Jump to content

The Unsustainable Foreign Debt


Recommended Posts

Is the Iraq financially sustainable? I mean where are going to get the money to keep this going? This seems to think we will be forced to leave Iraq and the Middle East with our tails tucked between our legs. So much for securing the Caspian Basin. What do you guys think? How do we get out of this financial mess? We have forgiven so much foreign previously and given so much to rest of the world only to lose it all, even our land? Or, will the IMF forgive our debt? We are going to write-off this debt , right? Does anyone here have insight into this macro-economic subject? Will we continue the warfare-state to defend our currency "against all enemies foreign and domestic"?

There are, however, significant obstacles to this US strategy. Hitherto the US has used access to its enormous internal market to finance its growing worldwide military presence and particularly to ensure the continued flow of strategic commodities on to international markets, above all oil. America now has troops in 135 countries across the globe. But there are clear signs that this cannot be sustained indefinitely as US trade and finance deficits continue to grow remorselessly.

First, whilst the US is important to Japan, it is not obvious that Japan would accept being constrained within a dollar bloc. Rather its trading future lies increasingly with China.

Secondly, whilst European independence remains hostage on its energy flank and was prevented by two world wars from gaining dominance over Middle Eastern and Caspian oil, the expanded EU is now increasingly the subject of contest between the US and Russia for influence over this important geopolitical space. Moreover Franco-German opposition to the Iraq War, the deadlock over the French-Dutch referenda and the instability over the recent German elections suggest it is unlikely that Europe will offer a strong partnership.

Third, the US has even less leverage over China. Chinese imports from the US amount to only $4bn a year while Chinese exports to the US account for only 15pc of its total trading. American difficulties are now magnified by the rapid approach of peak oil, the expensive elongation of the Iraq conflict, and the unleashing of increasing opposition to the so-called War on Terror doctrine.

The latter was never anything more than a cover for gaining US control over the lion's share of the world's oil supplies plus a justification for expanding the US military hegemony. However, the strategy depended on integrating Iraq as swing producer into a US-UK-Israeli oil cartel, together with the privatisation under Western influence of the former Soviet oil industry. If this had succeeded, wider gains might have included containment of Chinese expansion and significant limitation of Japanese room for manoeuvre.

This strategy has become badly unstuck. The war in Iraq is as unwinnable as ever, the cost is becoming prohibitive, and the safeguarding of the pipeline transit routes through Iraq and Syria is probably unachievable. The prospect of the oil sector dominating the Russian national interest has been upstaged by Putin's takeover of Yukos.

The US exit from Iraq, which will be enforced under unfavourable conditions, will certainly not be the final day of reckoning. That will come when the US is compelled to make fundamental changes to its current financial-trade-political stance as being insupportable, as happened half a century earlier to Britain at Bretton Woods.

Michael Meacher, Labour MP for Oldham West and Royton, was Environment Minister from 1997 to 2003


Link to comment
Share on other sites


This topic is now archived and is closed to further replies.

  • Create New...