Big Oil, Wall Street, Pentagon drive ‘New Cold War’ against Russia
April 14 — A U.S.-backed coup in Kiev has brought Ukraine to the brink of civil war. CIA director John Brennan is now visiting Kiev, as the right-wing regime there threatens to send tanks against protesters in Ukraine’s eastern cities.
U.S. warships are deployed in the Black Sea, and NATO F16s and AWACS have been sent to the Baltic. Washington is pressing West Europe to enact harsher sanctions on Russia. Ukraine’s CIA-funded Right Sector has threatened to blow up pipelines that carry Russian gas to West Europe.
U.S. agenda: tension and conflict
The Soviet Union no longer exists. The Russian Federation is not socialist. But the U.S. military and political establishment is deliberately provoking confrontation with the largest former Soviet republic. The corporate-owned media are egging it on.
What drives this seemingly irrational course of action is the same thing that drove the President George W. Bush regime to invade Iraq in 2003: financial need. And cold economic calculation.
Not the financial need of the hungry and homeless, of the millions who need jobs at living wages, of those who can’t pay their rent or mortgage or must choose between heating and eating.
It’s the financial need of giant banks and corporations to pump up their profits, stock prices and the value of their invested capital amid a global economic slowdown caused by capitalist overproduction.
It’s not the oil; it’s the money
The U.S. Energy Information Administration projects that the United States will replace Russia this year as the world’s top hydrocarbon energy producer. It says the U.S. will produce more oil than Saudi Arabia by 2015.
This development is possible because the U.S. capitalist class has invested at least $1 trillion over the past 10 years in fracking — the hydraulic fracturing of oil and natural gas from shale rock. ExxonMobil (XOM), now the largest U.S. natural gas producer, Phillips66, Valero, Berkshire Hathaway, General Electric, Koch Industries, KKR and Halliburton are among the giant firms betting billions on the superprofits they hope fracking will bring. Every major bank is also involved.
But these environment-destroying investments would not be profitable without the triple-digit oil prices of the last decade. These record oil prices were made possible by the armed and bloody suppression of Arab and Iranian oil production by the Pentagon.
Iraq war, bonanza for big oil
Before U.S. invaders destroyed Iraq’s state-owned oil industry, the price of West Texas Intermediate Crude hovered around $20 on the New York Mercantile Exchange. By April 2003, when U.S. tanks rolled into Baghdad, WTIC was over $40 a barrel, and Big Oil profits were up nearly 300 percent over the previous year.
By mid-2008, war threats and new sanctions combined with the Iraq war to drive oil up to $140 a barrel. It was XOM’s most profitable year ever. The destruction in Iraq made profitable the plunder of Canada’s tar sands, the Keystone XL pipeline and the Anglo-US-owned Baku-Tbilisi-Ceyhan pipeline from former Soviet Central Asia to the Mediterranean.
But the third quarter of 2008 saw a global capitalist economic crisis, and prices began to fall. Threats against Iran, the 2011 NATO bombing of Libya and the CIA-orchestrated war in Syria, which blocks a potential pipeline from Iran to the Mediterranean, have slowed the decline but not reversed it.
Some analysts predict prices as low as $50 a barrel by 2015. Oil and natural gas prices tend to move in tandem, and oil prices of $60-$80 a barrel are needed for most fracking projects to break even. On April 14, CNBC reported that “oil hovers near $108 as Ukrainian crisis worsens.”
‘Cold War’ chained West Europe to U.S.
In 1991, the Soviet Union was the world’s top energy producer. Much of its production was consumed domestically or provided to other socialist countries in barter arrangements. West Europe depended on U.S. and British monopolies for energy.
In the early 1980s, German and French banks financed a Soviet pipeline project, called Urengoi 6, to bring Siberian natural gas to West Europe. The Reagan regime launched an overt and covert campaign to sabotage the project. (See “A Tale of Two Pipelines,” Workers World, June 10, 2005.) U.S. imperialism aimed at hurting the Soviet economy, of course. It also wanted to keep West Europe dependent on U.S. energy monopolies. The project was completed, however, and Soviet natural gas poured into West Europe.
In 1998, Russia, now capitalist, responded to a speculative attack on its currency by devaluing the ruble. Oil fell below $11 a barrel. The U.S. responded with bombs.
The target was not Russia but Iraq. Within three months the Clinton regime came up with an excuse for a massive bombing campaign against Iraq, already suffering from years of U.S.-orchestrated sanctions. Two years earlier, U.S. Secretary of State Madeleine Albright admitted that sanctions had killed 567,000 Iraqi children. She said the “price was worth it.”
As the bombs fell on Iraq, Clinton’s Energy Secretary William Richardson was begging U.S. oil executives to build oil and gas pipelines to former Soviet Central Asia. The executives told him it would not be worth it unless he could guarantee oil prices above $40 a barrel for a sustained period. It took the 2003 invasion of Iraq to do that.
A war against development
Energy is the world’s most profitable commodity. But other interests are also at stake. The Pentagon wants to protect and expand its bloated budget, which faces “mandatory” cuts in 2016. The generals want to expand NATO to the east and put U.S. troops in the former Soviet Union. The military-industrial complex wants more arms sales in East Europe, with Ukraine as its newest customer.
And then there is the heart of the system — Wall Street itself. Bankers and politicians have learned that war and crisis abroad drive capital into the United States, pumping up the dollar and helping keep U.S. banks at the center of the world economy. The World Bank is predicting capital flight from Russia alone could reach $150 billion this year, more than twice what it was in 2013.
The monopoly-dominated world capitalist market is saturated with commodities and capital. It is in a permanent struggle with that crisis unique to the capitalist system — overproduction. Bankers are sitting on trillions of dollars they cannot reinvest at an “acceptable” rate of profit.
The world imperialist system cannot absorb the productive capacity of the vast industrial-technological-scientific apparatus created by Soviet power. Just as it cannot absorb the labor power, the minds and capabilities of hundreds of millions of people in the U.S. and around the world.
This system has no room for the Eurasian Union, the Commonwealth of Independent States, the Shanghai Economic Cooperation Organization or the rising bloc of BRICS (Brazil, Russia, India, China, South Africa) nations, which Iran seeks to join. It has no room for the Bolivarian Alliance for the Peoples of Our America or the African Union.
The dominant mode of production in the above-mentioned blocs is capitalist. But an important factor in their growth is the state-powered economy of the People’s Republic of China, a legacy of the 1949 revolution. Despite the overthrow of socialism, the state-owned sector of Russia’s economy has risen to 60 percent under the Putin administration.
The “Cold War” did not end with the fall of the Soviet Union because it was driven not only by hostility to socialism but by the internal contradictions of capitalism itself. In the “Cleveland massacre” of 1872, John D. Rockefeller, backed by Wall Street banks, drove hundreds of independent oil drillers out of business in order to create the Standard Oil trust. Apologists for capitalism have called such practices “creative destruction.” In its era of imperialist decay, U.S. monopoly capitalism and its state apparatus have nothing to offer the world but destruction.