effect, global oil consumption via OPEC provides a healthy subsidy to the U.S. economy. Hence, the Europeans created the euro to compete with the dollar as an alternative international reserve currency. Obviously the E.U. would also like oil priced in euros as well, as this would reduce or eliminate their currency risk for oil purchases.” [v]

In January 2003, before the invasion of Iraq, Clark outlined his thesis. Basically, he argued that the attack was due to fears in the US administration that 1) future oil supplies had to be ensured since the arrival of Peak Oil (after which production will begin to decline) was approaching, and 2) it had to keep OPEC from following Iraq’s lead and converting to the Euro as favored petro-currency.

Let’s omit the discussion of Peak Oil, which has been explained fully by Colin J. Campbell.

The petro-currency argument, however, has never, to my own knowledge, been given much exposure by the media. “The Real Reasons,” Clark explains,” for this upcoming war is this administration's [Bush’s] goal of preventing further OPEC momentum towards the euro as an oil transaction currency standard, and to secure control of Iraq's oil before the onset of Peak Oil (predicted to occur around 2010) [vi].” Were oil-producing nations to start converting to sales in Euros, the oil-consuming countries would have to sell their US dollar holdings and buy Euros instead. This would have the dramatic effect of causing a crash in the value of the US dollar on world markets (estimated at between 20-40%) and produce massive inflation. The consequence of that would be a run on the markets and a flight of bond and security holders out of the US dollar and into other currencies [vii].

It is interesting to note that the conversion to Euros was precisely what Iraq did in 2002, followed by Iran, where half the central banks assets were converted to Euros in the same year. Effective December 2002, North Korea, although not an oil-producing country, did the same. Just coincidentally these three are part of what the US president called the Axis of Evil. Does it start to make sense? Hell yes!

So what does this have to do with the interference and hostility towards Venezuela?

Why should the US care who is the President there?

The answer is that a president favorable to Washington would be one who did not implement a nationalist Venezuela policy, which is to say doing what it deems right and honorable with its oil production and sales. In other words, a pro-US president would not be making the deals that President Chavez has done, namely swapping oil for commodities and supporting OPEC’s move to the Euro as these actions impinge on the exclusivity of the Petrodollar as intermediary currency in oil transactions. Yes, Venezuela is supporting an OPEC move to switch from the US dollar to the Euro, and that in the foreseeable future [viii]. This makes President Chavez anathema in the eyes of the US. But that is not all. He is guilty of even a worse “crime” in the eyes of the US: Venezuela accepts oil-for-service swaps with poor countries, such as Cuba, that don’t have sufficient US dollar reserves with which to buy the oil it desperately needs, effectively avoiding the use of the Petrodollar [ix].

So what does the US plan for Venezuela?

Obviously the answer is the installation of a President favorable to Washington. As in the case of Iraq, the idea is to replace Chavez with a pro-US President; in other words, one who would not implement a nationalist Venezuela policy; and by whatever means.

The coming months leading up to the referendum are going to be the test. If one believes that instigating Colombian paramilitaries to invade Venezuela was the ultimate, then just wait and see.

There is nothing as dangerous as a wounded animal. By invading Iraq, the US embarked on an insane gamble. The entire world is watching the plan backfire, which is why Bush must now travel to “Old Europe,” hat in hand, begging for a bailout. But the lash of the tail of a downed creature can be lethal to smaller beings who get in the way.

Venezuelans: be on your guard. The worst desperate efforts are yet to come.

Karl B. Koth
kkoth@hotmail.com

Dr. Karl B. Koth is former professor of Latin American History at Okanagan University College in Kelowna, British Columbia, Canada. He is the author of Waking the Dictator: Veracruz, the Struggle for Federalism, and the Mexican Revolution, 1870-1927, Calgary, Alberta: University of Calgary Press, 2002. He divides his time between Canada and Brazil.

[i] Otto Reich: Mastermind of the April 2002 coup d'etat against President Hugo Chavez VHeadline.com, June 24, 2004

[ii] William Clark, “Revisited-The Real Reasons for the Upcoming War in Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth.” See also “Oil, the Dollar, and US Prosperity,” Richard Benson, SFGroup, August 8, 2003

[iii] “Our $8 trillion headache,” Cincinnati Post (On-Line Edition), 25 Jun 2004

[iv] Martin Walker, “U.S. distracted - and the world changed,” UPI, December 26 2003

[v] Ibid. See Spiro, David E., The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Cornell University Press (1999)

[vi] Clark, “Revisited”

[vii] This is not idle speculation. Writes David R. Francis, “Foreigners own far more of their direct investments (plants, equipment, office buildings) and financial assets than Americans own in other nations.” David R. Francis, “US financial power: a bang and a whimper,” The Christian Science Monitor, 1 Jan. 2004.

[viii] Patrick Brethour, “OPEC mulls move toward euro for its pricing of crude oil,” Globe and Mail (Toronto), Tuesday, Jan. 13, 2004, p. B1.

[ix] Hazel Henderson, "Beyond Bush's Unilateralism: Another Bi-Polar World or A New Era of Win-Win?" InterPress Service, June 2002, quoted in Clark.