John Damien posits what he sees as the likely material motive to the madness in BushCo’s planned escalation.
While there may well be a intra-elite split in the US administration between the neolibs and the neocons along the axis of economically draining military misadventures, this commentary speculates more about material rather than martial motives in the political economy underpinning the intention to escalate the military madness.
It suggests that otherwise competing guns and butter interests might overlap rather than diverge.
Excerpted from John Damien, Bush Throws the Dice, ICH blogs, 27 January 2007
By funding the Iraq war and supporting Israel, Egypt and Jordan, the US pays an oil security tax running at least $100 billion per year. China doesn’t pay billions per year to secure their oil supplies. The Europeans collectively spend a fraction of the US amount on oil security.
At $60 barrel, the US is paying approximately $290 billion per year for imported oil. Plus the security tax. That tax includes deployments and operations beyond the Iraqi theatre. However, based on the public estimates that Iraq cost $100 billion last year , it would appear the US economy pays 30% more for oil as anyone else. Put another way, China pays $60 per barrel of imported crude oil. Adding the cost of oil security, America pays more than $90 for the same barrel of oil. Even the United States cannot keep this up forever.
Pressure is growing to do something about this situation. The economics are complicated, but the point is straightforward. The US dollar is trending lower in value as the price of oil is trending higher. At some point, America becomes non-competitive, putting the massive US debt at risk. As the currency goes lower, the value of the return on US investments drops relative to other economies. Lower investment return means less demand for the US dollar. The best way for George Bush to deal with this potential nightmare is to prevent it from happening. The best way to keep it from happening is to 1) lower the security tax by making the Middle East more stable, 2) ensure that the money spent on security actually buys something. That something might mean for a more stable oil supply than competitive countries, or a return to the US dollar as the only currency for energy trading.
Like the Middle East political situation, the economic outlook dictates decisive action by the US. The United States cannot continue indefinitely to pay more for oil than everyone else. As we have seen, there is nothing that can be done within the context of Iraq. The only course open to Bush is escalation.
John Damien concludes soberly:
The basic fact is that America controls nothing in Iraq, and little beyond. They have no ability to do anything more than wreck the remaining stability in the region. Nevertheless, because of perceived strategic necessity, economic exposure and dreams of greatness, the US Administration is planning action. The gambler is readying one last, grand wager.
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