The U.S. Dominance Is Doomed
By Abid Ullah Jan, taken from his 2005 book, After Fascism
As postulated about the approaching collapse of the United States under the rule of fascists and the emergence of Israel as the world Ruling State, U.S. global dominance is bound to come to an end sooner than expected. On the question of how, let us remove the Israel factor and see how the collapse is still inevitable and why it is better for other nations not to tie themselves to a sinking ship.
Indeed, the U.S. is the dominant power in the world today. This power shows itself in the role the U.S. currency plays in the world economy, the role it has played for over 50 years now, the role of general reserve currency. The following analysis shows that this role of the U.S. currency is under threat, and it expands on what would result from a removal of this role for the U.S. dollar by looking at the benefits it provides, in order to assess the significance of this threat.
Also, on the topic of power, or what makes a country powerful, this analysis will contend that power is the result of three factors, not just a single one, all of which are linked: these are political power, economic power and military power. This should serve as a basis to discuss power and dominance in a world where the role of the U.S. dollar as general reserve currency has ended.
It was at the end of World War I that the United States took over from Great-Britain as the dominant economic power in the world. Interrupted perhaps by the Great Depression, at the end of World War II the United States had turned into the central hub of the world economy. Part of the reason was that they did not have their infrastructure destroyed by the war. The bulk of industrial production took place inside the United States, and, for the western world at least, the United States was the source of almost all technological progress. So, when after World War II Europe had to rebuild itself, the only country able to provide what was needed was the United States.
In this environment, it was only natural for the United States to play a central role in the world economy, and it made only logical sense for the U.S. dollar to become central in the organization of international trade. This last point occurred, of course, because most trade involved the United States.
What we are taught in schools is that in appreciation of this fact under the Bretton Woods arrangement, the U.S. dollar was made the central currency of the world. The dollar was linked to gold and all other currencies in the world were linked to the U.S. dollar. Though justifiable in the light of economic fundamentals, the reasons for the arrangements established in Bretton Woods were more influenced by political and strategic considerations as it was by economic factors. This can be easily understood by looking at the benefits to the U.S. economy directly attributable to its currency functioning as the world reserve currency:
· The combination of this central role of the U.S. dollar arranged by Bretton Woods, the state of the U.S. industry versus the European economies and the U.S. Marshall-plan, enabled the U.S. economy to reap maximum benefit from the reconstruction effort in Europe.
· Under Bretton Woods, with the value of the U.S. dollar linked to gold and the value of the currencies of all other countries linked to the U.S. dollar, for a time at least, the United States was able to amass large quantities of gold. Under the influence of half a century of education to this aim (again), perhaps we have grown to forget the ‘value’ of gold in an economic system, but at least the rise in the actual value gold in the last few years should have served to remind us hereof. With uncertainty on the increase ever since the start of the U.S. declared War on Terror, investors have flocked to gold, recalling that in times of crisis at least gold has a actual value, instead of just a paper or generally accepted one. Paper money works fine in good times, but as it holds no actual value, it is easily brought down in times of economic crises. The effects this can have are best demonstrated by Weimar Germany, or, more recently, Turkey for instance, where inflation resulting from a lack of confidence in a national paper currency through the inflation it triggered brought economic collapse. The possession of gold therefore can shield one from major economic upheavals, as gold has an actual value, which in times of crises usually even tends to increase. So, for as long as it lasted, it’s gold reserve resulting from the Bretton Woods arrangement gave the United States a major strategic advantage over other countries. These days, in increasing circles it is generally accepted that actually the OPEC’s decision to price and sell its oil in U.S. dollars had nothing to with these economic fundamentals of that time. Instead, the decision can be traced back to an agreement between the United States and Saudi-Arabia, under which the U.S. promised to protect the House of Saud against all home-grown and foreign enemies in return for OPEC commitment to the U.S. dollar. This move further strengthened the position of the U.S. dollar in the world economy.
· The U.S. dollar being the world’s reserve currency has facilitated continuous significant shortages on the U.S. Trade Account over the last 30 years or so. The resulting indebtedness would not have been accepted by lending countries from any other borrower country but the United States. This willingness to lend is for a large part due to the fact that, of course, oil and gas, together with many other vital minerals, are priced and sold in the U.S. dollar. Almost none of the western economies is energy self-sufficient and therefore are dependent on oil and gas. Dollars are needed in order to buy these.
· The United States has been able to engage in international trade on incredibly favorable terms due to the reserve currency status of its dollar. The United States has been able to import from abroad, not only settling in its own currency, instead of in the currency of the seller country as one would normally expect, but also at the best possible prices just because it will pay in U.S. dollars.
These strategic concerns that led to the establishment of the system arranged in Bretton Woods are clearly visible. Even though BW itself is past history by now, it has enabled the United States to make its currency the central currency of the world, through making it the unit of exchange for many of the vital minerals. It would be hard to overestimate the benefit from this, points 3 and 4, and has facilitated continuous growth of the U.S. economy.
However, turning to the threats facing the U.S. economy, the size of the U.S. trade deficit—though cover is ensured due to the role of the U.S. dollar in the world—explains the actual quality of the current U.S. economy much better then wealth acquired over years does. Under the outsourcing trend, next to all industries of significance have moved away from the United States to other countries. No longer is the U.S. the ‘factory of the world’, but instead it has become dependent on imports. This makes clear that judging by economic fundamentals, there is no reason why the U.S. dollar should continue to function as the world’s central currency.
But what would occur if the U.S. dollar would lose this status is clear. If oil were to be priced and settled in euros (or yuan?) the oil guzzling United States will have to transfer its billion dollar a day trade deficit into a multi-billion dollar a day trade surplus, just to be able to finance its oil imports. This would be at a time when its favorable position in international trade would be removed; an impossible task.
How ironic—globalization, the most successful American export, has removed the fundamentals behind the U.S. economic power in the world.
This explains the current American foreign policy. Partly, at least, it is aimed at ensuring the U.S. dollar remains the currency used in the oil business. The invasion of Iraq has removed the only regime in the world that traded it’s oil in euros, and has given the United States sufficient leverage to ensure OPEC continues to price its oil in dollars. Iran (next war?) Publicly announced considering to trade its oil in euros, as did Russia. Venezuela, whose president has found himself to be the target for various underground CIA operations already, is proposing to barter its oil in the region and with China, effectively putting aside the U.S. dollar. Putting one and one together leads one to think, might this have something to do with the U.S. hostility against Venezuela?
So, it is not a question of ‘what is threatening the U.S. economy’. The U.S. economy has been outsourced to the extent that is has become fully dependent—not a sign of economic dominance. The current role of the U.S. dollar in the world economy has come about, in part at least, to the economic power the United States once had. It used this might and influence to attain for its own currency a position in the world carrying great strategic and economical advantages, as described above. However, this strength is no more, and from a strictly economical perspective it would make sense for oil and gas to be traded in euros. It is fair to say that the reserve currency position of the U.S. dollar is what keeps the U.S. economy from collapsing. What once resulted from her strength is now the only thing that keeps her standing. The real question, therefore, is not if the U.S. economy will collapse, but how much longer will the United States be able to hold off the inevitable collapse?
On the question of power
A collapse of the U.S. economy, and thereby a crumbling of its global dominance, is only a matter of time. This is because, as mentioned, fundamentally the U.S. economy has nothing anymore that would justify a dominant position. However, answering the question regarding what will replace her as the dominant power requires a study of the factors of influence on power, in a geopolitical context.
Dominance indeed results from economic power, as you contend when you state that those owning the banks will in the end run the world once the U.S. system finally breaks down. But, I think I can prove by looking at certain examples, that dominance also depends on political power (the ability to influence political processes abroad) and military power.
Please consider for instance the case of Japan. Japan, with its economic power, has some influence on the world. Through its economic power it can influence other countries, regions even. But, is Japan considered a dominant power in the world? No, it is not. It lacks real military power, largely due to the fact that the United States has forbidden it to develop the sort of military power it once held. These days the United States is changing this approach. In reaction the rise of China, the United States is now encouraging Japan is to arm itself. On political power, Japan, through agents or sympathizers, is not able to influence political processes abroad. Once it was, in Indonesia for instance, in the period when most of Asia was still colonized preceding World War II, but it is no longer (also due to the United States influence over Japan for the last 60 years).
Great-Britain was once the absolutely dominant economic, political and military power on this earth. I am referring to the beginning of the industrial age, when the British Navy ruled the ocean, the sun never set in all of its colonies at once, and its industrial apparatus was its pride and joy and transformed the raw materials imported from its colonies into finished products unavailable in large quantities anywhere else. Today, through her agents and sympathizers in the former colonies, it has retained some of its political influence, but it has lost most of its economic and military power. This explains why, in the presence of political power, it is no longer considered a truly dominant force on the world’s geopolitical stage but more of a smaller brother to the United States.
With the demise of the Soviet Union and the fall of communism, most of Russia’s political weight and its economic power have perished. During the Cold War, Russia, through its agents, was of influence behind the scenes in almost every part of the globe, most notably of course the Warsaw Pact areas. Also, it had economic and military muscle, making it a force to be reckoned with. Indeed, the world was considered bipolar, in full appreciation of the Soviet Union’s might.
Today, however, we find that the Soviet Union has been dismantled, and that most of the countries that resulted from this have switched loyalty away from Russia toward the United States. Russia’s agents and/or sympathizers no longer run the show in Eastern Europe and the Caucasus, a show of the greatly diminished political weight of the Russians. Economically, the transition to a market economy was used by the western powers to bring the country to its knees, damaged to an extent that will take decades to recover. As a result, its military has suffered too, through lack of funding. Russia is still of influence, it has retained some of its military capacity and political clout, but the dominant position it once held has gone.
Measured on this basis, France falls in the category of Great-Britain as it holds strictly political power, and little to no military and/or economic power. Germany would fall in the category of Japan, with no significant military power nor political power, but with economic power (largest exporter in the world, still). China, India and Russia are all increasing in strength significantly on all three factors of power.
What if we were to analyze the power of the United States on this basis? As discussed, economically today she is dependent on others for goods; others are no longer dependent on her for goods, services or the development of technology. Even science and technology are imported from abroad, with many university personnel in the U.S. coming from the Muslim and Asian countries, or the former Soviet Union. Politically, and this was never the United States’ strong point, her agents all face heavy and increasing opposition at home, with revolutions looming: Syria, Egypt, Saudi-Arabia, Pakistan. Consider Lebanon: the United States (in the form of Syria) is forced out by the agents of Great-Britain (the Druze) and France (the Maronites). So clearly, any political and economical power the United States has these days is based entirely on its military power, which is preserving the U.S. hegemony at the moment. Where once her dominance was based on economical power, political power and military power, today her military power is the only source of power for the United States, meaning the U.S. hegemony in 2005 is shaky.
To further underline this point, remember Bush II was forced to visit Europe not too long ago, in what could only be understood as an admission of the fact that the global superpower is not able to cope with two occupations at the same time. She is not powerful enough to unilaterally run the affairs of the world.
On the future
Fundamentally, the threat facing the United States is much graver than strictly economical, it is ideological. The collapse of Communism led some people to claim that the end of history had been reached. They could hardly have been more wrong; the (predictable) end of communism led to a global dominance of Capitalism, in a shape which Karl Marx rightly predicted that it would lead itself to ruins.
Currently, the U.S. economy is completely dependent on its military for preserving its interests. At the same time, the military is dependent on the economy for financing it. The United States will not give up its economy without a fight. We see rough times ahead for the world: history has shown that all empires in decline turned to brute force to delay what had become inevitable. The resort to using brute force also comes as a result of helplessness, the signs of which are quite obvious. It is remarkable to see what the United States cannot do today in its own backyard. It can’t fully isolate Cuba; it can’t create a regional “coalition of the willing” against Venezuela; it can’t simply impose its version of economics on the continent; it can’t stop a number of countries in the region from making energy deals of one sort or another with China, Iran, India, and other potential energy competitors. And if, for a moment, you were to glance north rather than south, you might notice that it was recently unable to impose its pet boondoggle, the Star Wars anti-missile system, on the recalcitrant northern neighbor Canada. Another small sign of America’s helplessness.
The Bush administration has been successful in fostering the military-to-military relations— that are seen as crucial to its plans—in almost all regions around the world. In an attempt to prevent U.S. soldiers or officials from ever ending up in a foreign or international court on any kind of war crimes charges, it sent the American Service Members Protection Act (ASPA) winging through Congress. This “prohibits U.S. security assistance funds and most military cooperation unless a country rejects the U.N.-backed ICC [International Criminal Court] or signs a bilateral immunity agreement with the United States”. It then pursued such agreements with just about every nation on the planet. As it happens, 11 of the nations that have ratified the ICC agreement and refused to grant the United States bilateral immunity are in Latin America. This is another sign of helplessness.
Self-assertion and the struggle for self-determination by Muslims are gradually gaining momentum in a global environment of change. A look at Latin America reveals that in Ecuador popular demonstrations drove the Bush-administration-backed President, Lucio Gutierrez, who had illegally dissolved the Supreme Court, out of the country. In April 2005, in Mexico City an estimated 1.2 million people turned out in a “silent march” to support Andres Manuel Lopez Obrador, that city’s left-wing mayor and the country’s leading candidate for president in next year’s election, after President Vincente Fox’s ruling party had tried to railroad him out of the race and into jail on a trumped-up charge. As Danna Harman of the Christian Science Monitor wrote of the march (People power rattling politics of Latin America), while discussing “the weakening of authoritarian regimes [in Latin America] and the growing self-assurance of the people —including, in the case in Bolivia, the indigenous”:
Chalk up another victory for Latin American people power. In the 1990s, what politicians feared most was apathy. But lately, Latin Americans from Mexico City to Quito, Ecuador—much like the citizens of Ukraine and Lebanon—have been taking to the streets in unprecedented numbers.
Once upon a time, an American administration would have put down such revolts of the people using the CIA, military to military relations, economic power, and aid of various sorts; but, though events in Latin America are finally making the United States sit up and take note, its ability to act is more limited than usual. After all, Iraq is proving a black hole for American power and something of a graveyard for the fascists’ global ambitions and energies—giving new meaning to that old Vietnam-era word “quagmire”.
There can be little question that, in the superpower-funded revolt of the Russian backyard and the unsupported revolt of the American backyard, you find similar impulses. When imperial power anywhere begins to crumble, it naturally creates space for local and regional experiments in new kinds of power relations. The imperial power has focused its energies on the world of Islam without realizing that it has already started to crumble all around. Unfortunately, all the U.S. covert (and less than covert) help in “organizing” democracy movements from Ukraine and Georgia to Kyrgyzstan and Belarus gives the fascists in America the feeling that they are actually creating democracies by manipulation in someone else’s backyard.
What the fascists do not expect on the home front is exactly what they enjoy abroad in places like Ukraine: the people’s power. People power’s a fine thing for shaking up Eastern Europe and other places where U.S.-friendly regimes come into being, but as it spreads to the Americas, it comes uncomfortably close to home. What if people power caught on in the United States? What if accountability was being demanded not just from governments in Kiev and Beirut but also those in London and Washington? The bread and circuses approach to democracy has so far been an effective guarantor of political apathy across America, but what if Americans in large numbers were to one day wake up from their political slumber and demand that they too deserve a truly representative government?
