Venezuela: Economic Warfare Brings Nation To Its Knees

Featured article from Mint Press News.

Which is mightier; the pen or the sword? In the case of the recent upheaval in Venezuela, the pen is the obvious answer.

The bankers fight using the pen — the pen that signs the paperwork to impose the sanctions that incur mass starvation, dissolve order, hike prices, and bring nations to their knees — Venezuela is in the crosshairs this time.

Last year, U.S. President Donald Trump signed a determination that singled out Venezuela for failing to adhere to counternarcotics obligations. The accusation came – perhaps not so coincidentally – on the same day that Venezuela declared it would no longer participate in the U.S.’ petrodollar trade system.

Venezuelan President Nicolás Maduro made his position clear, he had stated earlier in that month that the country would look to “free” itself from the dollar within a week’s time, following the U.S.’ sanctions against the embattled nation.

The decision is similar to that once made by former Iraqi leader Saddam Hussein, who dropped the dollar in favor of the euro a few years prior to the 2003 U.S. invasion of Iraq, we all know how that ended.

International markets thus far have failed to noticeably react to the policy shift, despite the threat it presents to the petrodollar system. The system, created in the 1970s, calls for OPEC nations to sell their oil in dollars in order to create artificial demand for the U.S. currency, a fiat currency based on thin air — held together by force.

Venezuela, home to the world’s largest oil reserves, is likely to exert some effect on the demand for dollars through its new policy, though the extent of the potential damage remains unclear. What is clear is that it means enough for the U.S. to declare a financial soft war in retaliation.

Millions of Venezuelans have seen their living conditions vastly improved through the Bolivarian process which shifted the focus away from compliance to the Western Banking Cartel.

The problems plaguing the Venezuelan economy are not due to some inherent fault in socialism, but to artificially low oil prices and sabotage by forces hostile to the revolution.

Starting in 2014, the Kingdom of Saudi Arabia flooded the market with cheap oil. This is not a mere business decision, but a calculated move coordinated with U.S. and Israeli foreign policy goals. Despite not just losing money, but even falling deep into debt, the Saudi monarchy continues to expand its oil production apparatus. The result has been driving the price of oil down from $110 per barrel, to $28 in the early months of this year. The goal is to weaken these opponents of Wall Street, London, and Tel Aviv, whose economies are centered around oil and natural gas exports.

Venezuela is one of those countries. Saudi efforts to drive down oil prices have drastically reduced Venezuela’s state budget and led to enormous consequences for the Venezuelan economy.

At the same time, private food processing and importing corporations launched a coordinated campaign of sabotage. This, coupled with the weakening of a vitally important state sector of the economy, has resulted in inflation and food shortages. The artificially low oil prices have left the Venezuelan state cash-starved, prompting a crisis in the funding of the social programs that were key to strengthening the United Socialist Party.

Corruption is a big problem in Venezuela and many third-world countries. This was true prior to the Bolivarian process, as well as after Hugo Chavez launched his massive economic reforms. In situations of extreme poverty, people learn to take care of each other. People who work in government are almost expected to use their position to take care of their friends and family. Corruption is a big problem under any system, but it is much easier to tolerate in conditions of greater abundance. The problem has been magnified in Venezuela due to the drop in state revenue caused by the low oil prices and sabotage from food importers.

Venezuelans told of how the privatizations mandated by the International Monetary Fund made life in Venezuela almost unlivable during the 1990s. Garbage wouldn’t be collected. Electricity would go off for weeks. Haido Ortega, a member of a local governing body in Venezuela, said: “Under previous governments we had to burn tires and go on strike just to get electricity, have the streets fixed, or get any investment.”

Chavez took office on a platform advocating a path between capitalism and socialism. He restructured the government-owned oil company so that the profits would go into the Venezuelan state, not the pockets of Wall Street corporations. With the proceeds of Venezuela’s oil exports, Chavez funded a huge apparatus of social programs.

After defeating an attempted coup against him in 2002, Chavez announced the goal of bringing Venezuela toward “21st Century Socialism.” Chavez quoted Marx and Lenin in his many TV addresses to the country, and mobilized the country around the goal of creating a prosperous, non-capitalist society.

In 1998, Venezuela had only 12 public universities, today it has 32. Cuban doctors were brought to Venezuela to provide free health care in community clinics. The government provides cooking and heating gas to low-income neighborhoods, and it’s launched a literacy campaign for uneducated adults.

During the George W. Bush administration, oil prices were the highest they had ever been. The destruction of Iraq, sanctions on Iran and Russia, strikes and turmoil in Nigeria — these events created a shortage on the international markets, driving prices up.

Big oil revenues enabled Chavez and the United Socialist Party to bring millions of Venezuelans out of poverty. Between 1995 and 2009, poverty and unemployment in Venezuela were both cut in half.

After the death of Chavez, Nicolas Maduro has continued the Bolivarian program. “Housing Missions” have been built across the country, providing low-income families in Venezuela with places to live. The Venezuelan government reports that over 1 million modern apartment buildings had been constructed by the end of 2015.

The problems currently facing Venezuela started in 2014. The already growing abundance of oil due to hydraulic fracturing, or fracking, was compounded by Saudi Arabia flooding the markets with cheap oil. The result: massive price drops. Despite facing a domestic fiscal crisis, Saudi Arabia continues to expand its oil production apparatus.

The price of oil remains low, as negotiations among OPEC states are taking place in the hopes that prices can be driven back up. While American media insists the low oil prices are just the natural cycle of the market at work, it’s rather convenient for U.S. foreign policy. Russia, Venezuela, Ecuador, and the Islamic Republic of Iran all have economies centered around state-owned oil companies and oil exports, and each of these countries has suffered the sting of low oil prices.

The leftist president of Brazil, Dilma Rousseff, has already been deposed due to scandal surrounding Petrobras, the state-owned oil company which is experiencing economic problems due to the falling price of oil. Although much of Brazil’s oil is for domestic consumption, it has been revealed that those who deposed her coordinated with the CIA and other forces in Washington and Wall Street, utilizing the economic fallout of low oil prices to bring down the Brazilian president.

The son of President Ronald Reagan has argued that Obama intentionally drove down oil prices not just to weaken the Venezuelan economy, but also to tamper the influence of Russia and Iran, Trump has continued this foreign policy.

Writing for Townhall in 2014, Michael Reagan bragged that his father did the same thing to hurt the Soviet Union during the 1980s:

“Since selling oil was the source of the Kremlin’s wealth, my father got the Saudis to flood the market with cheap oil.

Lower oil prices devalued the ruble, causing the USSR to go bankrupt, which led to perestroika and Mikhail Gorbachev and the collapse of the Soviet Empire.”

Read more here.

 

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Trump Officially Declares Trade War on China Days Before Launch of Petroyuan

D-Day for the US Dollar: China’s Petroyuan oil futures contracts to be issued from 26th March 2018.

Between 1944 and 1971, the international monetary system, known colloquially as the Bretton Woods System, revolved around the gold backed US Dollar. Whether in Africa or Asia, a US Dollar was literally as good as gold, because it was pegged to and therefore could be converted to gold anywhere in the world. Then in 1971, US President Richard Nixon made the decision to un-peg the US Dollar from a gold standard, thus transforming the world’s major currency into a floating fiat currency.

In order to maintain the Dollar’s position as the world’s leading currency, the US reached an agreement with the leaders of OPEC, Saudi Arabia in particular, to sell oil exclusively in US Dollars, irrespective of who the buyer was.

This system remained largely unchallenged until the the arrival of a non-Dollar based economy, China, as the new leading economic power of the world, whose GDP will soon eclipse that of the US. Already, China purchases more oil than any other country in the world, in spite of its increased domestic energy production and furthermore, China now has the world’s highest purchasing power of any nation on earth. Even before oil became the highly valued commodity it became in the 20th century, the nation with the largest economy and more importantly, the largest and most wide reaching purchasing power, has traditionally set the bar for their own currency becoming the de-facto global currency of exchange and the most pervasive reserve currency for global treasuries.

Western-aligned states will shift to Eastern alignment.

For China and China’s partners this means that they will be able to set the terms of major international trade deals. For OPEC, it means intensifying discussions with China and China’s long term partners, as opposed to the US and its long term partners. This means that even traditional US allies like Saudi Arabia will begin looking to open new doors with China in preparation for an oil export market that will see banknotes featuring images of Mao Zedong supplant those with images of George Washington.

This will have a knock on-effect in geopolitics, making the richest countries in the Arab world, particularly those in the Gulf Cooperation Council, less attached to US foreign policy making. If China becomes their biggest trading partner and if the trade is conducted in the Petroyuan, it will be China whose geostrategic goals will be able to hold sway in the court of Gulfi Arab monarchies rather than the whims of Washington. Already, Saudi Arabia has begun courting China, likely in order to attract investment for its new megaproject, the creation of a massive new city on the Gulf of Aqaba.

U.S. sanctions will lose their effectiveness.

The Petroyuan will also help to render US Treasury sanctions far less effective, as countries whose global trade is linked in with Chinese monetary and trade policies, will be out of the loop of the US Dollar based system. This represents new opportunities for countries as diverse as Syria, Venezuela, Iran and if the right conditions are met from Beijing’s perspective, also the DPRK.

While Washington denies that its Federal Reserve system is now the biggest basis for its continued, however waning international influence, the fact that US political leaders are openly horrified by the arrival of China and its Petroyuan, is a prima facie admission that while China has industry, innovation, military might and is on the cusp of edging the Dollar out as the world’s leading reserve and trading currency, soon the US will have little but military might to show for its superpower status and given how expensive this military might is for the US, the changes in world monetary markets, could also impact America’s ability to invest in its own military-industrial complex.

The myth of an “undervalued” Yuan.

Of course, the US accuses China of purposefully undervaluing the Yuan so as to make Chinese exports more affordable and thus attractive. What the US hasn’t considered is that when the Yuan becomes the de-facto global reserve currency, it’s floating rate will likely be higher than that of the US Dollar. In this sense, the lesson for the US is “be careful what you wish for” and the lesson for China is that if the US seeks to shut Chinese goods out of the US market with tariffs, sanctions or even embargoes – then China has nothing to lose by floating the Yuan and letting the Dollar’s value sink vis-a-vis the Yuan.

China is in a win-win position vis-a-vis the US Dollar, while for the US, Washington and Wall Street will have to examine how major European currencies coped in the post-Bretton Woods and pre-Euro period. Ultimately, the only way the US will be able to cope in such an environment is to invest more into domestic production in order to regenerate confidence in a Dollar whose value will have to be based on what America does, rather than what America was. While technically the US still is a monetary leader, when the Yuan inevitably eclipses the Dollar, the US will have to get used to the word was in respect of global hegemonic monetary dominance. Much to the relief of millions, the US will no longer be able to peddle the lie that US hegemony is due to a somehow superior political and social system. The reality that US hegemony is based on the accepted value of the Dollar will be starring the US, its allies and its adversaries in the face like an emperor without clothes.


As China takes a decisive economic step away from the dollar; the international bankers move in.

Now, in the run up to the launch of the Chinese Petroyuan on March 26th 2018, U.S. President Donald Trump is declaring economic war on China on the behalf of international banking interests.

Protectionism has its time and place and this is usually in a newly industrializing nation that has not yet reached its peak output.

When countries like Britain, the US, Germany, Japan and China began their unique and highly notable industrial revolutions, they did so under the cover of protectionist policies. In this sense, as a nation develops an industrial base, in order to reach the zenith of development, it is important not to rest on someone else’s laurels in the form of easy imports. Protection turns the industrializing nation into an industrial island, thus testing the limits of self-sufficiency in terms of industrial development and the development of an internal market.

This is exactly what is happening, a second planned industrial revolution — a shift away from Tertiary and Quaternary imbalanced economies back to the industrial roots that will make the West once more a major economic contender.

Once such a revolution reaches a comfortable level of self-sufficiency, a protectionist economy has reached maturity and is ready to test the waters of free trade.

In the short to mid-term, the Globalists are promoting an artificial divide of trade protectionism, pursuing a split between Western and Eastern exchange in a bid to isolate China and its partners, Trump’s latest sanctions are one facet of this, for example; artificially inflating the price of Chinese goods to stimulate confidence in domestic economies. Protectionist blocs and trade agreements such as the EU are at the forefront of these protectionist efforts to sever ties with non-Globalist economies.

In the longer term, Globalist agents seek to boost the third world population of Europe to create a low-paid, manufacturing powerhouse to challenge China, as well as shift manufacturing and industry back to Western soil to reduce dependencies on non-Western imports and diversify Western import-reliant economies.

To successfully do this, they must eliminate or reduce the majority Western white middle class that demands higher wages and tends to avoid work in laborious, low-pay jobs.

This is something they are actively pursuing by promoting the migrant crisis, promoting anti-nationalism, promoting white-guilt, and the racism hysteria, all intended to ‘water-down’ the West and give emphasis to a more lucrative, lower IQ, third world population.

Many economists call the sanctions ‘damaging’ for both economies, but that’s the point, that the West is filing for a near total divorce from the economies of the non-Globalist variety, this is just the beginning.

New Tariffs.

Trump has signed a Section 301 Action of the 1974 Trade Act, authorizing the implementation of new wide reaching tariffs covering the import of a wide variety of Chinese goods into the United States, with an emphasis on barring Chinese technology and technology investment from the US market. Trump also threatened to take further action against alleged intellectual property rights violations in China. During his speech he also threatened the European Union, Japan and South Korea, but most of his ire was aimed at China. Where weeks ago it was suggested that the US would pass $30 billion worth of tariffs on Chinese goods, today Trump doubled the figure to $60 billion. By invoking the Trade Act of 1974, Trump has bypassed the Congress to take unilateral action in a trade war that most of the Congress and the US Chamber of Commerce does not support.

Donald Trump reaffirmed that while the new measures will be implemented immediately, he will be willing to negotiate with all parties, including China regarding establishing what he calls a better trade balance. He even suggested that the countries whose goods he is slapping new tariffs on would welcome the move because they were “taking advantage” of the US for years. In reality, China, South Korea, the EU, Canada and others have already strongly criticised Trump’s reactionary approach to trade.

It beggars belief that Trump purposefully held off on attempting to negotiate new trade deals until after ordering tariffs which have a punitive effect on both America’s trading partners and the American tax payer. This kind of bullying of powerful nations will if anything, make countries less likely to negotiate a favourable deal in the future. Rather than use tariffs as a last resort after a respectful negotiating process, Trump has decided to use tariffs as a means of blackmailing other nations. The US will now learn the hard way, that there are many markets for goods other than the US market. If anything, this will enforce China’s decision to sell-off even more US Treasury bonds in preparation for a larger divestment of assets from the US, which itself is a requisite to the Yuan detaching its value from the Dollar and floating freely on global currency markets. A floating Yuan was always a matter of ‘when’ rather than ‘if’. Trump’s zero-sum attitude has now made the question of ‘when’, a matter of ‘sooner rather than later’. The result will be less investment in the US economy which means fewer jobs, combined with a weakening dollar which means less purchasing power for both US companies and US consumers. Trump’s move has made this reality all the more inevitable.

When signing the executive order, he claimed “This is only one…it is the first of many”. The markets are likely to respond negatively to this development, but in the medium term, Trump’s move could usher in a pivot away from the US on the part of wider international trading, including in the all important areas of currency and energy commodities markets.

On the 26th of March, China will formally introduce the Petroyuan. The issuing of oil futures contracts in China’s national currency looks to threaten the long term efficacy of the Petrodollar – something the US has used to artificially inflate the value of its currency ever since Richard Nixon detached the Dollar from a gold standard in 1971.

With the US failing to produce desirable quality goods as efficiently as other major industrial powers, Washington has resorted to a combination of tariffs and sanctions as its only remaining weapons to try and inflect economic harm on other nations. Just as sanctions have not caused any significant damage to the Russian economy, so too will China which now has the most powerful internal market in the world, not suffer from Trump’s tariffs, certainly not as much as American businesses and consumers. China’s rapid expansion into new global markets combined with its own continually growing internal market, will rapidly compensate for losses in terms of exports to the US.

Washington Delivers New Ultimatum on Iran

The US State Department has issued a fresh ultimatum on the Iran nuclear deal to Washington’s ostensible major allies in Europe, demanding that Germany, Britain and France commit themselves to altering the agreement along the lines demanded by President Donald Trump or face its unilateral abrogation by the US.

A secret State Department cable obtained by Reuters presents what are essentially the same demands made by Trump last January. At that time, he announced that he was prepared to relaunch all-out US economic warfare against Iran unless the European powers joined Washington in imposing a rewritten nuclear accord on Tehran, including provisions that the Iranian government cannot and will not accept.

The occasion for Trump’s threat was his reluctant announcement on January 12 that he had decided to waive the re-imposition of US sanctions that were lifted as part of the nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA). He vowed that this would be the last time he issued such a waiver, unless his conditions were met. The next deadline for waiving the sanctions is May 12.

The message from the State Department to the European powers asks for their “commitment that we should work together to seek a supplemental or follow-on agreement that addresses Iran’s development or testing long-range missiles, ensures strong IAEA inspections, and fixes the flaws of the ‘sunset clause.’”

Washington has demanded that Iran grant International Atomic Energy Agency inspectors immediate and unlimited access to any site in the country, including military bases; the elimination of “sunset clauses” in the JCPOA, making time-limited restrictions on aspects of Iran’s civil nuclear program permanent; and drastically limiting, if not outlawing, Iran’s ballistic missile program.

While presented by Reuters and other media as a softening of the position outlined by Trump in January, the cable makes it clear that the US is continuing to present its nominal allies in Europe with an ultimatum.

“In the absence of a clear commitment from your side to address these issues, the United States will not again waive sanctions in order to stay in the Iran nuclear deal. If at any time the President judges that such commitment is not within reach, the President indicated he would end US participation in the deal.”

The cable’s “talking points” for US diplomats to advance Washington’s agenda in Europe stress “the Trump administration’s strategy to counter the Iranian regime’s reckless aggression,” which “addresses the full range of Iranian threats, of which Iran’s nuclear program is only one element.”

The clear implication is that Washington is embarked on a trajectory of war with Iran, either with or without the collaboration of its NATO allies in Berlin, London and Paris. Should they join with the US in ripping up the nuclear accord, it will set them on a collision course not only with Iran, but also with Russia and China, the two other signatories to the JCPOA.

The US has spelled out its own intentions in the Trump administration’s recent National Security Strategy, lumping Iran together with North Korea under the category of “rogue states” that represent a threat to US “national interests” and are to be confronted and defeated.

None of the European powers responded directly to the US cable, which the State Department itself refused to discuss. Asked about the US demands in an online media briefing, the French Foreign Ministry declared:

“The French position on the Iran nuclear deal is known. As the President of the Republic [Emmanuel Macron] has said, we reaffirm our full attachment to the global action plan and its strict implementation.” It added that Paris would “continue to talk about the Iran nuclear program with our European and American partners.”

The European powers are pursuing their own imperialist interests in the Middle East and are increasingly at odds with US interests and strategies. The lifting of sanctions against Iran was greeted by European corporations as an opportunity to generate a fresh stream of profits through billions of dollars in new investments and trade deals. Many of these plans remain unfulfilled because of concerns that the US will target companies with unilateral sanctions, and that their investments could go up in smoke in the event of a new and catastrophic US war in the Middle East.

While hostile to Iran’s growing influence in the region, the European powers are increasingly alarmed at the prospect that Washington’s strategy of forging a regional anti-Iranian alliance with Israel and Saudi Arabia, together with the other Sunni Gulf oil sheikdoms, will produce a military confrontation that could cut off oil supplies upon which Europe depends and unleash a political and refugee crisis that will spill onto the continent.

Washington has issued its latest ultimatum in the midst of an explosive escalation of regional tensions, driven in the main by US and Israeli aggression. Israeli Prime Minister Benjamin Netanyahu spelled out Tel Aviv’s aggressive stance against Iran in a bellicose speech to the Munich Security Conference on Sunday. Holding up what he claimed was a piece of an Iranian drone shot down over Israeli-occupied Syrian territory in the Golan Heights, he denounced Iran as “the greatest threat to the world,” equating it with Nazi Germany.

“We will act without hesitation to defend ourselves, and we will act if necessary not just against Iran’s proxies that are attacking us, but against Iran itself,” said Netanyahu, in a clear threat to attack Iran, an action that his government would undertake only with US backing.

Israel responded to the alleged overflight of the drone, which Tehran insists was launched by independent Syrian militia elements in Syria, by targeting Iranian personnel in Syria with air strikes. Syrian air defense units succeeded in shooting down an Israeli F-16 fighter jet, the first such loss for the Israeli Air Force since the early 1980s.

Speaking in response to Netanyahu at the Munich conference, Mohammad Javad Zarif, the Iranian foreign minister, attributed the frenzied tone of Netanyahu’s speech to the downing of the warplane.

“The so-called invincibility of [Israel] has crumbled,” he said.

The US military and intelligence apparatus and its loyal stenographers in the US corporate media are churning out continuous war propaganda against Iran.

Speaking at the Munich Security Conference on Saturday, US national security advisor Gen. H.R. McMaster declared it was necessary to “act against Iran,” which he accused of arming a “network of proxies” that is “becoming more and more capable as Iran seeds more and more…destructive weapons into these networks.”

The New York Times published a lengthy piece Monday based on interviews with Israeli military officers and government officials along with representatives of US, Israeli and Saudi-funded think tanks alleging that Iran is “creating an infrastructure [in Syria] to threaten Israel.” Needless to say, the article made no mention of Israel’s own funding and aid for Sunni Islamist militias attacking the Syrian government of President Bashar al-Assad.

The same issue of the Times carried an opinion piece by US ambassador to the United Nations Nikki Haley claiming, falsely, that a report issued by the United Nations proved that Iran has shipped missiles to the Houthi rebels in Yemen to fire at Saudi Arabia. The actual report found that “remnants” of the missiles were of Iranian origin, while providing no evidence as to how they got there.

Haley insists that the world must “act before a missile hits a school or a hospital and leads to a dangerous military escalation that provokes a Saudi military response.”

The column echoes the “big lie” methods pioneered by Nazi Minister of Propaganda Joseph Goebbels. That Saudi Arabia has been bombing Yemeni schools, hospitals, neighborhoods and infrastructure for nearly three years, killing some 13,000 Yemeni civilians and plunging the country’s population into the worst humanitarian crisis on the planet, goes unmentioned.

Haley is also silent on the fact that the US has provided the vast majority of the bombs and missiles dropped on the Yemeni people, while mounting logistical and refueling operations that make the mass slaughter possible.


Article from Bill Van Auken.
Global Research, February 21st, 2018.
World Socialist Web Site 20th February, 2018.