A Century of War Anglo-American Oil Politics and the New World Order Revised Edition William Engdahl Pluto P Press LONDON • ANN ARBOR, MI Engdahl 00 pre iii 24/8/04 8:18:06 am First published in English 1992 Revised edition first published 2004 by Pluto Press 345 Archway Road, London N6 5AA and 839 Greene Street, Ann Arbor, MI 48106 www.plutobooks.com Copyright © William Engdahl 1992, 2004 The right of William Engdahl to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 0 7453 2310 3 hardback ISBN 0 7453 2309 X paperback Library of Congress Cataloging in Publication Data applied for 10 9 8 7 6 5 4 3 2 1 Designed and produced for Pluto Press by Chase Publishing Services, Fortescue, Sidmouth, EX10 9QG, England Typeset from disk by Stanford DTP Services, Northampton, England Printed and bound in Canada by Transcontinental Printing Engdahl 00 pre iv 24/8/04 8:18:06 am Contents Preface ix 1. The Three Pillars of the British Empire 1 The Empire needs a new strategy 1 Free trade and the sinews of British power 2 Britain’s informal empire 5 The Great Depression of 1873 8 2. The Lines are Drawn: Germany and the Geopolitics of the Great War 11 Germany’s Wirtschaftswunder 11 A Berlin bank panic 14 The necessity for ship and rail infrastructure 15 3. A Global Fight for Control of Petroleum Begins 19 A British admiral sees beyond lamp oil 19 D’Arcy captures the secret of the burning rocks 20 By rail from Berlin to Baghdad 22 The new Dreadnoughts 28 Sir Edward Grey’s fateful Paris trip 29 Fashoda, Witte, great projects and great mistakes 30 4. Oil Becomes the Weapon, the Near East the Battleground 35 A bankrupt Britain goes to war 35 Oil in the Great War 37 Britain’s secret eastern war 40 ‘Selling the same horse twice’ 43 Arthur Balfour’s strange letter to Lord Rothschild 44 Balfour backs the new concept of empire 46 5. Combined and Confl icting Goals: The United States Rivals Britain 50 Morgan fi nances the British war 50 New York bankers challenge the City of London 55 Britain moves for oil supremacy 58 Churchill and the Arab Bureau 59 A battle for control of Mexico 60 The secret of British oil control 61 Engdahl 00 pre v 24/8/04 8:18:06 am vi A Century of War 6. The Anglo-Americans Close Ranks 65 A conference in Genoa 65 Sinclair and the American bid 66 Germany tries to outfl ank the British 68 Military occupation of the Ruhr 70 The real origins of Weimar hyperinfl ation 71 The Anglo-American Red Line 74 Deterding, Montagu Norman and Schacht’s Hitler Project 76 7. Oil and the New World Order of Bretton Woods 85 A new empire rises from the ashes of war 85 The dollar standard, Big Oil and the New York banks 87 The Marshall Plan forms a postwar oil hegemony 88 The power of the New York banks tied to U.S. oil 90 Mohammed Mossadegh takes on Anglo-American oil 91 Italy attempts independence in oil and development 97 Mattei’s bold development initiative 99 8. A Sterling Crisis and the Adenauer–de Gaulle Threat 105 Continental Europe emerges from the rubble of war 105 Anglo-American grand designs against Europe 107 1957: America at the turning point 109 ‘That ’58 Chevy’ 110 The dollar wars of the 1960s 111 The Vietnam option is taken 114 The beginnings of America’s internal rot 117 Sterling, the weak link, breaks 120 De Gaulle is toppled 125 9. Running the World Economy in Reverse: Who Made the 1970s Oil Shocks? 127 Nixon pulls the plug 127 An unusual meeting at Saltsjöbaden 130 Dr. Kissinger’s Yom Kippur oil shock 135 The economic impact of the oil shock 138 Taking the ‘bloom off the nuclear rose’ 141 Developing the Anglo-American green agenda 143 Population control becomes a U.S. national security issue 147 10. Europe, Japan and a Response to the Oil Shock 150 The petrodollar monetary order devastates the developing world 150 From Colombo comes a political earthquake 156 Engdahl 00 pre vi 24/8/04 8:18:06 am Contents vii Atoms for Peace becomes a casus belli 162 Gold, dollar crisis and dangerous new potentials from Europe 165 The Crash of 1979: Iran and Volcker 169 11. Imposing the New World Order 178 Volcker borrows a British model 178 Gunboat diplomacy and a Mexican initiative 183 Wall Street replays the 1920s, IMF-style 191 Reagan’s chickens come home to roost 199 ‘We’ll get by with a little help from our friends’ 207 The fall of a wall panics some circles 209 Saddam and Operation Desert Storm 213 The target: an independent Europe and Japan 219 12. From the Evil Empire to the Axis of Evil 223 Finding the new bogeyman 223 Japan: wounding the lead goose 225 Phase two: shooting Asian tigers 229 Washington revisits Halford Mackinder 231 Russia gets the IMF Third World cure 233 Yugoslavia gets the shock therapy 238 U.S. oil geopolitics in the Balkans 241 13. A New Millennium for Oil Geopolitics 246 Bush brings Big Oil back to Washington 246 ‘Where the prize ultimately lies’ 248 ‘The New American Century’ 250 From Kabul to Baghdad: war on terror or war on oil? 252 ‘You’ve got to go where the oil is’ 255 The peak of oil? 258 Oil and bases: removing the obstacles 263 ‘Full spectrum dominance’ 268 Notes 271 Appendix I: Founding Members of the Trilateral Commission (1973) 285 Appendix II: Participants at the Saltsjöbaden Meeting of the Bilderberg Group (1973) 286 Index 288 Engdahl 00 pre vii 24/8/04 8:18:06 am viii A Century of War LIST OF FIGURES 1. Agreement between the British and Sheikh al-Sabah of Kuwait (1899) 26 2. Attitudes of the British press towards Germany’s Baghdad Railway project (1899) 27 3. British map of the Mesopotamian oilfi elds (1914) 41 4. List of proposed U.S. Bilderberg group participants (1973) 131 5. Excerpts from confi dential Bilderberg protocol (Saltsjöbaden, 1973) 132 6. Cover page of Bilderberg protocol (Saltsjöbaden, 1973) 133 7. Partial list of offi cial Bilderberg attendees (Saltsjöbaden, 1973) 134 Engdahl 00 pre viii 24/8/04 8:18:06 am Preface The fall of the Berlin Wall at the end of the 1980s and the collapse of the Soviet Union were hailed by many as the dawn of a new era of peace and prosperity. Some authors, such as Francis Fukuyama, proclaimed it as the beginning of the end of history. The entire world seemed to open to economic cooperation, to investment, to democratic ideas. Trade barriers fell, doors opened. Little more than a decade later, the optimism was long forgotten as the outlines of a very different world were emerging. As this preface to the new edition of A Century of War was written, the world was mired in a bloody series of wars, the most serious being the war in Iraq. It soon became clear to the world that the decision of President George W. Bush to go to war against Iraq had little to do with the threat of weapons of mass destruction. It was also increasingly clear that the U.S. agenda in Iraq had little to do with the proclaimed effort to ‘bring democracy’ to a once despotic Iraq. That naturally raised in many minds the question of why the United States put so much of its credibility, of its reputation, of what some call its soft power, at risk, for apparently so little. The answer to the question was a short one: it was about oil. But not about oil in the simple sense many believed. This war was not an issue of corporate greed. It was about power, and geopolitical power above all. War in Iraq was about the very basis of America’s ‘national security,’ of future American power. America’s role as the sole hegemon was the unspoken reason for the war, and for this reason neither of the major presidential candidates offered an alternative to American military occupation of the vast oilfi elds of Mesopotamia. Iraq, as hawkish Pentagon strategists put it, was part of the American post-cold war agenda, U.S. pursuit of ‘full spectrum dominance.’ The role of oil in the war, and the role of oil in most of the wars of the past century or more forms the heart of this study of power and geography. It is the thread running through the chapters of this book. In 1904, a British geographer, Halford Mackinder, presented a series of theses to the Royal Geographic Society in London under the title ‘The Geographical Pivot of History.’ Almost a century later, American security adviser and strategist Zbigniew Brzezinski spoke in admiration of the work of Mackinder and his theory of Eurasian ix Engdahl 00 pre ix 24/8/04 8:18:07 am x A Century of War geopolitics. It quietly but clearly guided American global strategy. The occupation of the oilfi elds of Iraq, the war in Kosovo and the Balkans, endless civil wars in Africa, fi nancial crises across Asia, the dramatic collapse of the Soviet Union and the subsequent emergence of a Russian oligarchy, blessed by the International Monetary Fund and by Washington, all assumed coherence in a world where geopolitics, power and control dictated relations.