Bilderberg, timeline for global government?
Controlling the Global Economy: Bilderberg, the Trilateral Commission
and the Federal Reserve
Global Power and Global Government: Part 3
by Andrew Gavin Marshall
http://www.globalresearch.ca/index.php?context=va&aid=14614
Global Research, August 3, 2009
This essay is Part 3 of "Global Power and Global Government,"
published by Global Research.
Part 1: Evolution and Revolution of the Central Banking System
Part 2: Origins of the American Empire: Revolution, World Wars and
World Order
--------------------------------------------------------------------------------
The Bilderberg Group and the European Union Project
In 1954, the Bilderberg Group was founded in the Netherlands, which
was a secretive meeting held once a year, drawing roughly 130 of the
political-financial-military-academic-media elites from North America
and Western Europe as “an informal network of influential people who
could consult each other privately and confidentially.”[1] Regular
participants include the CEOs or Chairman of some of the largest
corporations in the world, oil companies such as Royal Dutch Shell,
British Petroleum, and Total SA, as well as various European monarchs,
international bankers such as David Rockefeller, major politicians,
presidents, prime ministers, and central bankers of the world.[2]
Joseph Retinger, the founder of the Bilderberg Group, was also one of
the original architects of the European Common Market and a leading
intellectual champion of European integration. In 1946, he told the
Royal Institute of International Affairs (the British counterpart and
sister organization of the Council on Foreign Relations), that Europe
needed to create a federal union and for European countries to
“relinquish part of their sovereignty.” Retinger was a founder of the
European Movement (EM), a lobbying organization dedicated to creating
a federal Europe. Retinger secured financial support for the European
Movement from powerful US financial interests such as the Council on
Foreign Relations and the Rockefellers.[3] However, it is hard to
distinguish between the CFR and the Rockefellers, as, especially
following World War II, the CFR’s main finances came from the Carnegie
Corporation, Ford Foundation and most especially, the Rockefeller
Foundation.[4]
The Bilderberg Group acts as a “secretive global think-tank,” with an
original intent to “to link governments and economies in Europe and
North America amid the Cold War.”[5] One of the Bilderberg Group’s
main goals was unifying Europe into a European Union. Apart from
Retinger, the founder of the Bilderberg Group and the European
Movement, another ideological founder of European integration was Jean
Monnet, who founded the Action Committee for a United States of
Europe, an organization dedicated to promoting European integration,
and he was also the major promoter and first president of the European
Coal and Steel Community (ECSC), the precursor to the European Common
Market.[6]
Declassified documents (released in 2001) showed that “the US
intelligence community ran a campaign in the Fifties and Sixties to
build momentum for a united Europe. It funded and directed the
European federalist movement.”[7] The documents revealed that,
“America was working aggressively behind the scenes to push Britain
into a European state. One memorandum, dated July 26, 1950, gives
instructions for a campaign to promote a fully-fledged European
parliament. It is signed by Gen William J Donovan, head of the
American wartime Office of Strategic Services, precursor of the CIA.”
Further, “Washington's main tool for shaping the European agenda was
the American Committee for a United Europe, created in 1948. The
chairman was Donovan, ostensibly a private lawyer by then,” and “The
vice-chairman was Allen Dulles, the CIA director in the Fifties. The
board included Walter Bedell Smith, the CIA's first director, and a
roster of ex-OSS figures and officials who moved in and out of the
CIA. The documents show that ACUE financed the European Movement, the
most important federalist organisation in the post-war years.”
Interestingly, “The leaders of the European Movement - Retinger, the
visionary Robert Schuman and the former Belgian prime minister Paul-
Henri Spaak - were all treated as hired hands by their American
sponsors. The US role was handled as a covert operation. ACUE's
funding came from the Ford and Rockefeller foundations as well as
business groups with close ties to the US government.”[8]
The European Coal and Steel Community was formed in 1951, and signed
by France, West Germany, Italy, Belgium, Luxembourg and the
Netherlands. Newly released documents from the 1955 Bilderberg meeting
show that a main topic of discussion was “European Unity,” and that
“The discussion affirmed complete support for the idea of integration
and unification from the representatives of all the six nations of the
Coal and Steel Community present at the conference.” Further, “A
European speaker expressed concern about the need to achieve a common
currency, and indicated that in his view this necessarily implied the
creation of a central political authority.” Interestingly, “A United
States participant confirmed that the United States had not weakened
in its enthusiastic support for the idea of integration, although
there was considerable diffidence in America as to how this enthusiasm
should be manifested. Another United States participant urged his
European friends to go ahead with the unification of Europe with less
emphasis upon ideological considerations and, above all, to be
practical and work fast.”[9] Thus, at the 1955 Bilderberg Group
meeting, they set as a primary agenda, the creation of a European
common market.[10]
In 1957, two years later, the Treaty of Rome was signed, which created
the European Economic Community (EEC), also known as the European
Community. Over the decades, various other treaties were signed, and
more countries joined the European Community. In 1992, the Maastricht
Treaty was signed, which created the European Union and led to the
creation of the Euro. The European Monetary Institute was created in
1994, the European Central Bank was founded in 1998, and the Euro was
launched in 1999. Etienne Davignon, Chairman of the Bilderberg Group
and former EU Commissioner, revealed in March of 2009 that the Euro
was debated and planned at Bilderberg conferences.[11] This was an
example of regionalism, of integrating an entire region of the world,
a whole continent, into a large supranational structure. This was one
of the primary functions of the Bilderberg Group, which would also
come to play a major part in other international issues.
Interdependence Theory
The theoretical justifications for integration and regionalism arrived
in the 1960s with what is known as “interdependence theory.” One of
its primary proponents was a man named Richard N. Cooper. Two other
major proponents of interdependence theory are Robert Keohane and
Joseph Nye. Interdependence theory and theorists largely expand upon
the notions raised by Keynes.
Richard Cooper wrote that, during the 1960s “there has been a strong
trend toward economic interdependence among the industrial countries.
This growing interdependence makes the successful pursuit of national
economic objectives much more difficult.” He also identified that “the
objective of greater economic integration involves international
agreements which reduce the number of policy instruments available to
national authorities for pursuit of their economic objectives.”[12]
Further, “Cooper argues that new policies are needed to address the
unprecedented conditions of international interdependence.”[13]
Cooper also opposed a return to mercantilist pursuits in order for
nations to secure economic objectives, arguing that, “economic
nationalism invited policy competition that is doomed to fail,” and
thus concludes “that international policy coordination is virtually
the only means to achieve national economic goals in an interdependent
world.”[14]
Keohane and Nye go into further analysis of interdependence,
specifically focusing on how interdependence transforms international
politics. They tend to frame their concepts in ideological opposition
to international relations realists, who view the world, like
mercantilists, as inherently anarchic. Keohane and Nye construct what
is known as “complex interdependence,” in which they critique realism.
They analyze realism as consisting of two primary facets: that states
are the main actors in the international arena, and that military
force is central in international power. They argue that, “global
economic interdependence has cast doubt on these assumptions.
Transnational corporations and organizations born of economic
integration now vie with states for global influence.”[15]
Keohane and Nye also discuss the relevance and importance of
international regimes in the politics of interdependence, defining
regimes as “networks of rules, norms, and procedures that regularize
behavior.” They argue that, “Regimes are affected by the distribution
of power among states, but regimes, in turn, may critically influence
the bargaining process among states.”[16] Again, this contests the
realist and mercantilist notions of the international sphere being one
of chaos, as a regime can produce and maintain order within the
international arena.
Interdependence theorists tend to argue that interdependence has
altered the world order in that it has become based upon cooperation
and mutual interests, largely championing the liberal economic notion
of a non-chaotic and cooperative international order in which all
nations seek and gain a mutual benefit. Ultimately, it justifies the
continued process of global economic integration, while realist and
mercantilist theorists, who interdependence theorists contest and
debate, justify the use of force in the international arena in terms
of describing it as inherently chaotic. In theory, the notions of
mercantilism and liberalism are inimical to one another however, they
are not mutually exclusive and are, in fact, mutually reinforcing.
Events throughout the 1970s are a clear example of this mutually
reinforcing nature of mercantilist behaviour on the part of states,
and the “interdependence” of the liberal economic order.
As early mercantilist theorist Frederick List wrote in regards to
integration and union, “All examples which history can show are those
in which the political union has led the way, and the commercial union
has followed. Not a single instance can be adduced in which the latter
has taken the lead, and the former has grown up from it.”[17] It would
appear that the elites have chosen the road less traveled in the 20th
century, with the Bilderberg Group pursuing integration and union in
Europe by starting with commercial union and having political union
follow. This concept is also evident in the notions of interdependence
theory, which focuses on global economic integration as changing the
realist/mercantilist notions of a chaotic international order, as
states and other actors become more cooperative through such economic
ties.
Trilateralism
In the late 1960s, Western European economies (in particular West
Germany) and Japan were rapidly developing and expanding. Their
currencies rose against the US dollar, which was pegged to the price
of gold as a result of the Bretton Woods System, which, through the
IMF, set up an international monetary system based upon the US dollar,
which was pegged to gold. However, with the growth of West Germany and
Japan, “by the late 1960s the system could no longer be expected to
perform its previous function as a medium for international exchange,
and as a surrogate for gold.” On top of this, to maintain its vast
empire, the US had developed a large balance-of-payments deficit.[18]
Richard Nixon took decisive, and what many referred to as
“protectionist” measures, and in 1971, ended the dollar’s link to
gold, which “resulted in a devaluation of the dollar as it began to
float against other currencies,” and “was meant to restore the
competitiveness of the US economy,”[19] as with devaluation, “U.S.-
made goods would cost less to foreigners and foreign-made goods would
be less competitive on the U.S. market.” The second major action taken
by Nixon was when he “slapped a ten percent surcharge on most imports
into the United States,” which was to benefit U.S. manufacturing firms
over foreign ones in competition for the U.S. market. The result was
that less imports from Asia were coming into the US, more US goods
were sold in their markets at more competitive prices, forcing Japan
and the European Economic Community (EEC) to relax their trade
barriers to US products.[20]
An article in Foreign Affairs, the journal of the Council on Foreign
Relations, referred to Nixon’s New Economic Policy as “protectionist,”
encouraging a “disastrous isolationist trend,”[21] and that Nixon
shattered “the linchpin of the entire international monetary system—
on whose smooth functioning the world economy depends.”[22] Another
article in Foreign Affairs explained that the Atlanticist, or
internationalist faction of the US elite were in particular, upset
with Nixon’s New Economic Policy, however, they “agreed on the
diagnosis: the relative balance of economic strengths had so changed
that the United States could no longer play the role of economic
leader. But they also argued that further American unilateralism would
fuel a spiral of defensive reactions that would leave all the Western
economies worse off. Their suggested remedy, instead, was much more
far-reaching coordination among all the trilateral [North American,
European and Japanese] governments.”[23]
There was a consensus within the American ruling class that the
Bretton Woods System was in need of a change, but there were divisions
among members in how to go about changing it. The more powerful (and
wealthy) international wing feared how US policies may isolate and
alienate Western Europe and Japan, and they advocated that, “The world
economic roles of America must be reconciled with the growth to power
of Europe and Japan. There must be fundamental reform of the
international monetary system. There must be renewed efforts to reduce
world trade barriers. The underlying U.S. balance of payments has
deteriorated.” However, Nixon “went much too far” as he alienated
Western Europe and Japan.
In 1970, David Rockefeller became Chairman of the Council on Foreign
Relations, while also being Chairman and CEO of Chase Manhattan. In
1970, an academic who joined the Council on Foreign Relations in 1965
wrote a book called Between Two Ages: America’s Role in the
Technetronic Era. The author, Zbigniew Brzezinski, called for the
formation of “A Community of the Developed Nations,” consisting of
Western Europe, the United States and Japan. Brzezinski wrote about
how “the traditional sovereignty of nation states is becoming
increasingly unglued as transnational forces such as multinational
corporations, banks, and international organizations play a larger and
larger role in shaping global politics.” David Rockefeller had taken
note of Brzezinski’s writings, and was “getting worried about the
deteriorating relations between the U.S., Europe, and Japan,” as a
result of Nixon’s economic shocks. In 1972, David Rockefeller and
Brzezinski “presented the idea of a trilateral grouping at the annual
Bilderberg meeting.” In July of 1972, seventeen powerful people met at
David Rockefeller’s estate in New York to plan for the creation of the
Commission. Also at the meeting was Brzezinski, McGeorge Bundy, the
President of the Ford Foundation, (brother of William Bundy, editor of
Foreign Affairs) and Bayless Manning, President of the Council on
Foreign Relations.[24] So, in 1973, the Trilateral Commission was
formed to address these issues.
A 1976 article in Foreign Affairs explained that, “Trilateralism as a
linguistic expression—and the Trilateral Commission—arose in the early
1970s from the reaction of the more Atlanticist part of the American
foreign policy community to the belligerent and defensive
unilateralism that characterized the foreign economic policy of the
Nixon Administration.”[25] The Commission’s major concerns were to
preserve for the “industrialized societies,” in other words, seek
mutual gain for the Trilateral nations, and to construct “a common
approach to the needs and demands of the poorer nations.” However,
this should be read as, “constructing a common approach to [dealing
with] poorer nations.” As well as this, the Commission would undertake
“the coordination of defense policies and of policies toward such
highly politicized issues as nuclear proliferation, terrorism, and
aerial hijacking, and such highly politicized geographic areas as the
Middle East or Southern Africa.”[26]
Interestingly, interdependence theorist Joseph Nye is a member of the
Trilateral Commission, as is Richard N. Cooper.[27] Today, Joseph Nye
is a member of the Board of Directors of the Council on Foreign
Relations,[28] and Richard N. Cooper was a Director of the Council on
Foreign Relations from 1993-1994.[29]
The end of the link of the dollar to gold meant that, “the US was no
longer subject to the discipline of having to try to maintain a fixed
par value of the dollar against gold or anything else: it could let
the dollar move as the US Treasury [and ultimately, the Federal
Reserve] wished and pointed towards the removal of gold from
international monetary affairs.” This created a dollar standard, as
opposed to a gold standard, which “places the direction of the world
monetary policy in the hands of a single country,” which was “not
acceptable to Western Europe or Japan.”[30] Addressing this issue was
among the reasoning behind the creation of the Trilateral Commission.
The Oil Crisis
The May 1973 meeting of the Bilderberg Group occurred five months
prior to the extensive oil price rises brought about by the Yom Kippur
War. However, according to leaked minutes from the meeting, a 400%
increase in the price of oil was discussed, and meeting participants
were creating a “plan [on] how to manage the about-to-be-created flood
of oil dollars.”[31] Oil is no issue foreign to the interests of the
Bilderberg Group, as among the 1973 participants were the CEOs of
Royal Dutch Shell, British Petroleum (BP), Total S.A., ENI, Exxon, as
well as significant banking interests and individuals such as Baron
Edmond de Rothschild and David Rockefeller, and the US Secretary of
State at the time, Henry Kissinger.[32]
In 1955, Henry Kissinger, a young scholar at the time, was brought
into the Council on Foreign Relations, where he distinguished himself
as a prominent Council member and became a protégé to Nelson
Rockefeller, one of David Rockefeller’s brothers. In 1969, Kissinger
became Richard Nixon’s National Security Adviser.[33] This Bilderberg
meeting was taking place during a time of great international
instability, particularly in the Middle East.
Kissinger, as National Security Adviser, was in a power struggle with
Secretary of State William Rogers over foreign policy. Nixon even
referred to the continual power struggle between Kissinger as National
Security Advisor and Secretary of State William Rogers, saying that,
“Henry's personality problem is just too goddamn difficult for us to
deal [with],” and that Kissinger’s “psychopathic about trying to screw
[Secretary of State William] Rogers.” Nixon even said that if
Kissinger wins the struggle against Rogers, Kissinger would “be a
dictator.” Nixon told his Chief of Staff, Haldeman, that Kissinger
feels “he must be present every time I see anybody important.”[34]
At the time of the Yom Kippur War, Nixon was in the middle of major
domestic issues, as the Watergate scandal was breaking, leading to an
increase in the power and influence of Kissinger, as “The president
was deeply preoccupied, and at times incapacitated by self-pity or
alcohol.”[35] By 1970, Kissinger had Rogers “frozen out of policy-
making on Southeast Asia,” during the Vietnam War, so Rogers
“concentrated on the Middle East.” Eventually, Nixon had Rogers
resign, and then Henry Kissinger took the position as both National
Security Advisor and Secretary of State.[36]
As Kissinger later said in a speech marking the 25th anniversary of
the Trilateral Commission, “In 1973, when I served as Secretary of
State, David Rockefeller showed up in my office one day to tell me
that he thought I needed a little help,” and that, “David’s function
in our society is to recognize great tasks, to overcome the obstacles,
to help find and inspire the people to carry them out, and to do it
with remarkable delicacy.” Kissinger finished his speech by saying,
“David, I respect you and admire you for what you have done with the
Trilateral Commission. You and your family have represented what goes
for an aristocracy in our country—a sense of obligation not only to
make it materially possible, but to participate yourself in what you
have made possible and to infuse it with the enthusiasm, the
innocence, and the faith that I identify with you and, if I may say
so, with your family.”[37]
Kissinger sabotaged Rogers’ peace negotiations with Egyptian President
Anwar Sadat, who, at the time, was trying to rally other Arab leaders
against Israel. In 1972, King Faisal of Saudi Arabia had “insisted
that oil should not be used as a political weapon.” However, “in 1973,
Faisal announced that he was changing his mind about an oil embargo.”
Faisal held a meeting with western oil executives, warning them. Sadat
told Faisal of the plan to attack Israel, and Faisal agreed to help
both financially and with the “oil weapon.” Days later, the Saudi oil
minister, Sheik Ahmed Yamani, “began dropping hints to the oil
companies about a cutback in production that would affect the United
States.” Yamani said Henry Kissinger had been “misleading President
Nixon about the seriousness of Faisal’s intentions.”[38]
On October 4, the US National Security Agency (NSA) “knew beyond a
shadow of a doubt that an attack on Israel would take place on the
afternoon of October 6.” However, the Nixon White House “ordered the
NSA to sit on the information,” until the US warned Israel a few hours
before the attack, even though “Nixon’s staff had at least two days’
advance warning that an attack was coming on October 6.”[39] Hours
before the attack on Israel by Syria and Egypt, the U.S. warned its
Israeli counterparts, however, “the White House insisted that the
Israelis do nothing: no preemptive strikes, no firing the first shot.
If Israel wanted American support, Kissinger warned, it could not even
begin to mobilize until the Arabs invaded.” Israeli Prime Minister
Golda Meir stood Israeli defences down, citing “Kissinger’s threats as
the major reason.” Interestingly, Kissinger himself was absent from
his office on the day of the attack, and he knew days before when it
was set to take place, yet, still went to the Waldorf Astoria in New
York. Further, he waited three days before convening a U.N. Security
Council meeting.[40] The attack needed to go forward, as directed by
the backdoor diplomacy of Kissinger.
With the outbreak of the Yom Kippur War on October 6, 1973, Kissinger
“centered control of the crisis in his own hands.” After the Israelis
informed the White House that the attack on them had taken place,
Kissinger did not consult Nixon or even inform him on anything for
three hours, who was at his retreat in Florida. After talking to Nixon
hours later, Kissinger told him that, “we are on top of it here,” and
“the president left matters in Kissinger's hands.” Alexander Haig,
Kissinger’s former second in command in the National Security Council,
then Chief of Staff to Nixon, was with the President on that morning.
Haig told Kissinger “that Nixon was considering returning to
Washington, [but] Kissinger discouraged it—part of a recurring pattern
to keep Nixon out of the process.” For three days, it was Kissinger
who “oversaw the diplomatic exchanges with the Israelis and Soviets
about the war. Israeli prime minister Golda Meir's requests for
military supplies, which were beginning to run low, came not to Nixon
but to Kissinger.” On October 11, the British Prime Minister called
asking to speak to Nixon, to which Kissinger responded, “Can we tell
them no? When I talked to the President he was loaded,” but the
British were told, “the prime minister could speak to Kissinger.”[41]
On October 12, the major American oil companies sent a letter to Nixon
suggesting the Arab countries “should receive some price increase,”
and Nixon, following Kissinger’s advice, sent arms to Israel, which
precipitated the Arab OPEC countries to announce a 70% increase in the
price of oil on October 16th, and announce an oil embargo against the
US on the 17th.[42]
The Bilderberg meeting five months prior involved participants
planning “how to manage the about-to-be-created flood of oil dollars.”
At the meeting, an OPEC Middle East oil revenue rise of over 400% was
predicted. A Bilderberg document from the meeting stated that, “The
task of improving relations between energy importing countries should
begin with consultations between Europe, the US and Japan. These three
regions, which represented about 60 per cent of world energy
consumption, accounted for an even greater proportion of world trade
in energy products, as they absorbed 80 per cent of world energy
exports.” The same document also stated that “an energy crisis or an
increase in energy costs could irremediably jeopardize the economic
expansion of developing countries which had no resources of their
own,” and the “misuse or inadequate control of the financial resources
of the oil producing countries could completely disorganize and
undermine the world monetary system.”[43]
As economist F. William Engdahl noted in his book, A Century of War,
“One enormous consequence of the ensuing 400 per cent rise in OPEC oil
prices was that investments of hundreds of millions of dollars by
British Petroleum, Royal Dutch Shell [both present at Bilderberg] and
other Anglo-American petroleum concerns in the risky North Sea could
produce oil at a profit,” as “the profitability of these new North Sea
oilfields was not at all secure until after the OPEC price rises.”[44]
In 2001, the former Saudi representative to OPEC, Sheik Ahmed Yamani,
said, “'I am 100 per cent sure that the Americans were behind the
increase in the price of oil. The oil companies were in real trouble
at that time, they had borrowed a lot of money and they needed a high
oil price to save them.” When he was sent by King Faisal to the Shah
of Iran in 1974, the Shah said that it was Henry Kissinger who wanted
a higher price for oil.[45]
An article in Foreign Policy, the journal published by the Carnegie
Endowment for International Peace, concluded from exhaustive research,
that, “Since 1971, the United States has encouraged Middle East oil-
producing states to raise the price of oil and keep it up.” This
conclusion was based upon State Department documents, congressional
testimony and interviews with former policy-makers.[46] At the Eighth
Petroleum Congress of the League of Arab States (Arab League) in 1972,
James Akins, head of the fuel and energy section of the State
Department, gave a speech in which he said that oil prices were
“expected to go up sharply due to lack of short-term alternatives to
Arab oil,” and that this was, “an unavoidable trend.” A Western
observer at the meeting said Akins’ speech was essentially,
“advocating that Arabs raise the price of oil to $5 per barrel.” The
oil industry itself was also becoming more unified in their position.
The National Petroleum Council (NPC), “a government advisory body
representing oil industry interests, waited until Nixon was safely re-
elected before publishing a voluminous series of studies calling for a
doubling of U.S. oil and gas prices.”[47]
The summer before the Yom Kippur War, in 1973, James Akins was made
U.S. Ambassador to Saudi Arabia. He also happened to be a member of
the Council on Foreign Relations.[48] Saudi Arabian minister for
petroleum and representative to OPEC, Sheik Ahmed Yamani, stated in
February of 1973, that, “it is in the interests of the oil companies
that prices be raised,” as “their profits are collected from the
production stage.” It was also in the interests of the US, as OPEC
will have a massive increase in revenues to be invested, likely in the
US, itself.[49]
The oil companies themselves were also fearful of having their
business facilities in OPEC countries nationalized, so they “were
anxious to engage OPEC countries in the oil business in the United
States, in order to give them an interest in maintaining the status
quo.” Weeks before war broke out, the National Security Council,
headed by Kissinger, issued a statement saying that military
intervention in the event of a war in the Middle East was “ruled out
of order.”[50]
U.S. Ambassador to Saudi Arabia, James Akins, later testified in
congress on the fact that when, in 1975, the Saudis went to Iran to
try to get the Shah to roll back the price of oil, they were told that
Kissinger told the Iranians that, “the United States understood Iran’s
desire for higher oil prices.”[51] Akins was removed from Saudi Arabia
in 1975, “following policy disputes with Secretary of State Henry
Kissinger.”[52]
The OPEC oil price increases resulted in the “removal of some
withholding taxes on foreign investment” in the United States,
“unchecked arms sales, which cannot be handled without U.S. support
personnel, to Iran and Saudi Arabia,” as well as an “attempt to
suppress publication of data on volume of OPEC funds on deposit with
U.S. banks.”[53] Ultimately, the price increases “would be of
competitive advantage to the United States because the economic damage
would be greater to Europe and Japan.” Interestingly, “Programs for
sopping up petrodollars have themselves become justifications for the
continued flow of U.S. and foreign funds to pay for higher priced oil.
In fact, a lobby of investors, businessmen, and exporters [was]
growing in the United States to favor giving the OPEC countries their
way.” Outside the United States, it is “widely believed” that the high-
priced oil policy was aimed at hurting Europe, Japan, and the
developing world.[54] There was also “input from the oil industry”
which went “into the formulation of U.S. international oil
policy.”[55]
In 1974, when a White House official suggested to the Treasury to
force OPEC to lower the price of oil, his idea was swept under, and he
later stated that, “It was the banking leaders who swept aside this
advice and pressed for a ‘recycling’ program to accommodate to higher
oil prices.” In 1975, a Wall Street investment banker was sent to
Saudi Arabia to be the main investment adviser to the Saudi Arabian
Monetary Agency (SAMA), and “he was to guide the Saudi petrodollar
investments to the correct banks, naturally in London and New
York.”[56]
In 1974, another OPEC oil price increase of more than 100 percent was
undertaken, following a meeting in Tehran, Iran. This initiative was
undertaken by the Shah of Iran, who just months before was opposed to
the earlier price increases. Sheikh Yamani, the Saudi oil minister,
was sent to meet with the Shah of Iran following his surprise decision
to raise prices, as Yamani was sent by Saudi King Faisal, who was
worried that higher prices would alienate the US, to which the Shah
said to Yamani, “Why are you against the increase in the price of oil?
That is what they want? Ask Henry Kissinger - he is the one who wants
a higher price.”[57]
As Peter Gowan stated in The Globalization Gamble, “the oil price
rises were the result of US influence on the oil states and they were
arranged in part as an exercise in economic statecraft directed
against America’s ‘allies’ in Western Europe and Japan. And another
dimension of the Nixon administration’s policy on oil price rises was
to give a new role, through them, to the US private banks in
international financial relations.” He explained that the Nixon
administration was pursuing a higher oil price policy two years before
the Yom Kippur War, and “as early as 1972 the Nixon administration
planned for the US private banks to recycle the petrodollars when OPEC
finally did take US advice and jack up oil prices.”[58] Ultimately,
the price rises had devastating impacts on Western Europe and Japan,
which were quickly growing economies, but which were heavily dependent
upon Middle eastern oil. This is an example of how the US, while
championing a liberal international economic order, acted in a
mercantilist fashion, depriving competitors through improving its own
power and influence.
In 1973, David Rockefeller set up the Trilateral Commission to promote
coordination and cooperation among Japan, Western Europe, and North
America (namely, the US), yet, in the same year, his good friend and
close confidante, Henry Kissinger, played a key role in promoting and
orchestrating the oil price rises that had a damaging impact upon
Japan and Western Europe. Also it should be noted, David Rockefeller’s
Chase Manhattan Bank, of which he was CEO at the time, profited
immensely off of the petrodollar recycling system promoted by Henry
Kissinger, where the OPEC countries would reinvest their new excess
capital into the American economy through London and New York banks.
How does one account for these seemingly diametrically opposed
initiatives? Perhaps the oil crisis, having a negative effect on Japan
and Western European economies, could have spurred the necessity for
cooperation among the trilateral countries, forcing them to come
together and coordinate future policies.
It is of vital importance to understand the global conditions in which
the price rises and its solutions arose, particularly in relation to
the Third World. Africa, since the late 1800s, had been under European
colonial control. It was from the 1950s to the 1960s that almost all
African countries were granted independence from their European
metropoles. Africa is a very significant case to look at, as it is
extremely rich in many resources, from agriculture to oil, minerals,
and a huge variety of other resources used all around the world. If
African nations were able to develop their own economies, use their
own resources, and create their own industries and businesses, they
could become self-sufficient at first, and then may become a force of
great competition for the established industries and elites around the
world. After all, Europe does not have much to offer in terms of
resources, as the continent’s wealth has largely come from plundering
the resources of regions like Africa, and in becoming captains of
monetary manipulation. A revitalized, vibrant, economically
independent and successful Africa could spell the end of Western
financial dominance. “Between 1960 and 1975 African industry grew at
the annual rate of 7.5 per cent. This compared favourably with the 7.2
per cent for Latin America and 7.5 per cent for South-East Asia.”[59]
In Africa, “the 1960-73 period witnessed some important first steps in
the process of industrialization,” however, “[t]he dramatic decline in
rates of industrialization began to show after the first ‘oil crisis’.
Between 1973 and 1984, the rate of growth” rapidly declined.[60]
So, by manipulating the price of oil, you can manipulate the
development of the Third World, which was beginning to look as if it
could grow into significant competition, as it was experiencing
exponential growth. There were two oil shocks in the 1970s; one in
1973 and another in 1979. Following the price rises, there was a need
for the developing countries of the world to borrow money to finance
development.
The banks that were getting massive amounts of petrodollars deposited
into them from the oil producing countries needed to “recycle” the
dollars by investing them somewhere, in order to make a profit.
Luckily for the banks, “[d]eveloping countries were desperate for
funds to help them industrialize their economies. In some cases,
developing countries were oil consumers and required loans to help pay
for rising oil prices. In other cases, a decision had been made to
follow a strategy of indebted industrialization. This meant that
states borrowed money to invest in industrialization and would pay off
the loans from the profits of their new industries. Loans were an
attractive option because they did not come with the influence of
foreign transnational corporations that accompanied foreign direct
investment and most states had few funds of their own to invest.”[61]
The oil price rises “changed the face of world finance,” as: “In the
new era of costly energy, scores of countries, not all of them in the
Third World, were too strapped to pay their imported-oil bills. At the
same time, Western banks suddenly received a rush of deposits from oil-
producing nations. It seemed only logical, even humane, that the banks
should recycle petrodollars.” This is where the true face of
Trilateralism began to show: “It became an everyday event for one or
two lead banks in the U.S. or Western Europe to round up dozens of
partners by telephone to put together so-called jumbo syndicates for
loans to developing countries. Some bankers were so afraid of missing
out that during lunch hours they even empowered their secretaries to
promise $5 million or $10 million as part of any billion-dollar loan
package for Brazil or Mexico.” Interestingly, these banks argued,
“that their foreign loans were encouraged by officials at the U.S.
Treasury and Federal Reserve Board. They feared that developing
countries would become economically and politically unstable if credit
was denied. In 1976 Arthur Burns, chairman of the Federal Reserve,
began cautioning bankers that they might be lending too much overseas,
but he did nothing to curb the loans. For the most part, they ignored
the warning. Financiers were confident that countries like Mexico,
with its oil reserves, and Brazil, with abundant mineral resources,
were good credit risks.”[62]
According to a report produced by the Federal Reserve, prior to the
1973 oil crisis, “the private Japanese financial system remained
largely isolated from the rest of the world. The system was highly
regulated,” and, “various types of banking firms and other financial
service firms were legally and administratively confined to a
specified range of activities assigned to each.” However, the “OPEC
oil shock in 1973 signaled a turning point in the operation of the
Japanese financial system.”[63] As part of this turning point, the
Bank of Japan (the central bank of Japan), relaxed “monetary control
by lending more generously to the major banks. The result was a
growing budget deficit and a rapid rise in inflation.”[64] The
deregulation of Japanese banking access to foreign markets went hand-
in-hand with the deregulation of domestic markets. It was a two-way
street; as Japanese industry and banks gained access to foreign
markets, foreign industry and banks gained access to the Japanese
market. This led to the growth of Japanese banks internationally, of
which today many are among the largest banks in the world. This was a
result of the Trilateral Commission’s efforts. Also evident of the
Trilateral partnership was that western banks “made loans so that poor
countries could purchase goods made in Western Europe and North
America.”[65]
Of great significance was that, “the new international monetary
arrangements gave the United States government far more influence over
the international monetary and financial relations of the world than
it had enjoyed under the Bretton Woods system. It could freely decide
the price of the dollar. And states would become increasingly
dependent upon developments in Anglo-American financial markets for
managing their international monetary relations. And trends in these
financial markets could be shifted by the actions (and words) of the
US public authorities, in the Treasury Department and the Federal
Reserve Board (the US Central Bank).”[66] This new system is referred
to as the Dollar-Wall Street Regime (DWSR), as it is dependent upon
the US dollar and the key actors on Wall Street.
The Federal Reserve’s response to the initial 1973-74 oil price shock
was to keep interest rates low, which led to inflation and a devalued
dollar. It’s also what allowed and encouraged banks to lend massive
amounts to developing countries, often lending more than their net
worth. However, in 1979, with the second oil shock, the Federal
Reserve changed policy, and the true nature of the original oil
crisis, petrodollar recycling and loans became apparent.
The Rise of Neo-Liberalism
In the early 1970s, the government of Chile was led by a leftist
socialist-leaning politician named Salvador Allende, who was
considering undertaking a program of nationalization of industries,
which would significantly affect US business interests in the country.
David Rockefeller expressed his view on the issue in his book,
Memoirs, when he said that actions taken by Chile’s new government
“severely restricted the operations of foreign corporations,” and he
continued, saying, “I was so concerned about the situation that I met
with Secretary of State William P. Rogers and National Security
Advisor Henry Kissinger.”[67]
As author Peter Dale Scott analyzed in his book, The Road to 9/11,
David Rockefeller played a pivotal role in the events in Chile. After
a failed attempt at trying to solve the ‘situation’ by sending David’s
brother Nelson Rockefeller, the Governor of New York, down to Latin
America, David Rockefeller attempted a larger operation. David
Rockefeller told the story of how his friend Agustin (Doonie) Edwards,
the publisher of El Mercurio, had warned David that if Allende won the
election, Chile would “become another Cuba, a satellite of the Soviet
Union.” David then put Doonie “in touch with Henry Kissinger.”[68]
In the same month that Kissinger met with Edwards, the National
Security Council (of which Kissinger held the top post) authorized CIA
“spoiling operations” to prevent the election of Allende. David
Rockefeller had known Doonie Edwards from the Business Group for Latin
America (BGLA), which was founded by Rockefeller in 1963, later to be
named the Council of the Americas. Rockefeller founded it initially,
in cooperation with the US government, “as cover for [CIA’s] Latin
American operations.” The US Assistant Secretary of State for Latin
American Affairs at the time was Charles Meyer, formerly with
Rockefeller’s BGLA, who said that he was chosen for his position at
the State Department “by David Rockefeller.” When Allende was elected
on September 4, 1970, Doonie Edwards left Chile for the US, where
Rockefeller helped him “get established” and the CEO of PepsiCo,
Donald Kendall, gave him a job as a Vice President. Ten days later,
Donald Kendall met with Richard Nixon, and the next day, Nixon,
Kissinger, Kendall and Edwards had breakfast together. Later that day,
Kissinger arranged a meeting between Edwards and CIA director, Richard
Helms. Helms met with both Edwards and Kendall, who asked the CIA to
intervene. Later that day, Nixon told Helms and Kissinger to “move
against Allende.”[69]
However, before Edwards met with the CIA director, Henry Kissinger had
met privately with “David Rockefeller, chairman of the Chase Manhattan
Bank, which had interests in Chile that were more extensive than even
Pepsi-Cola’s.” Rockefeller even allowed the CIA to use his bank for
“anti-Allende Chilean operations.”[70] After Allende came to power,
“commercial banks, including Chase Manhattan, Chemical, First National
City, Manufacturers Hanover, and Morgan Guaranty, cancelled credits to
Chile,” and the “World Bank, Inter-American Development Bank, Agency
for International Development, and the Export-Import Bank either cut
programs in Chile or cancelled credits.” However, “military aid to
Chile, which has always been substantial, doubled in the 1970-1974
period as compared to the previous four years.”[71]
On September 11, 1973, General Augusto Pinochet orchestrated a coup
d’état, with the aid and participation of the CIA, against the Allende
government of Chile, overthrowing it and installing Pinochet as
dictator. The next day, an economic plan for the country was on the
desks of “the General Officers of the Armed Forces who performed
government duties.” The plan entailed “privatization, deregulation and
cuts to social spending,” written up by “U.S.-trained economists.”[72]
These were the essential concepts in neoliberal thought, which,
through the oil crises of the 1970s, would be forced upon the
developing world through the World Bank and IMF.
In essence, Chile was the neo-liberal Petri-dish experiment. This was
to expand drastically and become the very substance of the
international economic order.
Globalization: A Liberal-Mercantilist Economic Order?
Neo-Liberals Take the Forefront
In 1971, Jimmy Carter, a somewhat obscure governor from Georgia had
started to have meetings with David Rockefeller. They became connected
due to Carter’s support from the Atlanta corporate elite, who had
extensive ties to the Rockefellers. So in 1973, when David Rockefeller
and Zbigniew Brzezinski were picking people to join the Trilateral
Commission, Carter was selected for membership. Carter thus attended
every meeting, and even paid for his trip to the 1976 meeting in Japan
with his campaign funds, as he was running for president at the time.
Brzezinski was Carter’s closest adviser, writing Carter’s major
campaign speeches.[73]
When Jimmy Carter became President, he appointed over two-dozen
members of the Trilateral Commission to key positions in his cabinet,
among them, Zbigniew Brzezinski, who became National Security Adviser;
Samuel P. Huntington, Coordinator of National Security and Deputy to
Brzezinski; Harold Brown, Secretary of Defense; Warren Christopher,
Deputy Secretary of State; Walter Mondale, Vice President; Cyrus
Vance, Secretary of State; and in 1979, he appointed David
Rockefeller’s friend, Paul Volcker, as Chairman of the Federal Reserve
Board.[74]
In 1979, the Iranian Revolution spurred another massive increase in
the price of oil. The Western nations, particularly the United States,
had put a freeze on Iranian assets, “effectively restricting the
access of Iran to the global oil market, the Iranian assets freeze
became a major factor in the huge oil price increases of 1979 and
1981.”[75] Added to this, in 1979, British Petroleum cancelled major
oil contracts for oil supply, which along with cancellations taken by
Royal Dutch Shell, drove the price of oil up higher.[76]
However, in 1979, the Federal Reserve, now the lynch-pin of the
international monetary system, which was awash in petro-dollars (US
dollars) as a result of the 1973 oil crisis, decided to take a
different action from the one it had taken earlier. In August of 1979,
“on the advice of David Rockefeller and other influential voices of
the Wall Street banking establishment, President Carter appointed Paul
A. Volcker, the man who, back in August 1971, had been a key architect
of the policy of taking the dollar off the gold standard, to head the
Federal Reserve.”[77]
Volcker got his start as a staff economist at the New York Federal
Reserve Bank in the early 50s. After five years there, “David
Rockefeller’s Chase Bank lured him away.”[78] So in 1957, Volcker went
to work at Chase, where Rockefeller “recruited him as his special
assistant on a congressional commission on money and credit in America
and for help, later, on an advisory commission to the Treasury
Department.”[79] In the early 60s, Volcker went to work in the
Treasury Department, and returned to Chase in 1965 “as an aide to
Rockefeller, this time as vice president dealing with international
business.” With Nixon entering the White House, Volcker got the third
highest job in the Treasury Department. This put him at the center of
the decision making process behind the dissolution of the Bretton
Woods agreement.[80] In 1973, Volcker became a member of Rockefeller’s
Trilateral Commission. In 1975, he got the job as President of the New
York Federal Reserve Bank, the most powerful of the 12 branches of the
Fed.
In 1979, Carter gave the job of Treasury Secretary to Arthur Miller,
who had been Chairman of the Fed. This left an opening at the Fed,
which was initially offered by Carter to David Rockefeller, who
declined, and then to A.W. Clausen, Chairman of Bank of America, who
also declined. Carter repeatedly tried to get Rockefeller to accept,
and ultimately Rockefeller recommended Volcker for the job.[81]
Volcker became Chairman of the Federal Reserve System, and immediately
took drastic action to fight inflation by radically increasing
interest rates.
The world was taken by shock. This was not a policy that would only be
felt in the US with a recession, but was to send shock waves around
the world, devastating the Third World debtor nations. This was likely
the ultimate aim of the 1970s oil shocks and the 1979 Federal Reserve
shock therapy. With the raising of interest rates, the cost of
international money also rose. Thus, the interest rates on
international loans made throughout the 1970s rose from 2% in the
1970s to 18% in the 1980s, dramatically increasing the interest
charges on loans to developing countries.[82]
In the developing world, states that had to import oil faced enormous
bills to cover their debts, and even oil producing countries, such as
Mexico, faced huge problems as they had borrowed heavily in order to
industrialize, and then suffered when oil prices fell again as the
recession occurring in the developed states reduced demand. Thus, in
1982, Mexico declared that it could no longer pay its debt, meaning
that, “they could no longer cover the cost of interest payments, much
less hope to repay the debt.” The result was the bursting of the debt
bubble. Banks then halted their loans to Mexico, and “Before long it
was evident that states such as Brazil, Venezuela, Argentina, and many
sub-Saharan African countries were in equally difficult financial
positions.”[83]
The IMF and World Bank entered the scene newly refurnished with a
whole new outlook and policy program designed just in time for the
arrival of the debt crisis. The IMF “negotiated standby loans with
debtors offering temporary assistance to states in need. In return for
the loans states agreed to undertake structural adjustment programs
(SAPs). These programs entailed the liberalization of economies to
trade and foreign investment as well as the reduction of state
subsidies and bureaucracies to balance national budgets.”[84] Thus,
the neoliberal project of 1973 in Chile was expanded into the very
functioning of the International Financial Institutions (IFIs).
Neoliberalism is “a particular organization of capitalism, which has
evolved to protect capital(ism) and to reduce the power of labour.
This is achieved by means of social, economic and political
transformations imposed by internal forces as well as external
pressure,” and it entails the “shameless use of foreign aid, debt
relief and balance of payments support to promote the neoliberal
programme, and diplomatic pressure, political unrest and military
intervention when necessary.”[85] Further, “neoliberalism is part of a
hegemonic project concentrating power and wealth in elite groups
around the world, benefiting especially the financial interests within
each country, and US capital internationally. Therefore, globalization
and imperialism cannot be analysed separately from neoliberalism.”[86]
Joseph Stiglitz, former Chief Economist of the World Bank, wrote in
his book, Globalization and its Discontents, “In the 1980s, the Bank
went beyond just lending for projects (like roads and dams) to
providing broad-based support, in the form of structural adjustment
loans; but it did this only when the IMF gave its approval – and with
that approval came IMF-imposed conditions on the country.”[87] As
economist Michel Chossudovsky wrote, “Because countries were indebted,
the Bretton Woods institutions were able to oblige them through the so-
called ‘conditionalities’ attached to the loan agreements to
appropriately redirect their macro-economic policy in accordance with
the interests of the official and commercial creditors.”[88]
The nature of SAPs is such that the conditions imposed upon countries
that sign onto these agreements include: lowering budget deficits,
devaluing the currency, limiting government borrowing from the central
bank, liberalizing foreign trade, reducing public sector wages, price
liberalization, deregulation and altering interest rates.[89] For
reducing budget deficits, “precise ‘ceilings’ are placed on all
categories of expenditure; the state is no longer permitted to
mobilize its own resources for the building of public infrastructure,
roads, or hospitals, etc.”[90]
Joseph Stiglitz wrote that, “the IMF staff monitored progress, not
just on the relevant indicators for sound macromanagement – inflation,
growth, and unemployment – but on intermediate variables, such as the
money supply,” and that “In some cases the agreements stipulated what
laws the country’s Parliament would have to pass to meet IMF
requirements or ‘targets’ – and by when.”[91] Further, “The conditions
went beyond economics into areas that properly belong in the realm of
politics,” and that “the way conditionality was imposed made the
conditions politically unsustainable; when a new government came into
power, they would be abandoned. Such conditions were seen as the
intrusion by the new colonial power on the country’s own
sovereignty.”[92]
“The phrase ‘Washington Consensus’ was coined to capture the agreement
upon economic policy that was shared between the two major
international financial institutions in Washington (IMF and World
Bank) and the US government itself. This consensus stipulated that the
best path to economic development was through financial and trade
liberalization and that international institutions should persuade
countries to adopt such measures as quickly as possible.”[93] The debt
crisis provided the perfect opportunity to quickly impose these
conditions upon countries that were not in a position to negotiate and
with no time to spare, desperately in need of loans. Without the debt
crisis, such policies may have been subject to greater scrutiny, and
with a case-by-case analysis of countries adopting SAPs, the world
would become quickly aware of their dangerous implications. The debt
crisis was absolutely necessary in implementing the SAPs on an
international scale in a short amount of time.
The effect became quite clear, as the result “of these policies on the
population of developing countries was devastating. The 1980s is known
as the ‘lost decade’ of development. Many developing countries’
economies were smaller and poorer in 1990 than in 1980. Over the 1980s
and 1990s, debt in many developing countries was so great that
governments had few resources to spend on social services and
development.”[94] With the debt crisis, countries in the developing
world were “[s]tarved of international finance, [and] states had
little choice but to open their economies to foreign investors and
trade.”[95] The “Third World” was recaptured in the cold grasp of
economic colonialism under the auspices of neo-liberal economic
theory.
A Return to Statist Theory
Since the 1970s, mercantilist thought had re-emerged in mainstream
political-economic theory. Under various names such as neo-
mercantilism, economic nationalism or statism, they hold as vital the
centrality of the state in the global political economy. Much
“Globalization” literature puts an emphasis on the “decline of the
state” in the face of an integrated international economic order,
where borders are made illusory. However, statist theory at least
helps us understand that the state is still a vital factor within the
global political economy, even in the midst of a neo-liberal economic
order.
Within the neo-liberal economic order, it was the powerful western
(primarily US and Western European) states that imposed neo-
mercantilist or statist policies in order to protect and promote their
interests within the global political economy. Some of these methods
were revolved around policy tools such as export subsidies, imposed to
lower the price of goods, which would make them more attractive to
importers, giving that particular nation an advantage over the
competition.
For example, the US has enormous agriculture export subsidies, which
make US agriculture and grain an easily affordable, attractive and
accessible commodity for importing nations. Countries of the global
south (the Lesser-Developed Countries, LDCs), subject to neo-liberal
policies imposed upon them by the World Bank and IMF were forced to
open their economies up to foreign capital. The World Bank would bring
in heavily subsidized US grain to these poor nations under the guise
of “food aid,” which would have the affect of destabilizing the
nation’s agriculture market, as the heavily subsidized US grains would
be cheaper than local produce, putting farmers out of business. Most
LDCs are predominantly rural based, so when the farming sector is
devastated, so too is the entire nation. They plunge into economic
crisis and even famine.
With the statist approach, theorists examine how the state is still
relevant in shaping economic outcomes and still remains a powerful
entity in the international arena. One theorist who is prominent
within the statist school is Robert Gilpin. Gilpin, a professor at the
Woodrow Wilson School of Public and International Affairs at
Princeton, is also a member of the Council on Foreign Relations. In
his book, Global Political Economy, Gilpin postulated that
multinational corporations were an invention of the United States, and
indeed an “American phenomenon” upon which European and Asian states
responded by internationalizing their own firms. In this sense, his
theory postulated to a return to the competitive nature of
mercantilist economic theory, in which one state gains at the expense
of another. He also addresses the nature of the international economy,
in that both historically and presently, there was a single state
acting as the main enforcer and manager of the global economy.
Historically, it was Britain, and presently, it was the United
States.
One cannot deny the significance of the state in the global political
economy, as it has been, and still remains very relevant. The events
of 1973 are exemplary of this, however, more must be examined in order
to better understand the situation. Though states are still prominent
actors, it is vital to address in whose interest they act.
Mercantilist and statist theorists tend to focus on the concept that
states act in their own selfish interest, for the benefit of the
state, both politically and economically. However, this is somewhat
linear and diversionary, as it does not address the precise structure
of the state economy, specifically in terms of its monetary and
central banking system.
States, most especially the large hegemonic ones, such as the United
States and Great Britain, are controlled by the international central
banking system, working through secret agreements at the Bank for
International Settlements (BIS), and operating through national
central banks (such as the Bank of England and the Federal Reserve).
The state is thus owned by an international banking cartel, and though
the state acts in such a way that proves its continual relevance in
the global economy, it acts so not in terms of self-interest for the
state itself, but for the powerful interests that control that state.
The same international banking cartel that controls the United States
today previously controlled Great Britain and held it up as the
international hegemon. When the British order faded, and was replaced
by the United States, the US ran the global economy. However, the same
interests are served. States will be used and discarded at will by the
international banking cartel; they are simply tools.
In this sense, interdependence theory, which presumes the decline of
the state in international affairs, fails to acknowledge the role of
the state in promoting and undertaking the process of interdependence.
The decline of the nation-state is a state-driven process, and is a
process that leads to a rise of the continental state and the global
state. States, are still very relevant, but both liberal and
mercantilist theorists, while helpful in understanding the concepts
behind the global economy, lay the theoretical groundwork for a
political economic agenda being undertaken by powerful interests. Like
Robert Cox said, “Theory is always for someone and for some purpose.”
Hegemonic-Stability Theory
In his book, Global Political Economy, Gilpin explained that, “In
time, if unchecked, the integration of an economy into the world
economy, the intensifying pressures of foreign competition, and the
necessity to be efficient in order to survive economically could
undermine the independence of a society and force it to adopt new
values and forms of social organization. Fear that economic
globalization and the integration of national markets are destroying
or could destroy the political, economic, and cultural autonomy of
national societies has become widespread.”[96]
However, Gilpin explains that the “Creation of effective international
regimes and solutions to the compliance problem require both strong
international leadership and an effective international governance
structure.” Yet, he explains, “Regimes in themselves cannot provide
governance structure because they lack the most critical component of
governance – the power to enforce compliance. Regimes must rest
instead on a political base established through leadership and
cooperation.”[97] This is where we see the emergence of Hegemonic
Stability Theory.
Gilpin explains that, “The theory of hegemonic stability posits that
the leader or hegemon facilitates international cooperation and
prevents defection from the rules of the regime through use of side
payments (bribes), sanctions, and/or other means, but can seldom, if
ever, coerce reluctant states to obey the rules of a liberal
international economic order.” As he explained, “The American hegemon
did indeed play a crucial role in establishing and managing the world
economy following World War II.”[98]
The roots of Hegemonic Stability Theory (HST) lie within both liberal
and statist theory, as it is representative of a crossover theory that
cannot be so easily placed in either category. The main concept
champions the liberal notion of the open international economic
system, guided by liberal principles of open-markets and free trade,
while bringing in the statist concept of a single hegemonic state
representing the concentration of political and economic power, as it
is the enforcer of the liberal international economy.
The more liberal-leaning theorists of HST argue that a liberal
economic order requires a strong, hegemonic state to maintain the
smooth functioning of the international economy. One thing this state
must do is maintain the international monetary system, as Britain did
under the gold standard and the United States did under the Dollar-
Wall Street Regime, following the end of the Bretton-Woods dollar-gold
link.
Regime Theory
Regime Theory is another crossover theory between liberal and
mercantilist theorists. Its rise was primarily in reaction to the
emergence of Hegemonic Stability Theory, in order to address the
concern of a perceived decline in the power of the US. This was due to
the rise of new economic powers in the 1970s, and another major
purveyor of this theory was Robert Keohane. They needed to address how
the international order could be maintained as the hegemonic power
declined. The answer was in the building of international
organizations to manage the international regime.
In this sense, Regime Theory has identified an important aspect of the
global political economy, in that though states have upheld the
international order in the past, never before has there been such an
undertaking to institutionalize the authority over the international
order through international organizations. These organizations, such
as the World Bank, IMF, UN, and WTO, though still controlled and
influenced by states, predominantly the international hegemon, the
United States, represent a changing direction of internationalization
and transnationalism. Regime Theorists tend to justify the formation
of a more transnational apparatus of power, beyond just a single
hegemonic state, into a more internationalized structure of
authority.
Notes
[1] CBC, Informal forum or global conspiracy? CBC News Online:
June 13, 2006: http://www.cbc.ca/news/background/bilderberg-group/
[2] Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. (South End Press: 1980),
161-171
[3] Holly Sklar, ed., Trilateralism: The Trilateral Commission
and Elite Planning for World Management. (South End Press: 1980),
161-162
[4] CFR, The First Transformation. CFR History:
http://www.cfr.org/about/history/cfr/first_transformation.html
[5] Glen McGregor, Secretive power brokers meeting coming to
Ottawa? Ottawa Citizen: May 24, 2006:
http://www.canada.com/topics/news/world/story.html?id=ff614eb8-02cc-41a3-a42d-30642def1421&k=62840
[6] William F. Jasper, Rogues' gallery of EU founders. The New
American: July 12, 2004:
http://findarticles.com/p/articles/mi_m0JZS/is_14_20/ai_n25093084/pg_1?tag=artBody;col1
[7] Ambrose Evans-Pritchard, Euro-federalists financed by US
spy chiefs. The Telegraph: June 19, 2001:
http://www.telegraph.co.uk/news/worldnews/europe/1356047/Euro-federalists-financed-by-US-spy-chiefs.html
[8] Ambrose Evans-Pritchard, Euro-federalists financed by US
spy chiefs. The Telegraph: June 19, 2001:
http://www.telegraph.co.uk/news/worldnews/europe/1356047/Euro-federalists-financed-by-US-spy-chiefs.html
[9] Bilderberg Group, GARMISCH-PARTENKIRCHEN CONFERENCE. The
Bilderberg Group: September 23-25, 1955, page 7:
http://wikileaks.org/leak/bilderberg-meetings-report-1955.pdf
[10] Who are these Bilderbergers and what do they do? The Sunday
Herald: May 30, 1999:
http://findarticles.com/p/articles/mi_qn4156/is_19990530/ai_n13939252
[11] Andrew Rettman, 'Jury's out' on future of Europe, EU doyen
says. EUobserver: March 16, 2009: http://euobserver.com/9/27778
[12] George T. Crane, Abla Amawi, The Theoretical evolution of
international political economy. Oxford University Press US, 1997:
page 110
[13] George T. Crane, Abla Amawi, The Theoretical evolution of
international political economy. Oxford University Press US, 1997:
page 107
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[76] F. William Engdahl, A Century of War: Anglo-American Oil
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[78] Joseph B. Treaster, Paul Volcker: The Making of a Financial
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[96] Robert Gilpin, Global Political Economy: Understanding the
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International Economic Order, Princeton University Press, 2001: pages
97-98
Andrew Gavin Marshall is a Research Associate with the Centre for
Research on Globalization (CRG). He is currently studying Political
Economy and History at Simon Fraser University.
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