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|Walid Phares||October 13th 2008|
Cutting Edge Security Analyst
In the fog of economic mayhem ravaging American and international economies, experts are having a hard time determining the root causes of the current financial crisis. One parameter is established: The Ground Zero of this economic fear is located in Wall Street, a few blocks away from the other Ground Zero, where al Qaeda destroyed the World Trade Center and massacred thousands of Americans and other nationals.
While we know who caused the destruction of the Twin Towers and why they did it, the question of who is causing the crumbling of the world economy, starting with America, and why, remains unanswered. It will take probably years and the best economists to investigate the web that led to the most dangerous crisis in international finance since the late 1920s. But to political economists and international relations analysts, there are some leads to explore while pure economists are proceeding with only their reconstruction of the crisis.
The latter may not ever reach definitive conclusions, and for political reasons. Too many strategic interests are at stake in the convulsions we are witnessing. From a stratospheric view, we see a U.S. economy bleeding intensely; and as its government, in the midst of an electoral transition, is trying to administer some financial medicine, we can see that serious illnesses are breaking out in several economies around the world. The international community is waking up to watch another dimension of globalization: the lethal domino effect. When the greatest economy goes down, the international economic system follows.
But strategic analysts cannot avoid asking the following questions: Was the crisis system-induced or was it provoked or at least helped to spread? The main answer is found in the American genesis of the collapse. In sum, experts say, a huge mismanagement by both Wall Street and Washington ended up flooding Main Street with loans impossible to pay back. The mechanisms of the problem seem to be simple: American bankers and lenders messed up. They overestimated the ability of the markets to absorb these monies destined to help small consumers to leap into a higher social level, and to return their loans on time. And since millions of real estate buyers weren’t actually able to afford what they bought, the financial tidal wave hit back at the banking institutions, crumbling them. And as the financial giants were falling on Wall Street, a tsunami was unleashed on all continents, hitting monetary institutions from Tokyo to London. This equation—in a micro nutshell—is the official story of the beginnings of the crisis, but certainly not the end of it.
As we continue to watch the economic spasms, we proceed along another line of basic questions. Other than raw capitalist greed, why did the lenders initially increase their offers into the markets? Who or what led the flood of cash? Many argue that the trend of pushing out-of-control loans to unqualified segments of society emanated from political operatives on the Left. Meaning that pressure groups, including national politicians, induced Wall Street to cross the fine line of appropriate banking policy to grant almost any loan seeker, regardless of his capacity to pay back the mortgage loan. But even if that were true, market analysts would have figured out the weaknesses of such a plan. So the next question is: on what grounds was the huge release of funds rationalized?
One answer could be that an assumption was made that jobs would always provide income for the payments of such mortgages. So, up to this stage, blame can be leveled in two directions. First, towards those politicians who threatened political retaliation if the financial system didn’t lend beyond rational limits; and second, Wall Street financiers who risked breaking the financial system by relying on poor judgment regarding the public’s ability to overcome economic challenges. Economists and those investigative committees expected to be formed will tell us more about the American roots of this economic debacle.
A thorough psycho-economic observation of the public’s financial behavior, however, tells us that there may be more to the crisis. It reveals that an outside push—I now coin it economic terrorism—may have been the tipping point of the collapse. For monitoring how and why buyers massively abandoned their plans shows that it followed, or coincided, with an abrupt rise in the cost of gas dividends. With the numbers at the pumps going ballistic, the cost of living suddenly rose, goods became less attainable and the price of enjoying, let alone using, the newly purchased properties soared. Hence, undoubtedly the lifestyle that was sought by the tens of millions of homes buyers wasn’t possible to achieve anymore; thus they surrendered financially in droves, taking the system down with them.
Economists will tell us if this diagnosis stands up. But if it does, then we cannot avoid investigating the factor that caused the strategic stress in real estate, which turned into economic chaos. In bypassing a narrow economic analysis, we can detect clearly the connection between the dizzying ups in petrol pricing and the slowing of American buying capacity. Stunningly, one can conclude that while it is sadly true that both Wall Street’s corruption and politicians’ abuse of the system handed the tools of doom to the middle class, Main Street’s rapid disenfranchisement was manufactured overseas, thousands of miles away, at the hands of OPEC, or perhaps in some quarters of the oil-producing Cartel.
Indeed, as economic commentators tell us (including a strong accusation leveled by real estate tycoon Donald Trump on Fox News against OPEC), oil powers are behind the instability that crumbled the will of millions of middle class Americans over the past three years. If we go back in time, we can see that oil pricing by OPEC’s hard core shows clearly that US leadership was not able to convince the top producers from the Gulf to give American oil consumers a chance. Most producing regimes replied that demand - mostly from China and India - was putting pressure on production. Pressed by Washington to produce more, the regimes alleged it would affect the selling price and thus minimize their profits, but promised they would try to be understanding of US needs in energy.
This attitude gave the producers discretion over price, while Jihadi propagandists roamed the media accusing Washington of putting unbearable pressure on the region to follow American injunctions in setting petroleum prices. Was there a connection between the oil regimes and the Jihadi propagandist machine? We have no answer to that now, but clearly an oil strategy was in the works with a calculated impact on the US economy. This charge is still in its early stages, it will be challenged ferociously, but it will stand as long as limpid answers are not provided.
What adds to the inquiry into the OPEC destabilization factor are the many indicators that strategic political motives have appeared to be behind the pricing maneuvers. Over a period of half a decade, many voices heard on the region’s airwaves have intimated that the US economy will be made to pay for what America’s leadership is doing. Commentators on several outlets funded by oil companies, including on al Jazeera, underlined that as long as average citizens in the United States (and eventually in the West) don’t feel financial pain, the war on terror and spreading of democracy won’t be stopped.
Sheikh Yussuf al Qardawi, Muslim Brotherhood ideologue and mentor of the Qatari-funded channel, spoke openly of Silah al Naft, i.e., the weapon of oil. Indeed, it was called a weapon - as in a warfare situation - and most likely it was used as such. Of course, the producing regimes will deny the existence of a real strategy to bring the US to its knees by striking at its pumps. They will dismiss statements made by emirs and commentators in this regard. The oilfield Jihadists, however, won’t deny the existence of such a battlefield.
For years now, Salafist web sites and al Qaeda spokespersons have loudly called for an oil Jihad against infidel America and its lackeys. Online material is still circulating. But more revealing are the official speeches by Osama Bin Laden and his deputy on the absolute necessity to use that weapon. Ayman Zawahiri called expressly and repetitively on the public to sell their US dollars and buy gold instead (Beu al dullar washtaru al zahab). These were stunning statements ignored by most analysts at the time but that are making sense today. He predicted a collapse in the infidels’ economy, starting from American markets. Was he a part of the lobbying effort in the OPEC game? Most likely not, but he seems to have been privy to the game, having insiders in the Wahhabi radical circles in the Peninsula: in the end there are too many political signs to dismiss and the analysis of price warfare is too evident to ignore.
OPEC’s manipulation of the markets did hit Americans hard in their pockets. Hundreds of millions of Joe and Jane Does were intimidated, rather terrorized, into abandoning their lifelong dreams of owning properties because of the aggressive stance of petro-regimes towards the US and its campaign to spread democracy in the Greater Middle East. In historical terms, America was punished for daring to change the status quo in the Arab and Muslim world to the advantage of the weakest and the suppressed: Shia and Kurds in Iraq, Syrian reformers, Lebanese civil society, Africans in Darfur, Iranian women and students, artists and liberals across the Arabian Peninsula. In return, the U.S was submitted to economic destabilization, steady, gradual and by small doses. Yes, let’s not underestimate the power of the Jihadi-oil lobby in America: it has decades of influence and it has long arms into the system, and it has powerful political allies. It knows when Americans are messing up their own system, and it knows very well how to push them over the cliff, into the abyss of economic calamity.
A counterpoint to this thesis would vigorously argue that the alleged OPEC destabilization over the US economy is illogical, as many countries in the Gulf are experiencing a recession as a result of Wall Street’s crunch. In other words, they wouldn’t do it to themselves. Yet the ideological forces manning the oil weapon aren’t particularly concerned about economic stability. Their driving factor is Jihadism. We’ve heard their ideologues stating that even if they were to incur losses among their own societies in order to defeat the infidel powers, then let it be. Ten percent losses in local companies and markets are a price that radicals would absorb if the final prize is an earth-shattering change in US policy in the region and a triumphant return to pre-9/11 status. I find the rationale of this policy very Jihadist: if a world economic crisis is needed to remove the US democratization efforts from the region and to end its post 9/11 campaigns, the end justifies the means. In addition, how intriguing to see that Saudi Arabia and other producers are among the very few who didn’t have to pump much cash into their markets yet (Per news Agencies, today).
What some oil regimes - or the ideological forces within - want to accomplish from this alleged interference in US economics is to provoke a “regime change” in Washington, D.C., so that regimes in their region are not challenged anymore. But another issue is also coming to the surface: pressures against America’s financial structures seem to have escalated in parallel to increasing US talk and commitment to achieving energy independence. Since last April, the American debate finally reached a dramatic conclusion: We’re sending 700 Billion Dollars a year to regimes that dislike us, agree most national leaders; and furthermore some of that money is ending up in the hands or accounts of terrorists, affirm some among them.
This revolutionary conclusion is a direct affront to the multi-decades-long dominance of petro-dollars in US politics. What America is readying itself to do is to achieve its most dramatic war of independence since 1776: ending the dependence on Middle East Oil. Therefore, let’s not be surprised that these gigantic interests would strike at the heart of this economic revolution, as I coined it in my latest book, The Confrontation.
Back to the ongoing crisis on these shores, we nevertheless must admit that the original sins are domestic first: financial drunkenness and economic recklessness. Without these plagues, outside forces wouldn’t have been able to shake up America’s stability. But assuming that most capitalist societies travel through rough patches, it is vital to realize that America’s economy is under attack by forces aiming to maintain US dependency on foreign energy, as a means to obstruct the rise of democracy.
Seven years after 9/11, Americans are paying the price of liberty from their own economic flesh.
Cutting Edge Security Analyst Walid Phares is the director Foundation for the Defense of Democracies “Future Terrorism Project.” He is the author of the acclaimed Confrontation: Winning the War against Future Jihad.