The American Empire in a Changing World


Friday, June 22, 2012

PetroDollar: "Gulf capitalism''

Nixon was fighting Watergate at the time this all happened, quite the diversion don't you think? Kissinger was basically running the country and as we know, Kissinger is/was a Rockefeller boy.......follow the money

Op-Ed From The News Pakistan

''The price of a barrel of standard Saudi Arabian crude oil rose from $2.59 on January 1, 1973, to $11.65 on January 1, 1974. This sudden groundswell of “petrodollars” assigned a pivotal role to the Gulf in the global economy. Not just because of oil but also because the way petrodollars were utilised in global financial circuit.

“Petrodollar flows from the Gulf, particularly from Saudi Arabia, played a critical role in strengthening both the financialisation of the system as a whole and the specific role of the United States as the dominant power,” Hanieh says. There are two particular components to this role. First, “much of the Gulf petrodollars flowed into North American and European banks (often operating in Euromarkets) where they were recycled as loans to multinational companies, governments, and other borrowers.” Kuwait provides an excellent example of how these petrodollar flows helped to consolidate the trends of financialisation. As oil prices increased, assets of Kuwaiti commercial banks tripled from 1971 to 1977. The massive amounts of funds accumulated by Kuwaiti banks were redirected into international capital markets through “consortium banks”: joint partnerships between Kuwaiti banks and large foreign banks. From 1973 to 1977, $107 billion of OPEC reserves flowed into Euromarkets, constituting over 10 percent of the market’s total dollar-dominated assets. Over 40 percent of total OPEC reserve assets were held as Eurodollars from 1976 to 1984, a striking indication of the importance of the market for the oil exporting countries.''

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