PART III:
“Humanitarian Wars are Good for Business”.... Speculators Applaud....
The establishment of a no fly zone is on the drawing board of the Pentagon. Saudi Arabia and the Gulf states, supported by the Arab League and the Organization for African Unity (OUA) have labelled Libya as “An Unfriendly Nation”.
The scenario envisaged by Washington is to involve Saudi Arabia and the Gulf states in aerial attacks directed against Libya. They have also called on Saudi Arabia to supply opposition forces with weapons.
Reports confirm that NATO special forces and military advisers to the rebellion are on the ground in Eastern Libya. The geopolitical and economic implications of a US-NATO led military intervention directed against Libya are far-reaching.
Libya is among the World’s largest oil economies with approximately 3.5% of global oil reserves, more than twice those of the US. A war on Libya would have an immediate impact on the price of crude oil. The latter has risen by 18 percent since the beginning of the insurrection in Libya. It currently stands at $104.42 a barrel for April delivery on the New York Mercantile Exchange, its highest level since the financial crash of September 2008. Since August 2010, the price of crude oil has risen from 75.93 a barrel to 104.42 (March 2011), a hefty increase of 37.5 percent. (See Table below)
Value
Aug-10
75.93
Sep-10
76.14
Oct-10
81.72
Nov-10
84.56
Dec-10
90.1
Jan-11
92.66
March 2011 Price for April Delivery 104. 42
Source indexmundi.com. Crude Oil (petroleum) - Monthly Price - Commodity Prices
These price hikes, which are already ongoing, would occur despite the abysmally low costs of Middle East oil. What this means is that powerful institutional speculators on Wall Street with links to the US military and intelligence establishment will cash in on billions of dollars in speculative gains not only in the oil market but also in the commodity and foreign exchange markets. This money is appropriated from households which must now pay a higher price for fuel. A “humanitarian war” would be “good for business”. It serves the interests of the institutional speculators; it contributes to a further process of appropriation of money wealth.
Financial institutions which had prior knowledge or intelligence of events in Egypt and Libya have already made billions of dollars in speculative gains in the futures and options markets for crude oil. These global financial and banking institutions, which “placed their bets” several months ago, have “a vested interest in war”. The greater the turmoil and disruption of the crude oil market, the greater the speculative gains. Short term speculative gains due to market volatility are also part of this process. Foreknowledge of the sequence of political or military events and how they affect markets as well as control and/or manipulation of financial news pertaining to these events are an essential part of the betting process.
In this regard we are dealing the with workings of the World’s commodity exchanges, the most important of which is the powerful CME Group created following the merger of the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBOT) and the New York Mercantile Exchange (NYMEX).
Political Rumors and Fake Information
The spreading of rumors and fake information is also a profitable undertaking particularly in relation to short-term movements of commodity markets:
...a rumour that Libya’s long-time ruler Muammar Gaddafi had been shot tore across the commodities market, sending US crude oil futures down more than two percent. Other rumours have had similar immediate and sweeping effects, even without real changes in actual oil production or reserves. The cause is oil speculators, such as hedge funds, who buy and sell commodities, profiting by betting on short-term price changes.
These traders are making money on quick movement, wagering on rumours and market blips. They are buying and quickly re-selling commodities they have no intention of actually holding or using. Their opportunism is once again hitting working-class families across the country, increasing the burden on small business owners and farmers, ... (Rep. Joe Courtney: Market Speculators and the Real Cost of Oil, Huffington Post, March 16, 2011)
Economic Sanctions
Economic sanctions have been imposed by the US on Libya thereby creating havoc in the supply of Libyan oil to the European Union. These sanctions are indirectly targeted at the European Union. They contribute to weakening Italy and France, which are heavily dependent on Libyan oil. Libyan oil trade has virtually been paralysed as banks decline to clear payments in dollars due to US sanctions (Reuters, February 8, 2011) “The move follows a decision by major US oil firms to halt trade with Libya and makes it almost impossible for European firms to buy Libyan oil and supply refineries in countries such as France and Italy.
Economic Impacts of a US-NATO Military Operation
If this military operation is carried out, oil prices will spiral, contributing to further exacerbating the economic crisis with devastating social consequences, particularly in the Europe Union, which is heavily dependent on Libyan oil. The hikes in oil prices contribute to increased poverty, they also contribute to a concurrent increase in global food prices (which are also the object of speculative activity on the commodity exchanges) and more generally in the cost of living Worldwide. i.e the consumer price index.
Month
246.25
271.69
270.29
274.37
306.99
326.54
US$ per metric ton
175.6
205.84
235.7
236.44
251.02
265.29
Maize (corn), US No. 2 Yellow, FOB Gulf of Mexico, U.S. price, US$ per metric ton
Wheat, No.1 Hard Red Winter, ordinary protein, FOB Gulf of Mexico, US$ per metric ton
Maize (corn) - Monthly Price - Commodity Prices
Wheat - Monthly Price - Commodity Prices
Source indexmundi.com
The fuel price hikes will in turn have a significant impact on the costs of transportation, international freight and air travel. At the height of a global economic crisis, it will further undermine both domestic and international trade. All this is known and understood by the major economic actors including the politicians and the speculators. The politicians follow the guidelines set by Wall Street, which largely call the shots on government financial policy.
Michel Chossudovsky is an award-winning author, Professor of Economics (Emeritus) at the University of Ottawa and Director of the Centre for Research on Globalization (CRG), Montreal. He is the author of The Globalization of Poverty and The New World Order (2003) and America’s “War on Terrorism” (2005). He is also a contributor to the Encyclopaedia Britannica. His writings have been published in more than twenty languages.
© Copyright Michel Chossudovsky, Global Research, 2011; courtesy GlobalResearch.ca
[www.globalresearch.ca/index.php?context=va&aid=23741]
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