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Global Research, March 18, 2011 | |
- 2011-03-16 |
PART I The scenario envisaged by Washington is to involve Saudi Arabia and the Gulf states in aerial attacks directed against Libya. The geopolitical and economic implications of a US-NATO led military intervention directed against Libya are far-reaching. Libya is among the World's largest oil economies with approximately 3.5% of global oil reserves, more than twice those of the US. A war on Libya would have an immediate impact on the price of crude oil. The latter has risen by 18 percent since the beginning of the insurrection in Libya. It currently stands at $104.42 a barrel for April delivery on the New York Mercantile Exchange, its highest level since the financial crash of September 2008. Since August 2010, the price of crude oil has risen from 75.93 a barrel to 104.42 (March 2011), a hefty increase of 37.5 percent. (See Table below)
Source indexmundi.com. Crude Oil (petroleum) - Monthly Price - Commodity Prices A war directed against Libya would push the price of crude oil up to abysmally high levels, potentially triggering a global inflationary spiral, which would result in the impoverishment of large sectors of the World population. A sizeable increase in the price of oil over a prolonged period would wreak economic havoc: production and transportation costs would increase dramatically. Hikes in the costs of fuel and energy would trigger a renewed string of bankruptcies in major sectors of economic activity. They would also contribute to a sizeable increase in the external debt of developing countries. These price hikes, which are already ongoing, would occur despite the abysmally low costs of Middle East oil. What this means is that powerful institutional speculators on Wall Street with links to the US military and intelligence establishment will cash in on billions of dollars in speculative gains not only in the oil market but also in the commodity and foreign exchange markets. This money is appropriated from households which must now pay a higher price for fuel. A "humanitarian war" would be "good for business". It serves the interests of the institutional speculators, it contributes to a further process of appropriation of money wealth. Financial institutions which had prior knowledge or intelligence of events in Egypt and Libya have already made billions of dollars in speculative gains in the futures and options markets for crude oil. These global financial and banking institutions, which "placed their bets" several months ago, have "a vested interest in war". The greater the turmoil and disruption of the crude oil market, the greater the speculative gains. Short term speculative gains due to market volatility are also part of this process. Foreknowledge of the sequence of political or military events and how they affect markets as well as control and/or manipulation of financial news pertaining to these events are an essential part of the betting process. In this regard we are dealing the with workings of the World's commodity exchanges, the most important of which is the powerful CME Group created following the merger of the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBOT) and the New York Mercantile Exchange (NYMEX). The spreading of rumors and fake information is also a profitable undertaking particularly in relation to short-term movements of commodity markets:
Read Chossudovsky's analysis on War and the Economic Crisis Economic sanctions have been imposed by the US on Libya thereby creating havoc in the supply of Libyan oil to the European Union. These sanctions are indirectly targeted at the European Union. They contribute to weakening Italy and France, which are heavily dependent on Libyan oil.
Economic Impacts of a US-NATO Military Operation If this military operation is carried out, oil prices will spiral, contributing to further exacerbating the economic crisis with devastating social consequences, particularly in the Europe Union, which is heavily dependent on Libyan oil. The hikes in oil prices contribute to increased poverty, they also contribute to a concurrent increase in global food prices (which are also the object of speculative activity on the commodity exchanges) and more generally in the cost of living Worldwide. i.e the consumer price index.
US$ per metric ton
US$ per metric ton Maize (corn), U.S. No. 2 Yellow, FOB Gulf of Mexico, U.S. price, US$ per metric ton Maize (corn) - Monthly Price - Commodity Prices Wheat - Monthly Price - Commodity Prices Source indexmundi.com. The fuel price hikes will in turn have a significant impact on the costs of transportation, international freight and air travel. At the height of a global economic crisis, it will further undermine both domestic and international trade. All this is known and understood by the major economic actors including the politicians and the speculators. The politicians follow the guidelines set by Wall Street, which largely call the shots on government financial policy. Regulation of the price of food staples or the retail price of gasoline is considered to be an encroachment on the workings of the "free market". What we are dealing with is a corrupt economic system which feeds on war and destruction. The average price of gasoline at the pump in the US is of the order of 3.80 a gallon, in excess of $4 a gallon in California. The speculators applaud! The media casually blames the price hikes on Gaddafi... "Households are cutting back on travel, cinema visits and groceries in the UK, where prices jumped to 130.68 pence a liter ($8.06 a gallon) on March 3, ... Prices set records in the Netherlands and Italy. ( Record Gas Prices: $8 In Europe, $4 In California; Trichet Could Raise Interest Rates To Halt Inflation | Markets | Minyanville.com, March 4, 2011) Average Gasoline Prices in the US (US$ per Gallon)
Source AAA Michel Chossudovsky is an award-winning author, Professor of Economics (Emeritus) at the University of Ottawa and Director of the Centre for Research on Globalization (CRG), Montreal. He is the author of The Globalization of Poverty and The New World Order (2003) and America’s “War on Terrorism” (2005). He is also a contributor to the Encyclopaedia Britannica. His writings have been published in more than twenty languages. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Global Research Articles by Michel Chossudovsky |
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