> Chapter 1

"A CENTURY OF WAR"

(By F. William Engdahl. Pub. 1993 by Paul & Co., c/o PCS Data Processing, Inc., 360 W. 31st St., New York, NY 10001. Tel. (212) 564-3730, Fax (212) 971-7200.)

We start with this book because it explicitly defines the mechanics behind the major disruptions which have impacted us all during this last century. These events include World War 1, the 1929 stock market crash and subsequent depression, the rise of Hitler and the subsequent World War 2, the Marshall Plan and subsequent never-ending "foreign aid," the Vietnamese War and LBJ's Great Society, followed in quick order by Nixon's separation of the dollar from gold and the 1974 "Oil Shock," the creation of the massive Third World debt, the buildup of the massive U.S. national debt in the 1980's, and last but not least, George Bush's Gulf War. Omitting Mr. Engdahl's documentation and his gentle entry into his subject, he lays out the following picture:

The wars and other horrors listed above were derived from Great Britain's secret strategies to control gold, the seas, and the world's raw materials, most particularly including, after the turn of the century, petroleum, the new "black gold" which enabled modem warfare to be waged. In the several decades prior to World War 1, the furtherance of this basic policy was in the hands of Cecil Rhodes, Alfred Lord Milner, and others, who formed a secret group called the "Round Table." This group, as recorded in its own writings, was specifically anti-German and pro-Empire. It viewed the economic strengthening of Germany in the late 1800's with alarm, and the German effort after the turn of the century to build a Baghdad-to-Berlin railway as a direct military threat, since it would provide direct German access to the Middle East's oil fields, bypassing the sea routes controlled by the British. Britain had earlier sealed off extension of the railway to the Persian Gulf by the forcible establishment of Kuwait as a "British Protectorate" to be run by the Sabah family, as at present, preventing future Central European (i.e.., German) access to the southern oceans. The last northern link of the railway, also of concern, was in Serbia. But before that link could be finished, the Austrian heir-apparent was assassinated by a Serb, to which Austria responded, starting World War 1 by bringing in Germany, France and Russia by treaty with either Serbia or Austria, and also Britain, via a secret treaty which it had signed with France only three months before the assassination.

The war produced between 16 and 20 million deaths, mostly civilians, including a half-million British deaths. Germany was successfully cut off from Russian and Middle-Eastern oil, and the war was essentially won with Rockefeller oil from America. Following the war, Britain and France carved up the Middle East (by prior secret wartime agreement), Britain obtaining "protectorate" status over Palestine (Israel) and the important oil-producing areas, especially Iraq. Their protectorate over Palestine set the stage for their planned later creation in that area of a Jewish homeland, which intent was proclaimed to British Zionists in a letter from Britain's Foreign Secretary Arthur Balfour to Walter Lord Rothschild, representing the English Federation of Zionists. The letter became known as the Balfour Declaration, which was not implemented until after World War 2. The British intent was to project their control into the oil-laden Middle East by creating a Jewish-dominated Palestine, beholden to Britain for survival, and surrounded by a pack of squabbling, balkanized Arab states.

During the Versailles Treaty talks after the war, Round Table members Lionel Curtis, Balfour, Milner, and others, formed an above-ground group called the Royal Institute of International Affairs for the purpose of coordinating Anglo-American cooperative efforts. They decided also to form an American branch, but gave it a different name in order to obscure its antecedents. Thus was born the Council on Foreign Relations, originally staffed by J.P. Morgan men and financed by Morgan money. The CFR, of course, is still very much with us.

The Rockefeller and British-controlled oil companies struggled after the war over control of world-wide oil resources. Becoming tired of such competition by the late 20's, they sent representatives to a meeting in Achnacarry, Scotland to work out an arrangement for cooperating rather than competing. Out of this came the secret "Achnacarry Agreement" of 1928, defining market shares and geographic divisions and setting world cartel prices. The seven major companies in the cartel, known as the "Seven Sisters," were Esso (Standard of N.J.), Mobil (Standard of N.Y.), Gulf Oil, Texaco, Chevron (Standard of Calif.), and the two British companies Royal Dutch Shell and the Anglo-Persian Oil Company (later named British Petroleum). These folks remain today the real cartel, and not the squabbling Arabs in OPEC. They agreed to purchase, or deal even more inhospitably with, any company outside the cartel if it got big enough to be of concern.

Montagu Norman, the Governor of the Bank of England, and without doubt the world's most influential banker, precipitated the U.S. stock market crash by his secret request to George Harrison, the Governor of the New York Federal Reserve Bank, to end the American post-war inflation (which the British had earlier "requested") by raising U.S. interest rates and restricting credit. The stock market crash and the subsequent Great Depression followed. (These financial events are covered in a great deal more detail in "The Creature From Jekyll Island," reviewed below.)

Britain was also largely responsible for saddling Germany with unpayable war debts, and then denying Germany any reasonable possibility of organizing to pay them off. The German reparations debt amounted to 132 billion gold marks, with the unpaid balance to accumulate at 6% annual interest. Germany was prostrate, and even British experts acknowledged the debt to be so huge as to be unpayable. Germany signed the agreement, however, under the pain, if they refused, of the military occupation of the Ruhr, the engine of their economy.

But then Germany's Foreign minister Walther Rathenau worked out, signed, and announced, in April 1922, the bilateral Rapallo Treaty with the Soviet Union, in which the Soviets agreed to forgive reparations payments due it in return for German agreement to sell it industrial technology. The British, fearing the Russian development of the Baku oil fields without them, and to the potential benefit of Germany, protested that the accord had been negotiated "behind their backs." Two months later, Rathenau was mysteriously assassinated, and any hope for German economic stability was lost. The German Mark then began its famous fall. In December 1922, the Mark had fallen to 7,592 to the dollar. Germany was declared in default of her reparations payments on January 9, 1923, and two days later French military forces occupied the Ruhr. By November, the Mark was trading at 750 billion Marks to the dollar, and the savings of the entire German population were destroyed, substantially wiping out their entire middle class.

The political upshot ultimately affected the whole world. The Versailles payment plan was replaced by the Dawes Plan, created by the Anglo-American banking community, which rescheduled the German reparations payments. Then, through a series of political maneuvers and fortuitous accidents and other deaths, a cooperative German banker named Hjalmar Schacht, a long-time correspondent with the Bank of England's Montagu Norman, was elevated to the position of President of the Reichsbank. Reparations continued from 1924 until the 1929 stock market crash, which dried up credit flowing into Germany and then out again in reparation payments. The German economy once again collapsed.

Then, most astonishing of all, after Hitler came to power in 1933, Schacht became Hitler's Minister of Economics and was also reappointed President of the Reichsbank. As soon as Hitler's power was consolidated, credits immediately began to flow from Montagu Norman's Bank of England to Schacht and the Hitler government. Schacht's support of Hitler is shown to go back to around 1926. Many others in the close-knit British ruling class were involved, including Round Table figures, oil executives, and even Edward VIII, King of England, soon to abdicate and become Duke of Windsor. But, I can hear you say, How is it possible? Why in the world... ? Years after World War 2, with its millions of deaths and the near demolition of England and the whole British Empire, Mr. Engdahl quotes a conversation with Colonel David Stirling, the founder of Britain's elite Special Air Services, as follows: "The greatest mistake we British made was to think we could play the German Empire against the Russian Empire, and have them bleed one another to death."

The British, finding themselves after the war to be exhausted, broke, and with a worn out industrial system, decided that their salvation lay in long-term support by the U.S. To that end, they set about to convince Americans that a "special relationship" existed between the two countries, justifying such long-term American aid. To help solidify this relationship, and to involve the U.S. in helping to bring about British foreign policy objectives, Britain "helped" the U.S. with the creation of a formal U.S. intelligence network. The CIA which emerged was nothing more than a renamed extension of the wartime OSS, which was itself headquartered in the London offices of the British intelligence services. Two of the many tragic consequences of this secret arrangement are described below, involving the countries of Iran and Italy.

After the war, Iran's leader Mohammed Mossadegh managed to expel wartime troops of Britain and Russia, and then attempted to renegotiate the terms of the British monopoly oil concession which had been in place since 1902. Britain refused, and Mossadegh, becoming Prime Minister in April 1951, got a bill through the Iranian parliament to nationalize, with fair compensation, the Anglo-Iranian Oil Company. In response, Britain sent in their navy and imposed an embargo against all Iranian oil shipments. Feeling the financial impact, Mossadegh took his case first to the UN, which did nothing, and then to the U.S. State Department, which advised him to appoint Britain's Royal Dutch Shell as Iran's oil management company. Getting the message, Mossadegh next took his case to the World Court, which, in July 1952, denied British jurisdiction, which Britain ignored. Cutting to the chase, British and American intelligence forces (i.e., the CIA) organized a coup in August 1953, forced Mossadegh's arrest, and installed the young Reza Shah Pahlevi in his place. The sanctions were then lifted, and the British oil monopoly was preserved. The new Shah was in turn deposed some 25 years later by the same forces that put him in power.

In post-war Italy, the non-communist wartime resistance leader Enrico Mattei rose to the leadership of the moribund oil entity known as AGIP. He energetically set about to find oil and gas on Italian soil, and was successful. Success led to further success, until he attracted the negative attention of the Seven Sisters, whose dominance he was determined to avoid. He managed first to negotiate a separate deal with the new Shah of Iran for oil from lands outside of the British concession areas. Oil was actually delivered under this contract, helping to initiate a viable Italian post-war recovery. Then came the shocker. He negotiated another deal with the Soviets for oil from the Baku fields to be paid for with large steel pipe, enabling the Soviets to build a pipeline into Central Europe, threatening the monopoly of the Seven Sisters in that region. A steel works to roll the pipe was completed in northern Italy, but about a month after it went into operation, in October 1962, Enrico Mattei was killed in a suspicious airplane accident, immediately following which the Rome CIA Station Chief left Italy for the U.S. Italy lost the driving force behind its recovery, and the Seven Sisters again triumphed.

As an epilogue, Engdahl notes that Mattei was at the time of his death planning to meet with President Kennedy, who was then urging the U.S. oil companies to negotiate with Mattei. Kennedy, of course, was himself assassinated about a year later, with trails of evidence also leading to the doors of the CIA. (We'll say much more about that in our review of Final Judgment, by Michael Collins Piper.)

America's present economic decline started in the late 50's as European and Japanese productivity, with their new factories and machinery, began to overtake that of the U.S., whose industrial base dated back to the 40's. The decline was greatly exacerbated by three developments: the flow of investment funds overseas, the start of the Vietnamese War, and LBJ's Great Society. President Kennedy tried to head off the first two of these, and can't really be blamed for the third. Seeing American investment banks channeling funds abroad in response to the higher profits available there, instead of keeping the funds at home to invest in modernized factories and refurbished infrastructure, he pushed for an Interest Equalization Tax on American funds invested abroad. He was assassinated, however, and the version which passed in the following year had been gutted by the Eastern financial community by exempting Canada, through which the investment funds then merrily flowed in the same total amounts as before. JFK was also moving in the direction of ending U.S. involvement in the Vietnam conflict, a policy shift "confirmed by Arthur Schlesinger" says Mr. Engdahl, and in accord with advice given to Kennedy by President de Gaulle of France. President Kennedy didn't live to bring this about either, and following his death, LBJ expanded Vietnam from a CIA technical advisory operation to a full-scale war. Worse, it was a no-win war, in accordance with the deliberate strategy of LBJ's Pentagon and National Security advisors. Adding in LBJ's Great Society programs, federal deficits ballooned, mostly financed by printed dollars graciously created by the Federal Reserve. Our economic decline was thus started down a path from which we have not yet recovered.

The drain on the economy during the 60's decade led to the Fed's reduction of interest rates in an effort to "stimulate" the economy, but it brought instead an outflow of capital for better returns elsewhere, and the increased receipt of foreign dollars for conversion into gold. Instead of devaluing the dollar to about $70 an ounce, as urged by hard-money proponents such as Jacques Rueff, de Gaulle's former economic advisor, Nixon instead followed the strategy of his own advisors, including budget advisor George Schultz, Treasury's Paul Volcker, and National Security Advisor Henry Kissing. Their advice was to stay the course, which he did until the gold outflow became so alarming that, on August 15, 1971, he followed the new advice which they then offered him, which was to terminate the redeemability of foreign dollars into gold. This was the ultimate goal of Edmond de Rothschild, Sir Siegmund Warburg, and the other owners of the London merchant banks, who were, in fact, the real architects of the American policy. All ties of world currencies to a metallic base were thereby broken, and the fate of such currencies delivered into the hands of central bankers and their prostituted politicians.

After 1971, a White House policy was initiated, under the effective control of Henry Kissinger, to control the economies of the nations and to reduce their populations, rather than to facilitate technology transfer and industrial growth. The strategy was to force the price of the cartelized world oil up by about a factor of four, recover the Arab oil receipts back into the British and American central banks, and lend them to the Third World to acquire control over those countries. To this end, the Bilderberg group, containing the world's top financial and political insiders, met privately in Saltsjoebaden, Sweden in May 1973 to discuss how the coming flood of oil dollars was to be handled. Mr. Engdahl lists many of the participants, including Kissinger, George Ball, David Rockefeller, and others. Then in October of that same year, the "Yom Kippur" war broke out, with Syria and Egypt invading Israel, with the U.S. supporting Israel, and the British staying demurely neutral. Kissinger performed his "shuttle diplomacy" among the participants, to assure the war followed the script previously worked out in Sweden. The Arab OPEC countries declared an embargo on all oil shipments to the U.S. and mainland Europe (but not Britain), and started cranking up the price, which rose by the scheduled factor of four by the end of the year. Nixon, drowning in the Watergate affair, tried to get the Treasury to find a way to get the Arabs to reduce their prices, but was rebuffed, and advised to support the "recycling" of the oil dollars at the current prices. Nixon agreed, and the deed was done. The great bulk of the petro-dollars were repatriated in purchasing U.S. government debt and in deposit accounts in Chase Manhattan, Citibank, et al. From there they were loaned to the Third World, which could not otherwise buy the fuel they needed to survive, whence many of those countries became enslaved to the bankers, and forced to follow their edicts on how to run their countries. Engdahl supplies lots more of the ghastly details.

Next to hit the economies of the world was the "Green" movement, or, as known in the U.S., environmentalism. Was it all one of those natural, spontaneous events in history, like an asteroid collision? Hardly. The movement on limiting industrial growth and responding to environmental threats was orchestrated by the same Anglo-American oil and financial interests that produced the oil shock. (But why? Stay with us.) For example, Robert Anderson, head of Atlantic Richfield Oil Co., and Bilderberg participant, helped fund Friends of the Earth, which, among other things, helped bring about the fall of the Australian government of Gough Whitlam in order to stop an Australian contract for supplying uranium to Japan for their nuclear power program. Anderson also created the Aspen Institute, which worked diligently to stop the developing nuclear power program in the U.S. The institute's board was peopled with board members from most if not all of the Seven Sisters. Another actor was McGeorge Bundy's Ford Foundation, whose operatives extended their reach into Germany to try to stop Germany's attempt to attain energy independence via nuclear power.

But why the effort to slow industrial growth? Engdahl says that American officials in the mid 70's openly claimed in news conferences that they were "neo-Malthusians." Malthus, says Engdahl, was an English clergyman who, in 1798, wrote an essay claiming that human populations expanded geometrically, while their means of subsistence expanded only linearly. Hence, populations must be limited, and, if necessary, governments should enhance the operations of nature to produce the needed mortality. Consistent with such pseudo-science, Henry Kissinger produced, in April 1974, the classified National Security Council Study Memorandum 200 (NSSM 200), directed to Washington high officialdom, defining a program aimed at population reduction in Third World countries possessing needed raw materials, since growing populations with aspirations for a better standard of living give rise to high prices for such materials. Kissinger named 13 target countries for population control, including Brazil, India, Egypt, Mexico, Ethiopia, Columbia, and others. (But what was the real reason for playing God in this way? You'll have to stay tuned just a little longer.)

The new "petro-dollar order" proceeded apace during the remainder of the 70's decade, but not without recognition and resistance by those most impacted, and the suppression of that resistance by the oil and banking elites. Most of the Third World, including the bulk of South America, Africa, and the Asian underbelly, unable to afford the oil they needed, found not only their industrial development stopped, but even food purchases curtailed, and starvation threatening. Far from living standards continuing the growth begun during the 50's and 60's, many of these countries were being pushed back to a condition of bare subsistence. A coalition of "Unaligned Countries" attempted to break free and deal independently with OPEC, with the help of Central European countries showing a willingness to help, including Italy and West Germany. Kissinger and company managed to isolate and pick them off one by one, however. Bonn was allegedly threatened with the pullout of U.S. troops if it persisted, and it backed off. Italy thereupon did likewise. Indira Gandhi in India was faced with political defections and a new opposition party and lost her next election. Mrs. Bandaranaike of Sri Lanka, one of the leaders of the coalition, encountered a wave of strikes and riots by a "Trotskyite" party having reported intimate ties to the Anglo-American intelligence services, and was forced out of office. Kissinger and company momentarily remained ascendant.

In 1978, the European Community, led by Germany and France, created the beginnings of the EMS, the European Monetary System, as a result of policy disagreements with the Anglo-Americans. The EC and the EMS sought independent ties with the Arab countries, offering them help in establishing nuclear power facilities and other technology, in return for long-term oil supply agreements. London opposed these efforts at every turn, refused to join or cooperate with the EMS, and decided that more shocks were needed to assure the ongoing primacy of the petro-dollar system. This time, President Carter, at the behest of advisors George Ball and Zbigniew Brzezinski, dropped U.S. support of the Shah of Iran, who was negotiating with the EC countries for nuclear power plants. Support was transferred to the Islamic fundamentalist Ayatollah Khomeini, and a coup was mounted deposing the Shah, whom the same CIA and related intelligence forces had installed by coup some 25 years earlier. The Khomeini regime canceled the nuclear development plans, and cut off oil exports to the world. World prices skyrocketed to around $40 per barrel, and the second great oil shock of the 70's was underway.

Immediately thereafter, Paul Volcker, Nixon's 1971 architect of closing the gold window, was appointed Federal Reserve Chairman by President Carter. Gold was then changing hands at about $400 per ounce, and rising rapidly. To stop the world from dumping their dollars to buy gold, and to restore the dollar to its post-war status as the world's most sought after currency, Volcker started cranking up U.S. interest rates, reaching an incredible 20% in just a few weeks. Gold prices peaked at about $800 per ounce, and then retreated toward present levels. Interest rates stayed high for a short time, and then were gradually reduced over a period of years to more normal levels. The Anglo-American Establishment had momentarily won again.

The cost, however, was incredible, particularly to the Third World. But even in the U.S. any investment which took more than four or five years to complete was financially impossible with interest rates at 17 to 20 percent. Thus long-term government-funded infrastructure was deeply cut, as were similar long-term private projects, most particularly including nuclear power plant construction. Dozens of such contracts were canceled, and no new domestic contracts have been signed since. In the Third World, however, not only did the purchase of nuclear power plants become out of the question, but bare survival was in doubt. Those countries had been suckered into floating interest rate contracts on their Eurodollar loans, and those interest rates had now gone out of sight. Oil costs were up 140% after the Iran Oil Shock, and the U.S. dollar itself, mandatorily required for making oil purchases, was now becoming more expensive against other currencies. The great bulk of the Third World was essentially instantaneously bankrupted. The Anglo-American banks magnanimously agreed to reschedule the debt owed them, provided target countries would agree to accept the terms laid down for their future economic operation by the International Monetary Fund, which became the collection agency for the big banks. Engdahl supplies lots of detail about this matter, in the process bringing in again such familiar names as George Schultz, Henry Kissinger, Citicorp, Chase Manhattan, Manufacturers Hanover, Lloyds Bank, etc. The IMF's terms were uniformly Malthusian to the core. By 1987, the amount then owed in principal and interest amounted in total to some $1.3 trillion dollars, a sum virtually impossible ever to repay, even under healthy economic conditions.

Engdahl concludes with a brief but fascinating look at the Reagan and Bush years, with its massive deficits, S&L bailouts, leveraged buyouts, etc., ending with the Saddam Hussein episode, about which much more will undoubtedly be written as more and more facts are uncovered by future historians. He does, however, outline some of the economic pressures that were brought to bear on Iraq following Saddam's refusal to denationalize Iraq's oil, pressures which eventually led to the Gulf War and the destruction of Iraq's infrastructure, including its rail system.

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