By Michael Doliner
March 08, 2019 "Information Clearing House" - The United States Entity lost the war in Iraq. That fact determines the Entity’s position in the Middle East today. After having destroyed Saddam’s army and dispossessing the Sunnis in favor of the Shi’ites, after Abu Ghraib and it’s indelible pictures, after the total destruction of Fallujah, in short after a victory achieved with the utmost brutality, contempt and humiliation of Iraq and Iraqis, the Entity was in charge. Then the “insurgents” appeared. They put improvised explosive devices along the roads so, with a phone call, they could destroy patrols of the Entity. They made car bombs so that every vehicle approaching a check-point might spell doom. They donned suicide vests to blow themselves and any nearby Entity soldiers up. Entity soldiers couldn’t go into the streets. Every move they made could be their last. The enemy was everywhere and nowhere. These people would rather die then be ruled by these idiotic mechanized barbarians. Everything seemed peaceful, but at any moment, out of nowhere, they could be blown to pieces. That kind of thing wears on you. Their patrols, pointless bouts of Russian roulette, ended up as parked “search and avoid” missions. Life went on without the clanking monsters. Entity bases were like Kaposi sarcoma in AIDS patients. The Entity’s attempts at reconstruction were comically inept – roads to nowhere and chicken processing plants for chickens no one wanted. In short the Entity’s occupation of Iraq after the victory, other than being a disaster of comical incompetence, was non-existent. Muqtada Al-Sadr, the Shi’ite cleric, had much more power than the Entity. Eventually Iraq rejected the Entity’s status of forces agreement (SOFA). In other words the Iraqi puppets the Entity had installed unceremoniously kicked the Entity out of the country.
Until that time the Entity had been running a protection racket in the Middle East. But after the loss of Iraq these threats seemed a lot less plausible. The game was: oil had to be sold in dollars. Know as Dollar Hegemony, this racket allowed the Entity to print money. Oil backed the dollar just as gold once had. Governments had to maintain large supplies of dollars to protect against “emergencies,” that is, dollar shortages during speculative attacks on their currencies. “To prevent speculative and manipulative attacks on their currencies, the world’s central banks must acquire and hold dollar reserves in corresponding amounts to their currencies in circulation.” The Entity enforced dollar hegemony with military threats. One of the most important reasons for the Entity’s attack on Iraq was Saddam’s abandoning of dollar hegemony. He had begun to sell oil in euros. The Entity had to stop that. It invaded, and as soon as it was victorious, reversed that policy. Dollar hegemony restored. But the loss in Iraq revealed The Entity’s protection racket as a bluff. It’s threats were suddenly unconvincing.
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Pressed by Entity sanctions, Iran began to sell oil for other currencies after 2007. The Entity was not going to invade Iran! A look at the map reveals just what a catastrophe that would be. As soon as hostilities started, even before a shot was fired, no one would insure tankers going through the Straits of Hormuz, and the tanker owners would not send them through without insurance. Twenty percent of the world’s supply of oil would disappear with no more military action than the commencement of hostilities. The world economy would tank, and this time fall into chaos. There was no way the Entity could even think about occupying Iran after the debacle in Iraq. And there was no way to protect The Entity fleet in Bahrain. They would be sitting ducks anywhere in the Persian Gulf. If they were destroyed the Entity would lose unless it launched nuclear weapons. World War III would be on. Only madmen would even consider doing this.
The Entity had abused dollar hegemony over the years by simply printing dollars. The Entity ran huge trade deficits every year. China, Japan and all other countries had had to keep reserves of dollars if they were to purchase oil and protect their currencies. These were like never- having-to-be-repaid loans to the Entity. If other currencies could be used they would dump these reserves because the only thing preventing inflation of these dollars had been dollar hegemony, backing the dollar with oil. Iran doing business in non-dollar currencies is like a leak in a dike.
Russia, China, India and Japan are now unloading dollars carefully, so as not to cause a panic. But they are steadily unloading them. They see dollar hegemony disappearing. Naturally, Saudi Arabia sees what is happening, and is not that enamored of the dollar either. As long as they thought the Entity protected them from Iran and, of course, from the Entity itself, they went along with it. Now the Entity is impotent to enforce dollar hegemony. The dollars the Saudis take for their oil today will be worth a whole lot less tomorrow if dollar hegemony ends. They are wavering, especially after Trump scolded them for murdering Kashoggi. Naughty, naughty MBS. They know the Entity cannot protect them from Iran, and they are panicking.
The Entity’s hive mind, for it’s part, refuses to accept the Iraq failure as having revealed its weakness. It still wants to maintain dollar hegemony and its protection racket. The end of dollar hegemony is an existential threat to The Entity. Originally The Entity exchanged securities for these dollars, one piece of paper for another, or more likely bits of code, with the Federal Reserve. Then it spent them, mostly on the military. The Federal Reserve unloaded these dollar-denominated securities to whoever had faith in the dollars they could exchange them for. Nice work if you can get it, but securities are debt. The Entity is so far in debt that it pays almost a trillion dollars in debt service annually. To do so it needs more dollars and to sell more securities. Faith in this Ponzi scheme might waver. If everyone unloads dollar securities the entity will have to print more dollars, and sell more securities to buy them. Otherwise their price will crash. But what real something or other will these dollars buy given how many will be floating around? For there will be no other buyers unless the dollars can buy something real. The Securities will then be worthless. If Entity securities become worthless so will the dollar. Bye-bye Entity.
The hive-mind’s strategy is to simply deny what has happened, the ostrich maneuver. The Entity didn’t lose in Iraq, it hasn’t as a consequence lost all credibility in the Middle East, dollar hegemony is salvageable, and the Entity might still attack Iran after all. The continuation of dollar hegemony requires a world in which Humpty-Dumpty gets back together.
If only Iran could be put back in the box of dollar hegemony all would go back to what it was. In 2012 the Entity blocked Iran from the SWIFT messaging system for making international payments as punishment for straying from dollar hegemony, the first time that system had ever been used politically. It froze Iranian funds and the trust required for international banking was destroyed. However, Iran continued on its wayward path. Now the Entity withdraws from the JAPOCA, which was very beneficial to all other signers. Obedience to the Entity’s sanctions against Iran is bringing the interests of much of Europe into conflict with those of the Entity.
Without dollar hegemony the dollar will hyper-inflate and destroy the Entity. To restore dollar hegemony it was thought essential that Iran return to the dollar hegemony fold. Why then did Obama sign the treaty with Iran, the JAPOCA? Obama signed the Iran Treaty because of Hassan Rouhani and his party. Rouhani, as President of Iran, was a “moderate” and he had succeeded Mahmoud Ahmadinejad, the notorious hardliner who refused to even negotiate with the Entity. Ahmadinejad had called directly for the end of dollar hegemony. Rouhani won by arguing that he could relieve Entity sanctions on Iran through negotiations. Obama must have hoped that Rouhani could restore Iran to the dollar-hegemony fold. Perhaps a little coup d’état. He was, Obama must have hoped, our man in Tehran. The JAPOCA, which would relieve Iran of some sanctions, would prove to Iran that going along with Entity wishes, in particular dollar hegemony, was good for them. Rouhani was the guy who promised good things for Iran from a rapprochement with the Entity. Without the successful negotiation of the JAPOCA, Rouhani would fail.
The actual contents of the Iran deal, with its various detailed restrictions on Iranian nuclear research and enrichment of Uranium, was a drawn-out shadow play. In the end, Obama demanded only what Rouhani could give. Neocons in the shadows complained that he gave too much, as has Trump. Ahmadinejad, on the Iranian side, said it wouldn’t work, and complained that Iran got too little. In any case it was all a shadow play. Iran had no program to develop nuclear weapons. American Intelligence Agencies all agreed that it had been abandoned in 2003. Actually, it had never existed. Nevertheless, the two sides hammered out various conditions, dragged out the negotiations interminably, and carefully crafted the agreement to be acceptable to both sides. All of this was to present an appearance that would strengthen Rouhani and protect Obama’s rear. Only the lifting of some Entity sanctions was real. That was Rouhani’s win, and in return Rouhani would, Obama hoped, return Iran to the fold or at least “pave the way.”
But Rouhani would not or could not do any such thing. Although he did want to open Iran to the West, he would not restore dollar hegemony. When Rouhani did not do what the Entity hoped, it abandoned him and with him the JAPOCA, which Obama signed only to prop him up. That was the end of any hope for a Ukraine style regime change in Iran. At that point the Entity had to reestablish itself as the bully of the Middle East, which meant it had to threaten to attack Iran. Otherwise even Saudi Arabia, mortally afraid of Iran, wavering on dollar hegemony, and no longer believing in Entity protection, might itself abandon dollar hegemony. That would be curtains.
Earlier this year, the Chinese Ambassador Li Huaxin was pictured with Saudi officials as he praised Saudi Arabia’s Vision 2030, which calls for stronger economic cooperation between the two nations. This pact pressures Saudi Arabia to adopt the “petro-yuan,” which would effectively axe the petrodollar. Although Saudi Arabia relies heavily on U.S. military power, Saudi Arabia warming ties with China closeness are alarming. China’s growing economy and standing in the world could undermine the attitude towards the United States. Above anything else, a shift in alliances could threaten America’s standing in the Middle East and world.
The Entity, unable to face the truth, pretended its position in the Middle East had not changed. It had to punish misbehavior. Withdrawal from the JAPOCA was the first step, even though everyone admitted that Iran had not breached the agreement. Withdrawal from a signed agreement made the Entity no longer “agreement capable”, as Putin commented, for no one could trust its word. Trump’s blathering about a new agreement was nonsense. Diplomacy, for the Entity, is henceforth “off the table.” Europe’s slavish obedience to the Entity exposed its governments as puppets of the Entity to the benefit of the rising pan-European nationalist sentiment hostile to Entity hegemony. The Entity had to reignite its threats against Iran. But this just revived Obama’s dilemma, for the Entity cannot attack Iran without igniting WWIII.
With the credibility the Entity had had while it pretended to be the United States gone, and attacking Iran impossible for any sane entity, Trump is left with only one option if he is to maintain dollar hegemony: to go insane. The only alternative to going insane is to not attack Iran, allow dollar hegemony to dissipate (as is inevitable anyway), and so end The Entity– for the debt accrued through dollar hegemony is unpayable, except in hyperinflated dollars.
Michael Doliner studied with Hannah Arendt at the University of Chicago and has taught at Valparaiso University and Ithaca College.
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