Oil Play is Economic Warfare
Lawrence Wilkerson says the target of low
oil prices is Russia and Iran whose
economies are being thrown into turmoil and
opens the doors to sovereign raiders
December 29, 2014
PAUL JAY, SENIOR EDITOR,
TRNN: Welcome back to The Real News Network.
I'm Paul Jay.
In the 2007-2008 financial and economic
crisis, one of the things that's been
pointed out is that international capital,
as such, actually collaborated on a
solution. The Fed, American Fed, gave money
even to European banks and others. And
instead of retreating into trade wars that
often lead to real wars, there was a
systemic collaboration trying to deal with
So was that the end of this kind of economic
warfare? Well, maybe not. We're seeing
economic warfare now. Saudi Arabians have
moved the price of oil down into the 40s.
There's a backup into the 60s. There's a
question of might it even go down into the
high 30s. It's undermining, even destroying
some major economies in the world--the
Russians, the Iranians, the Venezuelans.
Maybe it's even going to harm/hurt the
But what's driving all this? And are we
seeing a market mechanism, or are we seeing
Now joining us to talk about all of this is
Thanks for joining us.
COL. LAWRENCE WILKERSON, FMR. CHIEF OF STAFF
TO COLIN POWELL: Thanks for having me, Paul.
JAY: So, one more time, Larry was Colin
Powell's chief of staff. He's a regular on
The Real News and teaches at William & Mary
Okay. So the Saudis are arguing, we have no
big foul and negative intent here. We're
just doing what the market--we think the
market requires from us to our advantage.
We're not trying to kill American shale,
which seems to be sort of the predominant
theory. We don't have any geopolitical
objectives. We're not trying to screw the
Iranians or the Russians. Except that is
WILKERSON: I think you're seeing some of the
most fundamental precepts being developed
and used throughout the globe right now of
what I would call the new kind of economic
I think if you go back to the collapse of
the Soviet Union, you will find that the
United States, OPEC (the Saudis,
principally), in a loose arrangement, force
the price of oil down to the point where it
was below $15 a barrel for the benchmarks.
And that had something to do, along with
Afghanistan and the expenditure on that
conflict, with the final collapse of the
Soviet Union, because that was their
principal source of their economy was their
I think you're seeing--what you've seen of
late was an attempt to do some of the same
things using the Commodity Futures Trading
Commission and a very--if you look at the
rules that were abrogated or suspended or
whatever for their moving into speculation
in a particularly light sweet crude, WTI and
Brent and so forth, which is a very, very,
very important part of the oil markets,
their attempts were to push the price up to
$140, $150 a barrel, which we saw it get to.
And that was to punish China, that was to
rip China's economy up, if you will, because
you look at China, and most of their
petroleum that they don't get internally
(which is decreasing every day) has to come
from vast distances overseas, lots from the
Persian Gulf, for example. And they were
contracting for heavy tankers at $200,000.
So when you factor all that in, it's heavy
subsidies that the Chinese have to put on
that in order to make it efficient within
their economy. They're taking money out of
that $2 trillion, $3 trillion in their
current accounts balances that they have
from United States.
But nonetheless, this is very dangerous, I
think, economic warfare. And the signs of it
are showing. The president's working group
on financial matters, for example, put into
place in its current format and its current
energy and power by Bob Rubin under
Clinton--called, on Wall Street, the "Plunge
Protection Team". But what it is, in
essence, is an attempt to do this on a macro
level, to use the economy and economic power
to injure other people.
JAY: Well, the American press has been
playing this as a Saudi attack or policy to
undermine American shale and fracking and
all this. But you're suggesting that in
fact, no, the U.S. is in on this with the
WILKERSON: I'm suggesting it's wider than
just the Saudis and that you've got to
have--you don't have to have the permission
of the United States, but you certainly have
to have the nod from the United States in
order to do this sort of thing. And I think
it has to do with more geostrategic
important matters than it does with just a
temporary setback in fracking or shale
extraction or whatever, or whether or not
Venezuela's aided by it or hurt by it and so
forth. I think they're looking at the very
tip of the geostrategic ladder, if you will,
right now. And Putin and Beijing, Moscow and
Beijing, sort of are at that tip. And it's
interesting to see that at one point Putin
was probably complicit with this effort in
order to injure China.
But now, since Ukraine, Crimea, and the
incidences that have developed around
JAY: Complicit to get the price higher.
WILKERSON: Yes, to get the price higher.
Now, suddenly, the price is going down. You
talk to anyone in the markets who will tell
you the truth, and he will tell you, she
will tell you there's absolutely no reason,
supply and demand, that these two things
should have happened. So there's got to be
another reason they happened.
JAY: So why would the Saudis benefit from
this? I mean, I understand how they're
screwing the Iranians. I guess they have a
beef with the Russians, given the support
for Assad and they would like to weaken
Russia. So the Saudis are certainly still
intent on overthrowing Assad.
WILKERSON: And there are other wrinkles
there, too. The Saudis over time have let it
be known that there is a certain benchmark
price that incentivizes alternative energy.
And they don't want to see that happen,
because they could see themselves at some
date in the future perhaps being told, hey,
you don't have any buyers anymore, there's
other energy out there that's cleaner and
better for the environment, and so forth and
so on. And then they have a certain
benchmark price, too, that they need to make
over time on a consistent basis in order to
pay their patronage, to pay the royals, who
grow every day as the families increase, and
to keep their population quiescent.
So they're caught on this kind of, oh, can't
go too high, can't go too low; we'd like to
stay right here. Well, that stay right here
changes as the world situation changes. But
nonetheless, you get an appreciation for the
dilemma the Saudis are in.
That said, they can do what they need to do
for geostrategic purposes for quite a time
before they start feeling the worst results
from either of these two conditions.
JAY: The Saudis.
JAY: We've heard a year to three years of
reserves they're sitting on.
WILKERSON: They could run something like
this for long enough to really hurt another
economy or economies.
JAY: So what's in it for the U.S.?
WILKERSON: What's in it for the U.S. is
punishing Putin in terms of driving the
prices down. Look at what's happening right
now. I mean, even though polls show because
of his stance against the United States he's
running low 80s in Moscow in the polls, he
is having tremendous problems. The inflation
now, the ruble is becoming worthless.
Inflation is terrible.
JAY: Devaluated about 45 percent than last
WILKERSON: Yeah. And the rest of the Russian
economy's not going to pick up. He's just
contracted--many people would say who know
the situation well, he's just contracted
Russia out to China in these latest two
deals, which is going to give the Chinese
even more leeway, more power to
develop--'cause that's what they're
doing--the vast five time zones, 3,000
kilometers Soviet Far East. They're going to
own the Soviet Far East. But Putin has this
short-term tactical vision. He doesn't seem
JAY: But does he have a choice?
WILKERSON: He's amassing--well, in terms of
staying in power, you're probably right.
This is the way he stays in power.
JAY: So Russia's screwed by this. Iran's
screwed by this. Venezuela's screwed by
this. I mean, the Canadians are, but in the
geopolitical equation who cares about the
WILKERSON: Actually, I think we do,
especially after Harper's help with Cuba.
JAY: Well, but in terms of the tar sands,
they'll be there when needed.
JAY: They're not going anywhere. If the
WILKERSON: That's something people forget.
If you don't pull it out now, it's there
JAY: Yeah. So the Canadian economy gets hit,
well, so be it.
So, geopolitically it's going to cause chaos
in some significant places. The Americans
WILKERSON: I think this kind of economic
warfare, as I said earlier, is very
dangerous. You're looking at creating chaos
and anarchy in markets that have other
factors at work in them. And while you may
think the president's team controls these
factors or controls what's happening in this
economic warfare, you may find you don't. Be
careful what you wish for--you may get it.
And it may be an awful mess.
I am very reluctant to see this kind of
thing, just as I am cyber warfare, as the
Sony example might represent, get started
big time. These are very dangerous types of
warfare for people, especially the United
States, who might ultimately be the most
vulnerable of all societies to this kind of
warfare, to begin experimenting with. It's
simply not the thing we should be doing, in
JAY: Okay. Thanks for joining us.
JAY: And thank you for joining us on The
Real News Network.
And don't forget we're in our year-end
fundraising campaign. Every dollar you
donate will be matched by another dollar
until we reach $200,000. In the U.S. and
Canada these are tax-deductible donations,
so it actually doesn't even cost you a whole
dollar. As you know, it costs us about
$100,000 a month to run The Real News, so
this campaign will pay for two full months.
And we have big plans next year. So, please,
if you don't click that donate, we can't do
Translation may take a
moment to load.
What's your response?
Scroll down to add / read comments
before posting -
It is unacceptable to slander, smear or engage in personal attacks on authors of articles posted on ICH.
Those engaging in that behavior will be banned from the comment section.