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