Editor’s Note: We bring to the attention of our readers this essay by  the late Professor Andre Gunder Frank, one of the World’s leading and most distinguished political economists. First published by Global Research in 2004.

Frank analyses the relationship between militarisation and the crisis of the US dollar as a World currency.

Published 14 years ago, the incisive essay provides a comprehensive perspective on the evolving New World Order, its structural weaknesses and contradictions.

Prof André Gunder Frank

More importantly, it enables us to understand the economic underpinnings of the Neocons’ “war on terrorism.”

This essay consists of the following parts:

Coup d’ État in Washington

Paper Tiger – The United States and the World

Fiery Dragon: China in East Asia

Michel Chossudovsky, February 19, 2018

***

Political Background

Recent events in Iraq that require no further elucidation here make this essay now more timely than when it was written.

For this essay is a combination of two related articles:

First, my earlier paper focusing on the 2000 [Election] Coup d’Etat. This paper related to the illegitimacy of the Bush government and the long standing agenda of the Cheney group which has made another Coup within the Bush Coup.

Secondly, my paper on the paper tiger, concerning the underlying Achilles heels vulnerability of American power that rests only on the paper dollar and the military Pentagon.

Vice President Gore’s major speech damning the policy of the Bush administration and calling the President himself incompetent, as he surely is, nonetheless judiciously avoided any direct mention of the illegitimacy of the president and his administration.

Bush’s presidency was derived from a veritable coup d’ Etat, not in having lost the popular vote, but first in having also lost the vote in the key state of Florida and “won” it through fraud and violence.

And then they violated the fourteenth amendment of due process through the stacked vote in the Supreme Court and its refusal to let anybody abide by due process.

Moreover, not only did Dick Cheney manage the entire transition to and construction of the Bush administration, but as Vice President he has continued to run the President’s show from behind the scenes. That is so much so that after their joint three hour testimony to the 9/11 commission about their Iraqi malfeasance, the New York Times was moved to editorialize that it made evident that the President is no more than a puppet managed by the Vice-President.

And as we know and the coup part of this essay further documents, the Vice-President himself was captured and molded to its own ends of long standing by a team of the PNAC – Program for the New American Century – maniacal adventurers, led by “Wolfowitz of Arabia.”

This illegitimacy of the President and his administration’s inauguration now takes further significance with the revelations that after having lied to the electorate, they have continued to lie and mislead the American public and the world regarding the State of the Nation and that of the world, as well as with regard to the devastating impacts of their foreign and domestic policies.

The documentation is overwhelming, but not even the tip of the iceberg is yet emerging that the Administration and President Bush himself have consistently lied and covered up about September 11, 2001.

They have lied about security and have deliberately weakened it and have themselves terrorized the American public, not to mention that they have torn the Bill of Rights to shreds and otherwise have violated the Constitution.

By sending the machine gun toting National Guard into every airport in the country, they are every day violating the Posse Comitatus Act that prohibits military participation in domestic civilian affairs that has stood since 1878. They have also violated a more recent law prohibiting the CIA from doing so as well. All this only to scare the public and Congress into accepting their unconstitutional Patriot Acts and other measures from the agenda of a small right minority.

And of course they have perpetrated monstrous lies about their war against Afghanistan and now against Iraq.

Thus, an illegitimate president who promised “gentle conservatism” has instead taken the most radical departure of militarizing American society at home, privatizing the US Military abroad, and antagonizing the rest of the world by his unilateral militarism and anti-environmentalism, not to mention his administration’s befuddled ‘’justification.”

His and his government’s verbal denunciation combined with de facto generation and sponsorship of terrorism is wearing thin and has in a totally irresponsible fashion led them and us into a Catch 22 damned if you do, damned if you don’t debacle.

The one in Iraq demonstrates one of several underlying vulnerabilities of American reliance on the Pentagon.

The Paper Tiger Dollar

As this essay argues, this military Achilles heel also further weakens the other one, which is based on the paper tiger dollar. That has declined in value against the Euro and the Yen since I first wrote about this threat and how it in turn would weaken the Pentagon that must be financed by devalued dollars, especially in its increasing ventures abroad.

At the same time, while the revelations and soul searching about American torture in Iraq – and now we know long since also in Afghanistan and Guantanamo – the US occupation in Iraq is proceeding relentlessly with its major agenda there: OIL and the economy.

The Cheney sponsored oil pipeline through Afghanistan that the Taliban was supposed to implement but was unable to guarantee, thus converting it from friend to enemy, is now in the hands of the new American appointed government in Kabul.

In Iraq, it is yet difficult to tell WHAT the US occupation is doing – nobody even bothers to look beyond the torture any more – about the oil and the economy, other than that they are being privatized and sold off at bargain basement prices to big American companies, with Vice President Cheney’s Haliburton in the lead. He still derives income from it, although his super-hawk friend Richard Perle resigned his high Defense Dept position so that his conflict of interest would ‘’not hurt the President’s re-election chances.’’

Meanwhile President Bush himself defends giving a near monopoly of contracts for ‘’re-building Iraq’’ to US near monopolies on the grounds that ‘’WE’’ put our lives on the line and so are we legitimately entitled to the economic rewards there from.

But more important, with the region’s second largest oil deposits in Iraq , what is the US really doing there on the world oil market and its efforts to control or break OPEC?

One thing is sure, and the oil section of the paper tiger part of this essay speaks to this issue: Iraqi oil is again being priced in US dollars and no longer in Euros as under Saddam Hussein.

In the meantime also, the dollar has indeed fallen significantly against the Euro and the Yen. This devaluation of the dollar would at least make US industrial and agricultural products more salable on the world market – if they were otherwise competitive. But the industrial ones are not and the agricultural ones thrive only thanks to the huge government subsidy, the same as in Western Europe and Japan.

On the other hand, a devalued dollar makes the US less attractive for the continued inflow of foreign capital from overseas savings on which the US economy and the American standard of living and way of life is so vitally dependent.

All presidential administrations have lied to the American public about the sources of their well being that are allegedly based on American efforts and skills promoted by healthy government domestic and foreign economic policies. But nothing could be further from the truth.

The Clinton boom years of the 1990s – after the 1989-92 recession – were based entirely on the suction and flight of capital first from the former Soviet Union and Eastern Europe who were forced into a depression far deeper than that of the 1930s and after the financial crisis of 1997 in Southeast Asia that was deliberately sponsored by Larry Summers, now President of Harvard but then at the World Bank and the US Treasury.

That resulted in declines of income by 40 and 50 percent and the deliberately managed misery and death of millions in East Asia – and the flight of their own and foreign speculative capital to the US safe haven of Treasury certificates (where it permitted a sudden but temporary balanced budget) and into Wall Street. There it fired the bull market that attracted Main Street to invest in Wall Street and made Mr. And Mrs. America feel rich and able to spend – also on $ 100 billion of excess imports of textiles and gadgets from China.

The Chinese in turn also sent the dollars they earned thereby back to Washington to buy Treasury certificates, so that the poor Chinese are by now the world’s largest creditors to the rich Americans.

More recently however, China has begun to import more itself, in particular from Southeast Asia and using it’s American earned US dollars to get at least something more that worthless Treasury certificates on which the US is bound to default, because it will be neither able nor willing to make good.

All depends on how long the rest of the world is still willing to put up with the US dollar as the world currency and what alternatives thereto there are. And this brings us back to the Pentagon as a shaky support for the dollar and the Iraq debacle as yet another chink in the rusty armor of confidence in the US in general and its money in particular.

And it leads us forward to examine the expanding role in the world of China, whose ten percent annual economic growth has been duplicating income every six years and making it a, and soon perhaps the, major player in the world economy.

What is the basis and security of the United States position and power in the world? The answer is the twin pillars of the Dollar and the Pentagon.

The dollar is a paper tiger – literally so, much more than when Mao applied this term to the US. The Pentagon’s strength and mobility is dependent on the dollar, which in turn is supported by US military might. But these two supporting towers of the US are also its two Achilles heels. Through them, like the twin towers of the World Trade Center in New York, the entire US edifice can come crashing down in one morning – not by terrorism but through the operation of the world market economy and the foolish policies of the United States government itself.

With the end of the cold war in 1989 and the subsequent decline of Russia as a serious immediate contender, as well as the decline during the 1990s of the hype of JAPAN AS # 1 [Vogel 1979] two other regions, states and powers came into contention. They are the United States whose fortunes and prospects seemed to have declined after 1970 but recovered in the 1990s; and yet it is a paper tiger. The other is the rising Fiery Chinese Dragon In global terms, we could regard this as a process of continued shift of the world center of gravity west-ward around the globe, from East Asia/China to Western Europe, then across the Atlantic to the United States, and there then from the eastern to the western seaboard, and now onwards across the Pacific back to East Asia, as observed in my “Around the World in Eighty Years” [Frank 2000]. Let us inquire further into the so far last part of this historical process.

Coup d’Etat in Washington

Be wary of conspiracy theories, beware of real conspiracies, and be aware of a grab of power.

It has happened in Washington and its instigators are pursuing a policy of (several) faits accomplis that attracts ever more people to jump on the band wagon. The Busch administration has made a real Coup d’Etat and achieved its apparently unknowing acceptance by America and the World. Even Hitler and Mussolini came to power by electoral routes and Stalin and Latin American dictators had to resort to violence to make their coups d’etat. Busch and his small coterie required none of these to get to the seat of power.

The Coup

To begin with, Bush’s accession to the Presidency was in violation to the Constitution. It is not that he received a minority of the popular vote, because the Constitution provides for the President’s election by the Electoral College. But Bush received the Electoral College vote by fraud, for he lost the decisive popular and thereby electoral vote in Florida. His brother Jeb as Governor of Florida with the help of Mrs Harris as Secretary of State first deprived hundreds of thousands of African American and presumably Democratic voters of the vote through incarceration, intimidation, and other means.

The Republican Cuban Mafia sent its goon squads physically to prevent a recount in Broward County. Mrs. Harris did all she could, which was plenty, to interfere with recounts in other counties in Florida. The alleged recounts that were made were a sham. They only recounted votes that were NOT counted in the first count by voters who had been unable to punch holes all the way through the voting cards without leaving the infamous hanging chads. Yet much more importantly one either before the decision or afterwards when the newspapers did it again, NO one ever recounted the votes that HAD been for the Democrats but were discounted because voter mistakenly also punched a second hole on a confusing ballot. Yet even the third and most conservative candidate Pat Buchanon declared publicly that these duplicate votes in heavily Jewish and Democratic counties were surely not for him but for the Democratic Party candidate. These votes [or even half of them if they had been allotted also to other candidates] would have given a decisive majority of the popular vote and therefore of the Electoral College votes in Florida to the Democrats. Yet they were never counted or recounted for the Democrats.

In the end Bush was not elected, but was SElected in the Supreme Court by the decisive political swing vote of Justice Kennedy. The Supreme Court’s appeal to the 14th amendment, which guarantees due process of Law to all, was ironically biased. For it was selectively applied without due process to squash the popular vote in Florida, but the same due process procedures were not applied to challenged votes in any other State. That in itself was already a de facto coup d’ Etat.

Then, several members of the House of Representatives called for a challenge of the Electoral College under Constitutional provisions that permit the Congress to do so if the challenge has the support of at least one member of both houses. Yet they were not joined by even a single Senator, who would have made the challenge legally effective. In other words, the Congress simply acquiesced to this power grab by the Bush administration through a Coup d’eat with the help of the Supreme Court but in clear violation to the Constitution.

That was the beginning of the violation of the Constitutional separation of powers and checks and balances. Since then, the Bush administration has carried these violations farther than any previous one in the history of the United States. Not even President Lincoln in the Civil War, nor President Roosevelt in the Second World War nor his previous attempt to stack the Supreme Court, ever grabbed and concentrated as much power for the executive branch while marginalizing the Legislative branch and the Judiciary.

Beware of Conspiracy Theories. But be aware that it was really Vice-President elect Dick Cheney who then put together the Bush Administration, selecting whom to place in which positions of power, especially in defense affairs. And beware of PNAC, the Project for a New American Century, which was already lobbying Washington with their plans for a “Pax Americana” in 1992, 1997, and 2000 among other notable dates.

PNAC issued a long report in September of 2000 entitled “Rebuilding America’s Defenses: Strategy, Forces and Resources for a New Century.” Its statement of principles calls for a massive increase in military power, U.S. military domination of Eurasia to prevent the rise of hostile powers; and pre-emptive [not just pre-ventive] military action against states suspected of developing weapons of mass destruction. PNAC’s prescriptions have been converted into official US policy and praxis by the Bush Administration.

PNAC founding members and signatories of its statements include;

• Cheney himself,


• Lewis Libby, Cheney’s top national security assistant and now the Vice-President’s chief-of-staff


• Donald Rumsfeld, also a founding member, now Secretary of Defense


• Paul Wolfowitz [of Arabia], now Deputy Defense Secretary and arguably the groups ideologue


• Eliot Abrams, pardoned by Bush Sr. in the Iran/Contra scandal and now member of the National Security Council


• John Bolton, Undersecretary for Arms Control and International Security


• Richard Perle, the most outspoken hawk in the Reagan administration who advocates dumping the United Nations, then chairman of the powerful Defense Policy Board, who was forced to resign one of his positions over a conflict of interest scandal,


• Randy Scheunemann, President of the Committee for the Liberation of Iraq, who was Trent Lott’s national security aide and who served as an advisor to Rumsfeld on Iraq in 2001


• Bruce Jackson, now Chairman of PNAC and former vice president of weapons manufacturer Lockheed-Martin who headed the Republican Party Platform subcommittee for National Security where he called for – as had Wolfowitz for some years – the removal of Saddam Hussein


• William Kristol, noted conservative writer for the Weekly Standard, a magazine owned along with the most hawkish Fox News Network owned by Ruppert Murdoch


• Norman Podhoretz, editor of the right wing New Republic


• and others, like Norman Kaplan and Douglas Feith.

The core group of the PNAC now hold the highest positions of policy making power in the Pentagon and much of it in the White House.

They have also planted one of their group in the State Department to keep an eye and check on Colin Powell who is the only major foreign policy player who is not a member of this inner sanctum.

An interesting sidelight is that Wolfowitz, Perle and Feith also went to Israel to serve as advisors to Prime Minister Ariel Sharon, for whom they drew up a battle plan against the Palestinians. Behind them lies the strange ideological bed-fellow political alliance of two of the most powerful lobbies in the United States: Organized Zionism and Christian Fundamentalism. For good measure, throw in the Cuban Mafia as well.

Another matter to consider are some of the connections of these same people with the private sector. Two examples should suffice to give a general idea. Cheney was chairman of Halliburton Inc., which in turn owns Brown & Root and other habitual contractors of the Defense Department for major construction and/or petroleum projects around the world.

One of these companies was awarded a 1 Billion dollar contract to re-build the Iraqi oil fields in case they should be damaged in the war. Another, of which the now “Prime Minister” of Afghanistan was a former employee, namely UNOCAL, is first in line to build the proposed oil and gas pipeline across Afghanistan from Central Asia to the Indian Ocean. The Bush family and George W. Bush himself have long standing business relations with the Carlyle Group, which also represents the Bin Laden family (including Osama), with whom they have also maintained direct relations.

The White House and the Executive Branch generally has made full use of its new power to serve its economic and political allies. Those who made the largest campaign contributions have been handsomely rewarded with government hand-outs and regulations, or rather de-regulation. The Bush administration has issued at least 200 separate executive orders to roll back regulations enacted by previous administrations, even Republican ones, to protect the environment and/or Public Health and Safety. Executive Order has received a whole new meaning: Special interests write an order that is passed to the President for his signature, whereby mostly without knowing what he is doing he converts it into an Executive Order.

The Pentagon has petitioned the White House to exempt it from existing environmental protection regulations that hamper their disposal of spent munitions and other hardware and thereby interfere with ‘’national security. ” The President deliberately appointed as Secretary of the Interior a person known for her ties to the timber and oil industries to whose exploitation she seeks to open thousands of acres of federally owned lands as well as the Alaska Wilderness for the construction of a new pipe-line – all in the interest of course of ‘’national security.”

The Bill Of Rights and the Constitution

More serious still, the Bush administration has shredded the Bill of Rights, abrogated the Constitution, and even violated the age – old common law of Habeus Corpus, which prohibits the detention and holding of anybody against his will without due process of law.

Elsewhere in the Executive Branch, President Bush appointed and lent full support to Attorney General John Ashcroft who was already known for his racist and authoritarian inclinations. Although many Senators had doubts about his appointment, the Senate ratified it anyway. Since then, Attorney General Ashcroft and his staff have converted several arms of the Department of Justice into those of a police state. The Executive has encouraged and permitted the Attorney General and the Department of Justice Judiciary Branch to violate the Bill of Rights and the Constitution on multiple counts. For instance, the US Government already claims the right to monitor all e-mail and to bug telephone conversations without specific judicial permission.

The Bush Administration brought Admiral Pointdexter back into government after his participation in the Iran-Contra Scandal and lyiung about it to Congress. His new mission is a project, called Total Information Awareness Project (TIAP): to develop computers to monitor “vast quantities of data generated by US civilians in their daily lives: Academic transcripts, ATM receipts, prescription drugs, telephone calls, driving licences, airline tickets, parking permits, mortgage payments, banking records, emails, website visits and credit card slips” [The Guardian November 23, 2002].

In critique of all this and the Patriot Act, only the lone voice in Congress of Representative and presidential candidate Dennis J. Kucinich (D-Ohio) has asked

“How can we justify in effect canceling

• the First Amendment and the right of free speech, the right to peaceably assemble?


• the Fourth Amendment, probable cause, the prohibitions against unreasonable search and seizure?


• the Fifth Amendment, nullifying due process, and allowing for indefinite incarceration without a trial?


• the Sixth Amendment, the right to prompt and public trial?


• the Eighth Amendment, which protects against cruel and unusual punishment?


• And Justice for All?”

The Constitution makes all the rights it guarantees extensive to anybody in the US, but the Attorney General has declared that non- citizens are not worthy of protection by the Constitution.

We do not know yet how much of a loss that is because the Department of Justice and its Immigration and Naturalization Service[INS] have also taken it upon themselves also to divest naturalized and even native-born American Citizens of their citizenship, again in clear violation of the Constitution.

And even those who remain citizens are under constant threat to have their rights violated without due process under the fourteenth amendment, or to be detained in violation of Habeus Corpus.

They are denied representation by legal counsel and trial in civil courts, as provided for by the Constitution. In particular, hundreds of thousands of American residents and Citizens of Arab descent or even of features that appear to individual agents of the Department of Justice or the police’s racial profiling as perhaps being Arab, or Muslim, or who knows what else have been called in for questioning. When they appeared in Los Angles, they were detained without charge. They now live in constant fear of the infamous knock on the door at 3AM that was made infamous by Hitler’s Gestapo and Stalin’s GPU. That is so if they are even favored by a knock on the door before a blast of gunfire of shooting first and asking questions later.

So far as we know of over 700 people who have remained in detention since September 2001; though there may be many more, since nobody knows or says where they are, or who they are, or what they are accused of. Indeed, only a dozen of these have ever been charged with anything. The others remain out of sight and out of mind except for their families who are not allowed even to secure legal representation for them. So do the innocent Afghani prisoners the US keeps in in Guantanamo and the countless ones still detained under horrible conditions in Afghanistan. How come there is no public outcry about any of these?

On the other hand, the same Executive Branch has divested the Judiciary of powers and the citizenry of judicial protection by illegally transferring powers of the Judiciary to itself. Perhaps only the most visible tip of the iceberg of this process is the Bush Administration and Pentagon declaration that it will bring normal civil suits before military tribunals that operate under rules of court marshal and other procedures of Military “Justice” that can order death sentences without appeal. Moreover, the accused do not know whereof, cannot chose legal counsel, and their conversation with whom can be overheard by the authorities. The prestigious very conservative publicist William Saffire refers to them as ‘’kangaroo courts” and observes that “no longer does the judicial branch and an independent jury stand between the government and the accused.

In lieu of those checks and balances central to our legal system, non-citizens face an executive that is now investigator, prosecutor, judge, jury and jailer or executioner. In an Orwellian twist, Bush’s order calls this Soviet-style abomination “a full and fair trial.”

The Land of the Free?

John Ashcroft has also issued instructions to the Department of Justice to resist as far as possible the delivery of documents under the Freedom of Information Act.

And the Executive itself has severely restricted the kind and number of documents of its own that it is prepared to make public. In other words, transparency and therefore control or even critique of the ever widening powers and their use by the Executive Branch is itself being severely restricted.

On the other hand, the Executive Branch has multiplied its own access to information. During the congressional debate on John Ashcroft’s USA Patriot Act, an American Civil Liberties Union fact sheet on the bill’s assaults on the Bill of Rights revealed that Section 215 of the act “would grant FBI agents across the country breathtaking authority to obtain an order from the FISA [Foreign Intelligence Surveillance Act] court . . . requiring any person or business to produce any books, records, documents, or items.” That includes bookstores and public libraries being obliged to divulge who is reading what. This is now the law,

Alas, the Congress has been intimidated into passive acceptance of virtually everything and anything the Executive proposes and demands. It passed the Patriot Act that severely restricts civil liberties virtually without reading it.

The proposed Patriot Act # 2 has not even bee submitted to the Congress for study and yet the version leaked by the Press suggests that it proposes even more of a police state than the first one. When the Leader of the Democratic Majority in the Senate voiced only the mildest doubts about Bush’s military moves, he was immediately reprimanded by his Republican Majority Leader counterpart Lott, for ‘’how dare he criticize the President in time of war!” Both have been forced to resign since then, but for scandals unconnected to that one.

Moreover, the Executive has been more than secretive about the events and circumstances of September 11, 2001; and the Congress has not launched any serious inquiry of its own. Neither have the Media. There has not even been any public inquiry or disclosure into the failure of the Air Force or National Guard to scramble fighter aircraft to investigate the airliners that had clearly gone off course. That is every day routine standard operating procedure, but it was called off or at least not enacted during the 90 minutes that elapsed between the crash into the first World Trade Tower and the one into the Pentagon – that is IF the Pentagon was damaged by an aircraft which has been seriously questioned if only because no evidence has ever been made public for such an occurrence.

Nor has the government given any account of its receipt and disregard of multiple forewarnings from intelligence agencies among its allies in Pakistan, Russia, Germany, France, Israel. In other words, the very circumstances that allegedly require all these domestic and foreign responses by the Bush Administration are themselves wrapped in a shroud of self-imposed secrecy.

The violation of the Constitutional provisions for the separation of powers is particularly flagrant regarding the powers reserved to the Legislative Branch of the Congress and the Constitutional prohibition against military action in domestic civil affairs.

Bush also disregards the Constitutional provision that only Congress may declare war, and it violates the 1976 War Powers act that Congress passed to regulate that Constitutional provision after it had been grossly violated in the Vietnam War. The Bush administration has de facto-also abrogated the 1878 Posse Comitatus Act that prohibits military participation in the enforcement of civil law, and it violates the general Constitutional provision against the military action in domestic affairs.

A US tank convoy during the Vietnam War (Source: Wikimedia Commons)

Instead, the Bush Administration has visibly mobilized the Armed Forces and National Guard around all US airports and elsewhere, and the Pentagon is drawing up plans for its intervention in endless domestic affairs. It stands to reason that the machine gun toting military presence in the passenger areas of airports has not added one iota to security but serves only to terrorize the public into blind and passive acceptance of the violation of their civil rights there and elsewhere. Even the government has stated repeatedly that any other terrorist attack on the US is not likely to copy that of September 11, 2001 but to take totally different forms against which this military presence would offer no defense. Indeed, it would not have prevented that of September 11 either. The pretext that the country is at war is being used as cover for US government terror of its own at home and abroad; and the country is being militarized as never before, not even in war time.

The Pentagon is extending its actions in American Civil Affairs ever more, also by establishing a new office of Under Secretary of Defense for Homeland Security, which then created a northern command to coordinate military response to domestic threats. The Pentagon also has a new Under Secretary for Intelligence,

Stephen Cambone, who said the existing agencies will continue with their work but that his unit will ensure that they are meeting the intelligence needs and priorities laid out by the Pentagon, also at home. [Boston Globe June 8, 2003].

Pax Americana

The Pentagon is also expanding into previously unimagined places and roles overseas. There are now well over 100 US military bases around the world. and current US military operations in Iraq, Afghanistan, the Horn of Africa, Colombia, the former Yugoslavia, South Korea, the Philippines, and former Soviet states such as Georgia. The latest details, disclosed by the Wall Street Journal on June 10th 2003, include plans to increase U.S. forces in Djibouti on the Horn of Africa across the Red Sea from Yemen, setting up semi-permanent “forward bases” in Algeria, Morocco, and possibly Tunisia, and smaller facilities in Senegal, Ghana, and Mali that could be used to intervene in oil-rich West African countries, particularly Nigeria. Similar bases–or what some call lily pads–are now being sought or expanded in northern Australia, Thailand, Singapore, the Philippines, Kenya, Georgia, Azerbaijan, throughout Central Asia, Poland, Romania, Bulgaria, Qatar, even Vietnam, and Iraq. [Needless to say that the construction of these military bases constitute lucrative multimillion contracts for US corporations including Bechtel and Halliburton. (Edtor)]

The new republics in former Soviet Central Asia and the former Soviet satellite states in Eastern Europe are a particularly strong magnets for U.S. military presence, and a glance at the map will show that the US is systematically encircling China. Moreover, the Pentagon military missions are marginalizing the State Department diplomatic ones, with the senior military officer having more resources and greater influence than the US ambassador [Boston Globe, June 8 2003].

Even so, the Associated Press reports on February 24 that ” senior U.S. officials have been quietly dispatched in recent days to the capitals of key Security Council countries where they are warning leaders to vote with the United States on Iraq or risk “paying a heavy price.” Although this kind of blackmail has been SOP in all American administrations, the Bush Administration has carried the threat and practice to previously unheard of new heights. As President Bush declared in his State of the Union address “Those who are not with us, are against us” – and will pay a heavy price.

“We are in the process of taking a fundamental look at our military posture worldwide, including in the United States,” said Deputy Defense Secretary Paul Wolfowitz on a recent visit to Singapore, where he met with military chiefs and defense ministers from throughout East Asia about U.S. plans there. “We’re facing a very different threat than any one we’ve faced historically.” But recall that this is the same Wolfowitz of Arabia talking who drew up his and PNAC’s plans to face this different threat already in his memos of 1992, 1997 and 2000.

The Law of the West

The Bush administration has also set aside centuries of International law. It wages illegal war, prohibited by numerous international treaties and by the United Nations Charter. Indeed it makes war without even declaring it, which even Hitler took the trouble to do.

The US armed forces wantonly violate Geneva conventions of crimes against humanity, genocide, weapons of mass destruction such as depleted uranium, cluster bombs, massive ‘’Daisy Cutter” bombs, destruction of civilian facilities to provide as power, water, and sanitation, and even neutral international waterways as when it deliberately blocked shipping on the Danube.

The Bush Administration (though Presidents Clinton and Bush Sr. also already earlier) have completely emasculated the United Nations instruments and procedures set up by the US and its allies after World War II to preserve the peace. Bush even had the gall to go to the UN and charge it with dereliction of duty and of its reputation by failing to give its stamp of approval for his War against Iraq – when the clear duty of the UN and especially of its Security Council is not to make war but to keep the peace.

His government and his lackey press mislead the public into believing that a Security Council resolution could legalize his war. The fact is that even with a SC resolution, his father’s War against Iraq in 1991 was in clear violation of Articles 2, 27, 41, 42, 43 and 53 of the UN Charter, among others.

The NATO states and President Clinton failed even to consult the UN before going to War against Yugoslavia. Then the present President waged War against Afghanistan without the slightest provocation from its government, without UN approval. And then it made War on Iraq in clear violation of the expressed desires of the UN membership. What this illustrates is the total abandonment of the UN as an institution and instrument for peace.

The demise of the UN as an International Body

After the US bombs a country into shambles, it then goes to the UN to ask it to pick up the pieces, or in plain English allegedly to legitimize the US military occupation of the country it had just destroyed.

But not only that, the violation of international law also constitutes ipso facto a violation of national law, because Senate ratification of an international treaty converts it into US law as well. Moreover, domestic democracy has been sacrificed to waging international war as well, as when NATO did so against Yugoslavia without even a single member country government troubling itself to ask its parliament or Congress for authorization to do so.

In a word, the US has replaced existing International law by new Law IN the West on the model of its own old Law OF the West. Then in the 19th century, vigilante lynch mobs formed ad hoc to go hang whomever they wanted; and now the US is imposing this Vigilante “Law” on the rest of the world by force. And as the vigilantes bought off or terrorized the sheriff and the judge to ‘’legitimize” themselves, so is the US, doing the same world wide in the real world, following the scripts of fictitious Spaghetti Western movies.

The Media

And what of the Fourth Estate – the Media?

They are strictly the mouthpiece of the Administration.

Note their behavior at White House, State Department, or Pentagon news conferences. All their questions are limited to technicalities about the implementation of Administration policies that are themselves accepted as cartes blanches.

Never ever has any representative of the US media posed a question that challenges the basis of the official policy in even the most timid way.

Indeed, not only what the press says or does not say reflects the policy and press- releases of the Administration. The very Media selection of what is or is not ‘’news,’’ e.g on the 6.30 pm Evening News of ABC, NBC, CBS, CNN, Fox, and shame on PPS for carrying the just as bad Jim Lehrer News Hour, is a simple reflection of what the White House or the State Department have declared to be ‘’news’’ that morning.

No matter how world shaking an event, if it has not shaken the piper, it does not merit mention by the media. But whatever the White House or the State Department declares to be news IS news. And even they have been obliged to make an agonizing reappraisal , albeit still only partial, of their own, after the revelations of torture of Iraqis has cast a shadow on their previous glowing reports about bringing democracy to them.

Their pieces in the press are little better. In a survey of op-eds in the Washington POST over four months, Russell Mokhiber and Robert Weissman found twice as many columns for as against the war, and in February 2003 the count was 24 in favor and 10 against, while the POST itself brought 9 editorials of its own to support the war. And that was regarding a war that had the highest popular opposition ever.The TV and radio talk shows are even more dominated by defenders of Administration policy. No matter that the Administration cooks, blends, massages and even simply invents the news; as is finally emerging regarding the non-existent weapons of mass destruction, which were the alleged reason for waging War against Iraq.

The Home of the Brave from 1984 to 2003

George Orwell would have to regard his dire predictions of Big Brother for 1984 as a benign Alice in a charming Wonderland version of Animal Farm. The latter is to be compared to the 2003 Bush and Ashcroft reality of double-think and new-speak in which, however, some are no longer equal than others, either at home or abroad, but still WAR IS PEACE – really – the President said so.

But the capacity of the United States to rule the world is more than questionable, especially after its 2003 debacle in Iraq.

Paper Tiger – The United States and the World

The US still has the world’s largest economy, which saw boom times during much of the 1990s, and it has unrivalled military power exceeding the total of the next dozen or more military powers combined. Moreover, the present Bush administration makes use of both of them in unilateral policies to impose its will on the rest of the world, friend and foe alike, to all of which Bush threw down the gauntlet of ‘’you are either with us or against us.”

With means you do as we say, and against means you are under threat to be destroyed economically and politically, as well as militarily if we wish.

In case there be any doubt about our intentions and capabilities, Russia and Argentina are prime examples on the economic front as are Iraq through the boycott, Serbia and Afghanistan are so on the military front as well. The latter – but really both – are what President Bush father called THE NEW WORLD ORDER when he bombed Iraq in 1991. I termed it THIRD WORLD WAR in two senses, one that it takes place in THE THIRD WORLD and secondly that this war against the Third World constitutes a THIRD World War [Frank 1991].

The prosperity and welfare of the American people rests primarily on its position in the world today as Britain’s did in the nineteenth century. That observation is fundamentally different from the political and media hype about the sources of American exceptionalism that are supposedly in its genius, morality, productivity, and other characteristics that allegedly differentiate America from the rest of the world. On the contrary, America rests on two – maybe three- pillars:

1.The DOLLAR as the world currency whose monopoly privilege the US has to print at will, and

2. The PENTAGON with its unrivalled military capacities.

3. A third pillar perhaps is the government, educational and media fed IDEOLOGY that obscures these simple facts from public view. Moreover each supports the other: It costs dollars to maintain the Pentagon, its bases in 80 countries around the world, and the deployment of its military forces around the globe. Military expenditures are the prime causes of the twin American deficits, in the federal budget and in the balance of trade. Conversely, Pentagon strength helps sustain global confidence in the dollar.

But this same mutual reliance for strength, therefore, also constitutes two mutually related American Achilles heels.

The dollar is literally a Paper Tiger in that it is printed on paper whose value is based only on its acceptance and confidence in the same around the world. That confidence can decline or be withdrawn altogether almost from one day to the next and cause the dollar to lose half or more of its value.

Apart from cutting American consumption and investment as well as dollar-denominated wealth, any decline in the value of the dollar would also compromise US ability to maintain and deploy its military apparatus.

Conversely, any military disaster would weaken confidence in and thereby the value of the dollar. Indeed, at the 2003 World Economic Forum in Davos, the assembled world political and business elites expressed very serious fears that the mere deployment of the US military, e.g. against Iraq, would bring on a world depression. TIME Magazine this week reports on a comprehensive study of the US airline industry, which concludes that a war against Iraq would drive half of it into immediate bankruptcy. If so, what of still weaker non-American airlines? The insecurity that comes with military saber rattling and threats undermine confidence in the dollar and put brakes on investment. And no amount of ideology is sufficient completely to obscure that economic situation.

In fact, the world already is in depression, from which so far only the United States, Canada and Western Europe are partially exempt.

And the latter is so, because of the privileged position of the American economy within the global one, from whose mis-fortune Americans have been deriving the benefits of that position, which to repeat is essentially derived from the privilege of printing the world currency with which Americans can first buy up the production of the rest of the world at depressed prices and then have the same dollars be returned from abroad to be invested in Wall Street and US Treasury certificates for safe-keeping and/or higher earnings than are available elsewhere.

In the mid 1980s James Tobin [the inventor of the Tobin tax on financial transactions] and I were to my knowledge the only ones already to published predictions of DE-flation as the coming world economic danger. Economic policy makers however ignored these warnings and this risk [not really risk, but necessary consequence] while continuing their policies designed to fight IN-flation.

Nonetheless, since then commodity prices have fallen sharply and consistently and more recently industrial prices have fallen as well. Moreover in WORLD economic terms, high inflation in terms of their national currencies [pesos, rubles, etc.] and their sharp DEVALUATION against the DOLLAR world currency has been an effective de facto major DE-flation in the rest of the world. That has reduced their prices and made their exports cheaper to those who buy their currencies with dollars, primarily of course consumers, producers and investors in – and from ! – the United States. These additionally, which is hardly ever mentioned!, can and do buy up the rest of the world with dollars that ”cost” only their printing and distribution, which for Americans have virtually no cost. [The $ 100 dollar bill is the world’s most used cash currency on which runs the entire Russian economy, and there are two to now three times as many of them circulating outside as inside the US].

The American boom and welfare and then ”balanced” federal budget 1992-2000 Clinton administration, contrary to its populist claims, only happened to coincide with this boom. The also same 8 year long prosperity of the United States was entirely built on the backs of the terrible depression, deflation and thus generated marked increase in poverty in the rest of the world. During this one decade, production declined by over half in Russia and Eastern Europe and life expectancy in Russia declined by 10 – ten – years, infant mortality, drunkenness, crime and suicide increased as never before in peacetime. Since 1997, income in Indonesia declined by half and generated its ongoing political crisis. That is dissipation of entropy generated in the US and its export abroad to those who are obliged to absorb it in ever greater DISorder. It would be difficult to find better examples – except the destruction of the entire society in Argentina, Rwanda, Congo, Sierra Leone, previously prosperous and stable Ivory Coast – not to mention the countries that have been visited by destruction through American military power

All this has among others the following consequences: in the US. it can export inflation that would otherwise be generated by this high supply of currency at home, whose low rate of inflation in the 1990s was therefore no miracle result of domestic ”appropriate” Fed monetary policy.

The US has been able to cover its twin balance of trade and budget deficits with cheap money and goods from abroad. The US trade deficit is now running at over 500 billion dollars a year and still growing. Of that, 100 billion are covered by Japanese investment of their own savings in the US that saves nothing and which the Japanese may soon have to repatriate to manage their own banking and economic crisis – especially if an American war against Iraq causes a n even temporary spike the price of oil on whose import Japan is so dependent.

Another $ 100 billion comes from Europe in the form of various kinds of investment, including direct real investment, which could dry up as the European recession continues, the Europeans become exasperated with American policy, or they have any number of other reasons to reduce their dollar reserves and put them into their own Euro currency instead.

A third 100 billion is supplied by China, which first sells the US its cheap manufactures for dollars and then accumulates those dollars as foreign exchange reserves – thus in effect giving away its poor producers’ goods to rich Americans. China does this to keep its exports flowing and its industries going, but if it decided to devote these goods to expanding its own internal market more, its people would gain in income and wealth, and the United States would be out of luck. The remaining $ 200 billion of deficit are covered by other capital flows, including debt service from the poor Latin Americans and Africans who have paid off the principal of their debts already several times over and yet keep increasing the total amount owed by rolling it over at higher rates of interest. The idea of declaring US chapter 11 or 9 type insolvency is however finally catching on.

Thus, deflation / devaluation elsewhere in the world has like a magnet attracted speculative financial capital from the rest of the world – both American owned and foreign owned – into US Treasury certificates [ stopping up the US budget deficit] and into Wall Street. That is what fed and supported its 1990s bull market, which in turn has increased, supported and spread wider a speculative and illusory in increase in wealth for American and other stock holders and through this also illusory ”wealth effect” has supported higher consumption and investment. The subsequent and present bear market decline in stock prices nonetheless is a still a profit boon for enterprises who issued and sold their stocks at bull market high and rising stock prices. For they are now buying back their OWN stocks at what for them are bargain basement low prices, which represent an enormous profit for them at the expense of small stock holders who are now selling these stocks at low and declining prices. The US ”prosperity” now rests on the knife edge also of an unstable enormous domestic corporate and consumer [credit card, mortgage and other] debt.

Moreover, the US is also vastly over-indebted to foreign owners of US Treasury certificates, Wall Street stock and other assets, which can be called in by foreign central banks who have been keeping reserves in US dollars and other foreign owners of US debt. Indeed, it is the very US policy that has contributed so much to destabilization elsewhere in the world [e.g. through the destabilization of Southeast Asia that undermined the Japanese economy and financial system even more than it would otherwise have been] that now threatens and now soon makes much more likely that especially Japanese and European holders of US debt must cash it in to shore up their own ever more unstable instable economic and financial systems. The liabilities of the US to foreigners now equal two thirds of annual US GNP – and therefore can and will never be paid off. However any hick in rolling this debt over and over, can result in foreign attempts to get out as much money as they can – resulting in a crash of the dollar.

Another major consequence is that the US – and world! – economy is now in a bind from which it most probably can NOT extricate itself by resorting to Keynesian pump priming and much less to full scale macro-economic policy and support of the US and Western/Japanese economy, as the Carter and Reagan administrations did. Military Keynesianism, disguised as Friedman/Volker Monetarism and Laffer Curve Supply-Sideism, was begun by Carter in 1977 and put into high gear in 1979, when Carter the Fed was run by Carter appointee Paul Volker, who in October 1979 switched Fed monetary policy from high money creation / low interest price thereof to attempted low money creation / high interest [ to 20 percent monetary! ] to rescue the dollar from its 1970s tumble and attract foreign capital to the poor US. At the same time, Carter began Military Keynesianism in June 1979., which was then escalated further by President Reagan In that they then succeeded..

It is highly unlikely however that analogous policies could succeed again now. The US would need to invoke the same re-flationary policy again for itself and its allies, now. but it can not do so! The Fed has already lowered the interest rate so far that it cannot go much lower and is not likely to stimulate investment by doing so. On the other hand, raising the interest rate to continue to attract funds from abroad would risk choking off all domestic investment and working capital. Brazil tried that, admittedly with extravagant monetary interest rates at 60 percent to attract foreign capital, and ruined its domestic economy.

The US may [should? must ??] now attempt a repeat performance of the 1980s to spend itself and its allies [now minus Japan but plus Russia?] out of the present and much deeper world recession and threatening globe encompassing depression. The US would then again have to resort to massive Keynesian deficit [ using September 11 as a pretext for probably military] RE-flationary spending as the locomotive to pull the rest of the world out of its economic doldrums. However, the US is already the world consumer of last resort, but it can be so with the savings, investments and cheap imports from abroad, which themselves form part of the global economic problem.

Moreover, to settle its now enormous and ever growing foreign debt, the US may chose also to resort to IN-flationary reduction of the burden to itself of that debt and its also ever growing foreign debt service. But even the latter could – in contrast to the above summarized previous period- NOT avoid generating a further SUPER trade balance particularly if market demand falls further and pressure increases abroad to export to the US demand/er of last resort. But this time, there will be NO capital inflows from abroad to rescue the US economy. On the contrary, the now downward pressure to devalue the US dollar against other currencies would spark a

capital flight from the US, both from US Government bonds and from Wall Street where significant stock price declines generate further price declines and deflation in world terms even if the US attempts domestic inflation.

The price of oil is yet another fly in the political economic ointment, whose dimension and importance is inversely proportional to the health or illness of the ointment itself. And today that is quite sick and deteriorating already. The world price of oil has always been a two edged sword whose double cutting edges can be de-sharpened with the help of successful alternative economic and price policies. On the one hand, oil producing economies and states and their interests need a minimum price floor to produce and sell their oil instead of leaving it underground and also postponing further oil productive investment while waiting for better times. The US is a high cost oil producer. A high oil price is economically and politically essential also for important states like Russia, Iran and especially Saudi Arabia, as well as US oil interests. On the other hand, a low price of oil is good for oil importing countries, their consumers including oil consuming producers of other products, and supports state macro economic policy, eg in the US, where low oil prices are both good politics and good for the economy. These days, the high/low price line between the two seems to be around US$ 20 a barrel – at the present value price of the dollar! But nobody seems to be able to rig the price of oil at that level. The present conflict, long since no longer within OPEC, is primarily between OPEC that now sells only about 30 to 40 percent of the world supply and other producers that supply 60 percent, today especially Russia but also including the US itself as both a significant producer and a major market, although that is increasingly shifting to East Asia. Recession in both and the resultant decline in demand for oil drags its price downward. US strategy and wars against Afghanistan and Iraq. is to gain as much CONTROL of oil as it can and for now to share as little of it as it must with Russia in Central Asia, Caspian Sea and Persian Gulf regions. And that control, even if it cannot control the price of oil, is to be used as an important geo-political economic lever to manipulate against US oil import dependent allies in Europe and Japan and ultimately its strategic enemy in China.

For US Keynesian spending re-flation as well as in-flation can no longer put the floor under the price of oil needed today and tomorrow. No policy, but only recovery generated world market demand I- and/or limitations in the supply of oil -can now provide a floor to and prevent a further fall in the price of oil – and its deflationary pull on other prices. And further deflation in turn will increase the burden of the already vastly over-indebted US, Russian and East Asian, not to mention some European and Third World, economies.

Thus the political economy of oil is likely to add to further deflationary pressure. That would – indeed already does – again significantly weaken oil export dependent Russia. But this time it would also weaken US oil interests and their partners abr