How To Keep the War From Starting

One of my favorite economic's long but very insightful.

Mike Denny


Issue 223 March 14, 2003


     It is clear that the United States will invade Iraq
within the next few days. Jockeying for position in the
United Nations Security Council may delay things a bit, as
would a decision by Turkey to take another vote regarding
the use of Turkey as a base by American troops. But the
war is going to take place.

     The war needn't take place. It could be stopped by a
few phone calls. Let me describe the scenario of peace.

     The senior decision-makers of the Saud family call an
emergency meeting. They meet together in private, discuss
the situation, and gain agreement to issue this statement:

     Upon the invasion of Iraq by the United States,

     1. The nation of Saudi Arabia will withdraw all
          of its deposits in American banks.

     2. These deposits will not be transferred to
          commercial banks in those nations that vote
          with the United States in the Security

     3. Saudi Arabia will henceforth sell oil for
          euros. Dollars will no longer be accepted.

     The head of the Saudi central bank would then call the
head of the Bank for International Settlements in Basle.
He tells the BIS's senior representative that this
statement will be issued to the wire services within three
hours unless the Saudi head of state hears from President
Bush personally, assuring him that the troops will begin
being removed from Kuwait within two days. The BIS is also
told that if American troops should leave the compound
where they are stationed in Saudi Arabia, the statement
will be released to the wire services immediately, and the
withdrawal of Saudi funds will begin.

     Within 30 minutes Alan Greenspan would call President
Bush and explain things to him. Eddie George would call
Tony Blair at the same time.

     If the Saudi head of state gets no phone call from Mr.
Bush, he then issues the statement to the news wire
services. Simultaneously with this announcement, the Saudi
foreign minister begins calling the heads of all other oil-
exporting Middle Eastern nations to line up joint support.
Also, the head of the Saudi central bank begins calling the
heads of all other Arab central banks, starting with the
oil-exporters. The callers will remind the listeners of
the probable consequences of a TV broadcast on al-Jazeera
regarding those heads of state that refused to cooperate
with Saudi Arabia in challenging the invasion of an Arab
country. The words "Serbian Prime Minister" will be used

     By the third phone call, the dollar would be lock-
limit down in America's domestic currency futures markets.
The margin calls would go out.

     If the other oil-exporting Arab nations (excluding
Kuwait and possibly Qatar) were then to issue their own
statements to this effect, by the end of the day, Colin
Powell would be holding a press conference praising the
progress that Hans Blix's UN inspection team has
accomplished so far, and denying any suggestion that his
reversal of opinion has anything to do with the fact that
the dollar was down against the euro by 15% for the day in
foreign markets.

     For my scenario to work, there would have to be
cooperation within the Arab League. But the phrase, "Arab
League," has been the supreme political oxymoron of the
last eighty years. The rival clans that make up the Arab
League agree only on one thing: the Palestinians inside
their borders must eventually return to Palestine.

     This war is about oil. It's also about the
international value of the dollar. Iraq a year ago began
selling oil only for euros. Had the other Middle Eastern
oil-exporting states followed suit, there would be no war
clouds today.

     All of this is obvious, or should be. But people
refuse to discuss the obvious in public. What is obvious
is that individual oil-exporting Arab nations are acting as
income-seeking individuals, not as members of a regional
cartel that has the ultimate lever of power in
international markets. In a world that runs on oil, Arab
politicians are in it only for the money. Some of them are
named in honor of Muhammed, but not one of them thinks the
way he did. He understood strategy. They don't.

     The day that America invades Iraq, the Friends of
Osama will figure this out, once and for all. The pace of
recruiting will escalate. Their targets will include the
existing power structure of the oil-exporting Arab nations.

     What happened in Serbia on March 12 is a taste of
things to come. The Friends of Osama will become the
region's 800-pound guerilla.

     Meanwhile, back in the Security Council. . . .


     It's time to review a little history. The United
Nations Organization (UNO), better known as the UN, was
granted the right to use the name of the anti-Nazi military
alliance. The United Nations, 1942-45, were a loosely
associated federation of military powers, not a single
bureaucratic entity. The term "United Nations" was a
valuable asset, one which carried legitimacy in the eyes of
the victors. The decision by the heads of state of the
original United Nations to allow the phrase to be
transferred to the UNO involved a major transfer of

     In 1945, four of the five nations that had been the
primary targets of the Axis powers -- The United States,
the Soviet Union, Great Britain, France -- had been pre-war
empires. The fifth nation, China, had lost its status as
an empire. The Big Four had controlled nations and ethnic
groups outside their geographical borders.

     The war's losers had also been empires. There was in
1945 a crucial question as to which of the victorious
empires would maintain control over their existing domains,
plus pick up the domains of the losers. Japan had sought
to expropriate the British and Dutch in Southeast Asia.
The Soviet Union had appropriated half of Poland and the
three Baltic states during its treaty period with Nazi
Germany (1939-41). Who would pick up the vanquished
empires' pieces? Who would drop its pre-war pieces?

     In 1945, the victorious empires divvied up the
defeated empires' land holdings with the same enthusiasm
that they divvied up Middle Eastern oil after 1945.

     None of the victors in 1945 was about to allow the
UNO's General Assembly to replace them as the decision-
makers of the world. They knew that these nations would
resist the control of one or more of the five empires that
now controlled the post-war world. This is why the five
major powers transferred control over the decision to
authorize wars to the Security Council. They retained for
themselves permanent membership on the Council, and each of
them retained a veto over the Council, which meant the UNO
in matters of war.

     This is why the General Assembly is not consulted in
matters of war and peace. The General Assembly is the UNO
in its capacity as a growing conglomeration of independent
nations, now at 191 members. It is more like the United
Tribes. It is the third world's official welfare
distribution center. (Just for the record, the Bush
Administration has begun to send tens of millions a year to
UNESCO, which that liberal, pinko cad, Clinton, had refused
to do.) But the big boys, who now possess nuclear weapons,
are not about to hand over to the fuzzy-wuzzies the right
to say whose nation gets invaded legitimately and whose

     There is no doubt that the Soviet Union demanded the
veto as the price of its participation. Stalin was not
about to surrender to the West the crucial political asset
of military legitimacy.

     The Soviet Union feared the influence of the United
States in the Security Council. The Security Council in
turn feared the General Assembly. The existence of the
veto, possessed solely by the victors, has been the crucial
emblem of meaningful multi-national sovereignty in a
swelling sea of meaningless national sovereignties.

     The reason why the UNO went to war in 1950 in Korea
was because the USSR was conveniently boycotting the
Security Council when its ally and surrogate, North Korea,
crossed the 38th Parallel. It did not exercise the veto
over the Security Council's decision to back up the United
States in defending South Korea. It told North Korea and
the United States, "Let's you and him fight."

     Then, as soon as the vote was taken, the Soviet Union
re-joined the Security Council and continued to use its
veto to make sure that the UNO would not produce a
peninsula-wide victory for South Korea. This stalemate
established the legitimacy of North Korea, which ironically
has outlived the Soviet Union. Prior to the war, the North
Koreans had refused to allow UNO inspectors in to monitor
elections, and therefore the UNO had called into question
the legitimacy of Kim Il Sung's regime. That opposition
ended in 1953, when the cease fire (there has never been a
peace treaty) was signed.

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