Perdana Global Peace Forum

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Perdana Global Peace Forum

• William Clark, USA
• December 16, 2005

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Part I Energy and War

• If you know the history of oil during the 20th
  century, then you know 90 of the history.

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War and Peace in the 20th century

• Contemporary Warfare has traditionally involved
  two elements
• Access to Natural Resources
• Economics
• Oil, War, and Power 90 years of conflict
• 1914 1918 WWI
• 1939 1945 WWII
• 1991 Gulf War
• 9/11/2001 - Afghanistan
• 2003 Invasion of Iraq
• The Prize, A Century of War,
• by Daniel Yergin by William Engdahl

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The defining issue

• Energy will be one of the defining issues of
  this century. One thing is clear the era of
  easy oil is over. What we do next will determine
  how well we meet the energy needs of the entire
  world in this century and beyondWe can wait
  until a crisis forces us to do something. Or we
  can commit to working together, and start by
  asking tough questions
• - Dave OReilly, CEO of Chevron, July 2005

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Energy Insecurity Geopolitical
Instability

• The peak
• in global
• oil discovery
• occurred
• in 1964.
• The peak
• In global oil
• production
• is imminent.

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Defining the problem Global oil production is
now flat out

• Light crude oil peaked between 2000-2004
• OPEC newsletter, August 2005
• The 2nd and 3rd largest oil fields in the world
  went into decline during 2005
• Burgan (Kuwait) and Cantarell (Mexico)
• The whole world right now is producing petroleum
  at their maximum capacity. We're at the doorway
  of a major energy crisis worldwideWe'll have to
  develop other resources such as wind, solar and
  nuclear energy naturally for peaceful
  purposes.
• - Venezuela President Hugo Chavez, Oct. 2005

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Global Peak Oil The Millennium's Greatest
Challenge
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Oil Imperialism Transitioning from covert
operations to overt warfare

• Vice President Cheneys 2001 Energy Plan calls
  for the US to find an additional 7.5 mb/d of oil
  supply by 2020 to meet projected demand.
• Sources include ME, Russia, Caspian states,
  West Africa
• Technical data on global oil discovery and oil
  production indicates that 7.5 mb/d of additional
  oil supply may only be possible under one ominous
  scenario by strategically using the US military
  to divert oil exports from the Middle East,
  Caspian region, West Africa, and Latin America
  from going into China, India, and the European
  Union (EU).

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The thrust is clear

• Bush and Blair have been making plans for the
  day when oil production peaks, by seeking to
  secure the reserves of other nations.
• - George Monbiot, Bottom of the Barrel,
  Guardian, 2003
• The thrust is clear Once it has seized the oil
  wells of west Asia, the US will determine not
  only which firms would bag the deals, not only
  the currency in which oil trade would be
  denominated, not only the price of oil on the
  international market, but even the destination of
  the oil.
• Behind the Invasion of Iraq, Aspects of
  Indias Economy, 2002

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Part II Petrodollar Warfare

• The unspoken oil currency war between the dollar
  and the euro

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Overview of the Global Economy

• US enjoyed dollar supremacy post-WWII
• Bretton Woods Agreement 1944 1971
• IMF World Bank founded, dollar as good as
  gold
• Petrodollar Recycling 1974 to present day
• Dollar transitioned to as good as black gold
• US structural imbalances
• Trade Account deficit 2004 665 Billion
• Budget Deficit 2004 412 Billion
• Global economy has become unbalanced
• State of Extreme Disequilibrium
• Richard Duncan, author of The Dollar Crisis

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Petrodollar Recycling

• After the collapse of Bretton Woods in 1971, the
  US had to use state coercion to ensure that oil
  remained priced in dollars only and that
  petrodollars were recycled back to the Federal
  Reserve in accordance with US objectives in the
  1970s and 80s.
• Petrodollar recycling drives international
  demand/liquidity value of the dollar, allows the
  Federal Reserve to effortlessly create credit,
  and underpins the dollars status as the World
  Reserve Currency.

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an unfriendly act

• A switch away from the oil-dollar nexus would be
  (of) major strategic and political significance,
  said a senior official with an international
  economic agency who declined to be
  identified.(the senior official said) This
  would be considered by the U.S. as an unfriendly
  act.
• OPEC Boost Euro Deposits Over Dollars,
  Washington Times, December 8, 2004

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Growing petrocurrency conflict

• 1999 Euro is launched
• 2000 Iraq moves to petroeuros
• 2001 EU calls on OPEC non-OPEC to prepare
  the way for payment for oil in euros
• 2003 Post-Invasion Iraq reconverted back to
  petrodollars (UN Resolution 1483)
• 2003 Iran moved to petroeuro payments
• 2003 Russia publicly discusses petroeuros
• 2002-2004 OPEC sharply reduced dollar holdings
  (75 to 61.5)
• 2006 Iranian Oil Bourse (IOB) to open utilizing
  euro-denominated pricing

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The real clash of civilizations is over global
currency supremacy

• Until the advent of the euro in 1999, there was
  simply no potential challenge to dollar hegemony
  in world trade.
• Maintaining this is a strategic imperative if
  America seeks global dominance.
• Dollar hegemony is in many respects more
  important than US military superiority.
• Petrodollar recycling is now under threat from
  the euro, peak oil is approaching, and Iraq was
  the first proxy war in this high-stakes game of
  geopolitical power.

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War or Peace?

• If you want to rule the world, you need to
  control oil. All the oil. Anywhere.
• - Michel Collon, Monopoly (2000)
• The conclusion is clear if we do not
  immediately plan to make the switch to renewable
  energy faster, and backed by far greater
  investment than currently envisaged then
  civilisation faces the sharpest and perhaps most
  violent dislocation in recent history.
• Michael Meacher, former member of British
  Parliament, UK Environment Minister, 1997 to 2003
  

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Multilateral Accords to promote peace in the 21st
century

• Global Monetary Reform
• Multiple oil-transaction currencies
• basket of currencies - dollar, euro, yen,
  and ultimately renminbi (or yenminbi?)
• Global Energy Reform
• Oil Depletion Protocol (ASPO)
• International Consortium of G8 China India to
  develop alternative transport fuels
• Peak Oil Peace Party?
• Demand side strategies advocate of more
  localized trade, localized food production

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The significant problems we face can not be
solved at the same level of thinking we were at
when we created them. Albert Einstein

• Thank You