Instruction: Write an article about: Why does the US support Israel? A geopolitical analysis with economist Michael Hudson. Use the themes and topics represented by the tags provided as guidance for the content. It's not necessary to include the exact tag words in the article, but the article should reflect the essence and context of these tags.

Input: Benjamin Netanyahu, Iran, Israel, Michael Hudson, Middle East, oil, Saudi Arabia, West Asia

Output:
A geopolitical analysis of why the United States so strongly supports Israel: Economist Michael Hudson discusses with journalist Ben Norton.

Why does the United States so strongly support Israel? Geopolitical Economy Report editor Ben Norton interviewed economist Michael Hudson to explore the reasons why Israel is such an important part of U.S. foreign policy and Washington’s attempt to dominate not only the region of the Middle East, but the entire world.

Israel is an extension of U.S. geopolitical power in one of the most critically important regions of the world.
In fact, it was current U.S. President Joe Biden, back in 1986, when he was a senator, who famously said that, if Israel didn’t exist, the United States would have to invent it:
If we look at the Middle East, I think it’s about time we stop, those of us who support, as most of us do, Israel in this body, for apologizing for our support for Israel.
There is no apology to be made. None. It is the best $3 billion investment we make.
Were there not an Israel, the United States of America would have to invent an Israel to protect her interest in the region; the United States would have to go out and invent an Israel.
I am with my colleagues who are on the floor of the Foreign Relations Committee, and we worry at length about NATO; and we worry about the eastern flank of NATO, Greece and Turkey, and how important it is. They pale by comparison…
They pale by comparison in terms of the benefit that accrues to the United States of America.
It goes without saying that the so-called Middle East, or a better term is West Asia, has some of the world’s largest reserves of oil and gas, and the entire world’s economic infrastructure relies heavily on fossil fuels.
The planet is gradually moving toward new energy sources, which is needed to fight climate change, but fossil fuels are still absolutely critical to the global economy. And Washington’s goal has been to make sure that it can maintain steady prices in global oil and gas markets.
But this is about something much bigger than just oil and gas. The U.S. military’s stated policy since the 1990s, since the end of the Cold War and the overthrow of the Soviet Union, is to try to maintain control over every region of the world.
This was stated clearly in 1992 in the so-called Wolfowitz Doctrine. The U.S. National Security Council wrote:
[The United States’] goal is to preclude any hostile power from dominating a region critical to our interests, and also thereby to strengthen the barriers against the reemergence of a global threat to the interests of the U.S. and our allies. These regions include Europe, East Asia, the Middle East/Persian Gulf, and Latin America. Consolidated, nondemocratic control of the resources of such a critical region could generate a significant threat to our security.
Then, in 2004, the U.S. government published its National Military Strategy, in which Washington stressed that its goal was “Full Spectrum Dominance – the ability to control any situation or defeat any adversary across the range of military operations”.
Historically, when it came to West Asia, the U.S. relied on a so-called “twin pillar” strategy. The west pillar was Saudi Arabia, and the east pillar was Iran.
Until the 1979 revolution, Iran was governed by a shah, a dictatorial monarch who was backed by the United States and served U.S. interests in the region.
However, following the 1979 revolution, the U.S. lost one of the pillars of its twin pillar strategy, and Israel became increasingly important for the United States to maintain control over this crucially strategic region.
Many of the world’s top oil and gas producers are located in West Asia.

Furthermore, some of the most important trading routes on Earth go through this region.
It would be difficult to overstate how important Egypt’s Suez Canal is. It connects trade transiting from West Asia going into Europe, from the Red Sea into the Mediterranean.
Around 30% of all of the world’s shipping containers pass through the Suez Canal. That represents around 12% of the total global trade of all goods.
Then, directly south of the Suez Canal, where the Red Sea enters the Arabian Sea, there is a crucial geostrategic choke point known as the Bab al-Mandab Strait, off the coast of Yemen. There, more than 6 million barrels of oil pass through every single day.

Historically, the United States has tried to dominate this region in order to maintain control of energy supplies and ensure these global trade routes that the globalized capitalist system is built on.
As U.S. influence in the region has weakened in an increasingly multipolar world, Israel has become even more important for the United States to try to exercise hegemony in the region.
One can see this clearly in the discussions over oil prices in OPEC, the Organization of the Petroleum Exporting Countries, which has essentially been expanded to OPEC+ to include Russia.
Today, Saudi Arabia and Washington’s archenemy, Russia, play a key role in determining global oil prices.
Historically, Saudi Arabia was a loyal U.S. proxy, but Riyadh has increasingly pursued a more non-aligned foreign policy. And a very big reason for that is that China is now the biggest trading partner of many of the countries in the region.
For a decade, China has been the largest importer of oil and gas from the Persian Gulf, whereas U.S. oil imports peaked in 2005.
Due to massive expansion of production and the shale boom in the 2010s, the United States established itself as one of the top three oil producers on Earth, reducing its need for crude from Persian Gulf.
Meanwhile, through its global infrastructure project, the Belt and Road Initiative (BRI), China is moving the center of world trade back to Asia. And the “road” in BRI is a reference to the New Silk Road.

Can you guess which region is crucial in the New Silk Road and the BRI? Of course, it’s the Middle East – or, again, a better name is West Asia, and that term actually much better explains the geostrategic importance of this region, because it connects Asia to Europe.
This explains why the United States has been so desperate to try to challenge the Belt and Road with its own attempts to build new trade routes. In particular, the U.S. seeks to make a trade route going from India into the Persian Gulf, and then up through Israel.
So in all of these projects, Israel plays an important role, as an extension of U.S. imperial power in one of the most important regions of the world. That is why Biden said back in 1986 that if Israel didn’t exist, the U.S. would have to invent it.
That is also why Biden repeated this in a White House meeting with Israel’s President Isaac Herzog on October 27, 2022:
We’re also going to discuss the ironclad commitment – and this is, I’ll say this 5000 times in my career – the ironclad commitment the United States has to Israel, based on our principles, our ideas, our values; they’re the same values.
And I have often said, Mr. President [Herzog], if there were not an Israel, we would have to invent one.
And even as recently as October 18, 2023, Biden again repeated the same thing in a speech he made in Israel: “I have long said, if Israel didn’t exist, we’d have to invent it”.
In that speech in 2023, Biden traveled to Israel in order to support the country as it was carrying out a brutal bombing campaign in Gaza, and ethnically cleansing Palestinians as part of what legal experts around the world have referred to as a “textbook case of genocide”.
Top United Nations experts have warned that the Palestinian people are in danger of genocide by Israel.
And the United States has steadfastly been supporting Israel, because, as Joe Biden said, Israel is an extension of U.S. imperial power in West Asia, and if it didn’t exist, Washington would have to invent it.

Below follows a transcript of the interview that Geopolitical Economy Report editor Ben Norton conducted with economist Michael Hudson, author of many books, including Super Imperialism: The Economic Strategy of American Empire.
BEN NORTON: Michael, thanks for joining me today. We are speaking on November 9, and the latest death toll in the war in Gaza is that Israel has killed more than 10,000 Palestinians.
The United Nations has referred to Gaza as a “graveyard for children”. More than 4,000 children have been killed. About 40% of the casualties are children.
And the United States has continued to support Israel, not only diplomatically and politically, not only by, for instance, vetoing resolutions in the U.N. Security Council that call for a ceasefire, but furthermore, the U.S. has been sending billions of dollars to Israel.
Not only the $3.8 billion that the U.S. always gives to Israel every year in military aid, but additionally, tens of billions of dollars more.
So I am wondering if you could provide your analysis of why you think the U.S. is investing so many resources in supporting Israel while it is clearly committing war crimes.
MICHAEL HUDSON: Well, certainly it is supporting Israel, but it’s not supporting Israel because this is an altruistic act.
To the United States, Israel is its landed aircraft carrier in the Near East. Israel is the takeoff point for America to control the Near East.
And from the very time there was talk of creating an Israel, it was always that Israel was going to be an outpost, first of England, then of Russia, then of the United States in the Near East.
And I can give you an anecdote. Netanyahu’s main national security advisor for the last few years has been Uzi Arad. I worked at the Hudson Institute for about five years, 1972 to ‘76. And I worked very closely with Uzi there.
Uzi and I made two trips to Korea and Japan to talk about international finance. So we had a good chance to get to know each other. And on one trip, we stopped over from New York to San Francisco. And in San Francisco, there was a party or a gathering for people to meet us.
And one of the U.S. generals came over and slapped Uzi on the back and said, you’re our landed aircraft carrier over there. We love you.
Well, I could see Uzi feeling, tightening up and getting very embarrassed and didn’t really have anything to say. But the United States has always viewed Israel as just our foreign military base, not Israel.
So of course, it wants to secure this military base.
But when England first passed the act saying there should be in Israel the Balfour Declaration, it was because Britain wanted to control the Near East and its oil supplies.
When Israel was formed in the United Nations, the first country to recognize it was Stalin and Russia, who thought that Russians were going to have a major influence over Israel.
And then after that, of course, when Truman came in, the military immediately saw that America was replacing England as the chief of the Near East. And that was even after the fight, the overthrow of the Mossadegh government in Iran in 1953.
So from the United States, it’s not Israel’s wagging the American tail, just the opposite. You mentioned that America is supporting Israel. I don’t think America is supporting Israel at all, nor do most Israelis, nor do most Democrats.
America is supporting Netanyahu. It’s supporting Likud, not Israel. The majority of Israelis, certainly the non-religious Israelis, the core population of Israel since its founding, is opposing Likud and its policies.
And so what really is happening is that to the United States, Netanyahu is the Israeli version of Zelensky in the Ukraine.
And the advantage of having such an unpleasant, opportunist, and corrupt person as Netanyahu, who is under indictment for his bribery and corruption, is precisely that all of the attention now of the whole world that is so appalled by the attacks going on in Gaza, they’re not blaming the United States.
They’re blaming Israel. They’re blaming Netanyahu and Israel for it, when it’s the United States that has been sending plane load after plane load of bombs, of guns. There are 22,000 machine guns, automatic guns, that are banned for sale in the United States that America is sending for the settlers to use on the West Bank.
So there’s a pretense of good cop, bad cop. You have Mr. Blinken telling Netanyahu, when you bomb hospitals, make sure you do it according to the rules of war. And when you kill 100,000 Gaza children, make sure it’s all legal and in the war. And when you talk about ethnic cleansing and driving a population out, make sure that it’s all done legal.
Well, of course, it’s not the rules of war, and there are war crimes being committed, but the United States is pretending to tell Netanyahu and the Israeli government, use smaller bombs. Be more gentle when you bomb the children in the hospital, when actually this is all for show.
The United States is trying to say, well, we’re only there to give help to an ally. The whole world has noticed that the U.S. now has two aircraft carriers in the Mediterranean, right off the Near Eastern shore, and it has an atomic submarine near the Persian Gulf.
Why are they there? President Biden and Congress say we are not going to have American troops fighting Hamas in Gaza. We’re not going to get involved. Well, if the troops are not going to get involved, why are they there?
Well, we know what the American planes are doing. Yesterday, they bombed yet another airport and a fuel depot in Syria. They’re bombing Syria. And it’s very clear that they’re there not to protect Israel, but to fight Iran.
Again and again, every American newspaper, when it talks about Hamas, it says Hamas is acting on behalf of Iran. When it talks about Hezbollah, and is there going to be an intervention from Lebanon against northern Israel, they say Hezbollah are the Iranian puppets.
Any time they talk about any Near Eastern leader, it’s really that all these leaders are puppets of Iran, just like in Ukraine and Central Europe, they talk about Hungary and other countries as all being puppets of Putin in Russia.
Their focus, really – America isn’t trying to fight to protect Ukraine. It’s fighting for the last Ukrainian to be exhausted in what they’d hoped would be depleting Russia’s military. Well, it hasn’t worked.
Well, the same thing in Israel. If the United States is pushing Israel and Netanyahu to escalate, escalate, escalate, to do something that at a point is going to lead Nasrallah to finally say, okay, we can’t take it anymore. We’re coming in and helping rescue the Gazians and especially rescue the West Bank, where just as much fighting is taking place. We’re going to come in.
And that’s when the United States will then feel free to move not only against Lebanon, but all the way via Syria, Iraq, to Iran.
What we’re seeing in Gaza and the West Bank today is only the catalyst, the trigger for the fact that the neocons say we are never going to have a better chance than we have right now to conquer Iran.
So this is the point for the showdown, that if America is to control Near Eastern oil, and by controlling Near Eastern oil, by bringing it under the US control, it can control the energy imports of much of the world.
And therefore, this gives American diplomats the power to cut off oil and gas and to sanction any country that tries to go multipolar, any country that tries to resist US unipolar control.
BEN NORTON: Yeah, Michael, I think you’re really hitting such an important point, which is how this is one of the most geostrategic regions of the world, especially when it comes to hydrocarbons.
The entire global economy is still very heavily reliant on oil and gas, and especially considering the US is not part of OPEC, and especially now considering that OPEC has really expanded essentially to OPEC+ and now includes Russia.
That means that Saudi Arabia and Russia essentially can help control global oil prices. And we’ve seen this really, in fact, in the United States in the past few years with the rise of consumer price inflation.
We saw that the Biden administration was concerned about gas prices, in particular in the lead up to the midterm elections. And the Biden administration has been releasing a lot of oil from the strategic oil reserves of the United States.
And we can also see these kinds of statements in particular when we go back and look at the Bush administration. There are numerous people involved in the Bush administration and the so-called “War on Terror” who openly talked about how important it was for Washington to dominate this region.
And I’m really thinking of, in 2007, when the top US general and NATO commander Wesley Clark famously disclosed that the Bush administration had made plans to overthrow seven countries in five years. And those were countries in North Africa and West Asia.
Specifically, he revealed in an interview with journalist Amy Goodman on Democracy Now that Washington’s plans were to overthrow the governments of Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and finally Iran:
WESLEY CLARK: About 10 days after 9/11, I went through the Pentagon and I saw Secretary Rumsfeld and Deputy Secretary Wolfowitz. I went downstairs just to say hello to some of the people on the Joint Staff who used to work for me.
And one of the generals called me and he said, “Sir, you’ve got to come in and talk to me a second”.
I said, “Well, you’re too busy”. He said, “No, no”. He says, “We’ve made the decision; we’re going to war with Iraq”.
This was on or about the 20th of September. I said, “We’re going to war with Iraq, why?” He said, “I don’t know”. He said, “I guess they don’t know what else to do”.
So I said, “Well, did they find some information connecting Saddam to al-Qaeda?” He said, “No, no”. He says, “There’s nothing new that way. They’ve just made the decision to go to war with Iraq”.
He said, “I guess it’s like we don’t know what to do about terrorists, but we’ve got a good military and we can take down governments”.
And he said, “I guess if the only tool you have is a hammer, every problem has to look like a nail”.
So I came back to see him a few weeks later, and by that time we were bombing in Afghanistan.
I said, “Are we still going to war with Iraq?” And he said, “Oh, it’s worse than that”.
He said, he reached over on his desk, he picked up a piece of paper, and he said, “I just got this down from upstairs”, meaning the Secretary of Defense’s office today, and he said, “This is a memo that describes how we’re going to take out seven countries in five years, starting with Iraq and then Syria, Lebanon, Libya, Somalia, Sudan, and finishing off Iran”.
I said, “Is it classified?” He said, “Yes, sir”. I said, “Well, don’t show it to me”.
And I saw him a year or so ago, and I said, “You remember that?” And he said, “Sorry, I didn’t show you that memo! I didn’t show it to you!”
AMY GOODMAN: I’m sorry, what did you say his name was? (laughs)
WESLEY CLARK: I’m not going to give you his name. (laughs)
AMY GOODMAN: So go through the countries again.
WESLEY CLARK: Well, starting with Iraq, then Syria and Lebanon, then Libya, then Somalia and Sudan, and then back to Iran.
BEN NORTON: And since then, we of course saw the U.S. war on Iraq. We of course saw the proxy war in Syria that still goes on in many ways. The U.S. is occupying one-third of Syrian territory, including the oil rich areas.
And Trump himself, President Donald Trump, boasted in a 2020 interview with Fox News host Laura Ingraham that he was leaving U.S. troops in Syria to take the oil:
DONALD TRUMP: And then they say, “He left troops in Syria”. You know what I did? I left troops to take the oil. I took the oil. The only troops I have are taking the oil. They’re protecting the oil.
LAURA INGRAHAM: We’re not taking the oil. We’re not taking it.
DONALD TRUMP: Well, maybe we will, maybe we won’t.
LAURA INGRAHAM: They’re protecting the facilities.
DONALD TRUMP: I don’t know, maybe we should take it. But we have the oil. Right now, the United States has the oil.
So they say, “He left troops in Syria”. No, I got rid of all of them, other than we’re protecting the oil; we have the oil.
BEN NORTON: We also saw the U.S. impose sanctions on Lebanon, which contributed to hyperinflation and the destruction of the Lebanese economy. And that was largely because Hezbollah is part of the government, and the U.S. has been pressuring the Lebanese government to create a new government without Hezbollah.
We also saw, of course, that NATO destroyed the Libyan state in 2011. Somalia also has a failed state. And Sudan was divided in no small part thanks to the U.S. and Israel supporting South Sudan’s separatist movement on ethno-religious lines, using religious sectarianism.
So if you look at the list of countries that Wesley Clark named in 2006, the seven countries in five years, again, that was Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and finally Iran; the only country that really has been able to maintain state stability, that has not been completely devastated by the United States, is Iran.
Of course, it took longer than five years, but the U.S. was pretty successful. And of course Israel has played an important role in this U.S. goal to destabilize those governments in the region.
MICHAEL HUDSON: Well, let’s look and see how this was done. Remember after America was attacked on 9/11, there was a meeting at the White House, and everybody knew that the pilots were Saudi Arabians, and they knew that some of the pilots had been staying at the Saudi embassy in Los Angeles, I think, in the United States.
But after 9/11, there was a cabinet meeting, and Rumsfeld said to the people there, look and find any link you can get to Iraq, forget Saudi Arabia, no problem, Iraq is the key. And he directed them to find it, and 9/11 became the excuse for attacking not Saudi Arabia, but Iraq, and going right on with it.
Well, you needed a similar crisis in Libya. They said in Libya, there was some, I think, fundamentalists in the suburbs of one of the [cities], not the capital city, that were causing problems. And so you have to “protect” the innocent people from [Muammar Gadhafi], and you go in and grab all of their gold reserves, all of their money, and you take over the oil on behalf of France’s oil monopoly.
Well, this is the role of the fighting in Gaza today. Netanyahu’s fight against Gaza is being used as the excuse for America moving its warships there, its submarines, and bombing, along with Israel, the Syrian airport so that the Syrians are not able to move weapons or any kind of military support either to Lebanon, to the west, or Iran, to the east.
So it’s obvious that all of what we’re seeing is somehow to soften up public opinion for the fact that, well, just like we had to invade Iraq because of 9/11, we have to now finally fight and take out the oil refineries of Iran and their scientific institutes and any laboratories where they may be doing atomic research.
And Iran realizes this. Last week, the Iranian press TV said that their defense minister says that if there’s any attack on Iran, whether by Israel or by anyone else, the U.S. and its foreign bases are going to be hit hard.
Iran, Russia, China have all looked at the Gaza situation not as if it’s an Israeli action, but as if it’s the U.S. action. They all see exactly that it’s all about Iran, and the American press only says when it talks about Gaza or Hamas or Hezbollah or any other group, it’s always the Iranian tool so-and-so.
They’re demonizing Iran in the same way that the neocons have demonized Russia to prepare for America declaring an undeclared war against Iran. And they may even declare war.
Last night, on [November] 8, the Republicans had their presidential debate without Trump, and Nikki Haley said, you know, we’ve got to fight Iran, we’ve got to conquer it. And DeSantis of Florida said, yes, kill them all. He didn’t say who the them was. Was it Hamas? Was it everybody who lives in Gaza? Was it all of the Arabs in the Middle East?
And we’re really seeing something very much like the Crusades here. It’s a real fight for who is going to control energy, because, again, the key, if you can control the world’s flow of energy, you can do to the whole world what the United States did to Germany last year by blowing up the Nord Stream pipelines.
You can grind its industry to a halt, its chemical industry, its steelmaking industry, any of its energy-intensive industries, if countries do not agree to U.S. unipolar control. That’s why it wants to control these areas.
Well, the wildcard here is Saudi Arabia. Well, in two days, I think you’re going to have the Iranian president visit Saudi Arabia, and we’re going to see what’s going to happen.
But Saudi Arabia finds that while its role is key, Saudi Arabia could simply say we’re not going to export more oil until America pulls out of the Near East. But then all of Saudi Arabia’s monetary savings are invested in the U.S.
The United States is holding the world hostage, not only by controlling its oil and gas and energy, but by controlling its finance. It’s like you have your money in a mafia bank or in Bankman-Fried’s cryptocurrency mutual fund. They can do whatever they want with it.
So I think what would happen is it’s very unlikely that Saudi Arabia is ostensibly going to visibly break with the United States because the U.S. would hold it hostage.
But I think what it would do would be what has been talked about ever since the 1960s, when similar problems came with Iran. And Iran’s ace in the hole has always been the ability to sink a ship in the Hormuz Strait, where the oil goes through a very narrow little strait, where if you sink a tanker there or a warship, it’s going to block all of the sea trade with Saudi Arabia.
And that would certainly, number one, take Saudi Arabia off the hook for saying, we can’t help it. Of course, we’d love to export oil, but we can’t because the shipping lanes are all blocked because you, America, attacked Iran and they defended themselves by sinking the ship. So you can’t send your aircraft carriers and submarines to attack Iran. That’s very understandable.
But the United States is causing a world crisis.
Well, obviously, the United States knows that that’s going to happen because it’s been discussed literally for 50 years. Since I was at the Hudson Institute working on national security, it was being discussed what to do when Iran sinks the ship in the Strait of Hormuz.
Well, the United States figures, okay, oil prices are going to go up. And if Iran fights back in this way, we then will have the power to do to the world what we did to Germany in 2022 when we cut off its oil. But in this case, we don’t take the blame.
We’ll say, oh, we didn’t block the Saudi and Arab oil trade. It was that Iran that blocked it, and that’s why we’re going to bomb Iran, assuming that they can.
So that, I think, is the contingency plan. And just as America had a contingency plan just like that, waiting for an opportunity, like 9-11, they needed a trigger, and Netanyahu has provided the trigger. And that’s why the United States has been backing Netanyahu.
And of course, Iran says, well, we have the ability to really wipe out Israel. And in Congress, General Miley and the others have all said, well, we know that Iran could wipe out Israel. That’s why we have to attack Iran.
But in attacking Iran, you send its missiles off to Israel, and again, Israel will end up being the Near Eastern equivalent of Ukraine. And that sort of is the plan, and I think a lot of Israelis see this, and they’re the ones who are worried and are opposing Netanyahu and trying to prevent him from triggering a whole set of military exchanges that Israel won’t be able to resist.
And even though Iran, I’m sure they can bomb some places in Iran, but now that you have Russia, China, all supporting Iran through the Shanghai Cooperation Organization, you’re having the lines being drawn very, very clearly.
So it seems that this scenario is inevitable because Mearsheimer pointed out that it’s impossible to have a negotiated solution or settlement between Israel and Palestine. He said you can’t have a two-state solution because the Palestinian state is going to be like an Indian reservation in America, all sort of cut apart and isolated, not really a state.
And you can’t have a single state because a single state is a theocratic state. It’s like, again, it’s like the United States in the Wild West in the 19th century.
And I think the way to put it in perspective is to realize that what we’re seeing today in the attempt to split the world is very much like, excuse me, very much like what happened in the 12th and 13th century with the Crusades.
BEN NORTON: Yeah, Michael, you raise a lot of very important points there. And I know you want to talk further about the Crusades and the historical analogy. And I think you made a really good point about the US empire standing in as the new Crusaders.
But before you move away from the more contemporary political discussion, I wanted to highlight two very important points that you stressed.
One is not only the hydrocarbon reserves in the Middle East, which are so important for the world economy and in the US attempt to maintain control over oil and gas supplies and in particular energy costs.
There’s also an election coming up in 2024, and the US is concerned about gas prices and inflation. And of course, energy inputs are a key factor in inflation.
But furthermore, this region is strategic because of trade routes. Of course, the Suez Canal, according to looking at data here from the World Economic Forum, 30% of the world’s shipping container volume transits through the Suez Canal and 12% of all global trade consists of goods that pass through the Suez Canal.
And we saw this in 2021 when there was this big media scandal when a US ship got stuck in the Suez Canal. And this, of course, also came at the time when the world was coming out of the pandemic and there were all these supply chain shocks.
So we can see how sensitive the global economy is to even small issues in the global supply chain. And when you talk about shipping routes, we’re not only talking about the Suez Canal, we’re also talking about in the Red Sea toward the south.
You also have the Bab al-Mandab. This is a very important strait off of the coast of Yemen. And in the war in Yemen, starting in 2014 and 2015, a lot of the fighting back by the U.S. in this war was in the south, off of the Bab al-Mandab, because this is such an important strait where every single day millions of barrels of oil flow through this strait.
And this also reminded me, Michael, you were talking about the historical context. And if you go back to 1956, Israel invaded Egypt. And why was that? Israel invaded Egypt because Egypt’s leftist president, Nasser, nationalized the Suez Canal.
And at that moment, what was very interesting is that the U.K. and France were strongly supporting Israel in this war against Egypt because they were concerned also about Nasser’s nationalization of the Suez. At that moment, the U.S. wasn’t as deeply pro-Israel as it later became.
Of course, in 1967, in the Six-Day War, Israel attacked the neighboring Arab states and occupied part of Egypt, the Sinai, and then also what became Gaza. Israel occupied the Golan Heights of Syria, which remain illegally occupied Syrian territory today. And Israel occupied the West Bank, what we call the West Bank today.
But another important detail about that is, after the 1967 war, Israel increasingly became much more of a U.S. ally.
Whereas the first generation of Israeli leaders were much more, many of them were European, whereas the later generations of Israelis have been really American.
I mean, someone like Netanyahu, he is an American. Netanyahu was raised in the United States. He went to high school in Philadelphia. He went to high school with Reggie Jackson, by the way. He spent his most formative years in the U.S. He went to college at MIT.
He then worked in Boston, and he worked with many Republicans that he became friends with, like Mitt Romney, like Donald Trump. And then when he went back to Israel, he was sent to the U.S. to be a diplomat in the United States.
So the new generation of Israeli leaders is much more American, essentially.
And another detail you mentioned about Iran is so important, because, up until the Iranian revolution in 1979, the Iran of the Shah, the U.S.-backed monarchy, was such an important ally in the region.
And in fact, Saudi Arabia and Iran were famously referred to as the twin pillars. Saudi Arabia was the west pillar and Iran was the east pillar. The U.S. used to try to dominate this region, of course, with the support of Israel as well.
Well, with the Iranian Revolution in 1979, the U.S. lost that crucial east pillar, which meant that Israel became even more important from the perspective of the U.S. imperialism to maintain control over this region.
So I just wanted to mention those details of the strategic importance of the trade routes, like the Bab al-Mandab Strait, like the Suez Canal, and also the fact that the Iranian Revolution fundamentally shifted U.S. policy in the region and made Israel even more important from the perspective of U.S. imperialism.
And now we’re in a moment where, as you mentioned, the U.S. is even losing control over Saudi Arabia. So it’s losing both of its pillars, which is, again, why Washington is so desperate in propping up Israel, despite the fact that the entire region is completely against these settler-colonialist policies and these ethnic cleansing policies that Israel is carrying out right now, as the entire world is watching.
MICHAEL HUDSON: Well, to U.S. diplomats, what you call the support of Israel is really the support of the U.S.’ ability to militarily control the rest of the Near East.
It’s all about oil. America is not giving all this money to Israel because it loves Israel, but because Israel is the military base from which the United States can attack Syria, Iraq, and Iran and Lebanon. So it’s a military base.
And of course, it can frame this in terms of pro-Israeli, pro-Jewish policy, but this is only for the public relations view of the State Department.
If American strategy is based on energy in the Near East, then Israel is only a means to this end. It’s not the end itself. And that’s why the United States needed to have an aggressive Israeli government.
You can look at Netanyahu as being, in a way, a U.S. puppet, very much like Zelensky. Their positions are identical in their reliance on the United States against the majority of their own people.
So you keep talking about America’s support of Israel. It’s not supporting Israel at all. It rejects the majority of Israelis. It supports the Israeli military, not the Israeli society or the culture, have nothing to do with Judaism at all. This is pure military politics, and that’s how I’ve always heard it discussed among the military and national security people.
So you want to be careful not to be taken in by the cover story.
There’s one other means of control, I think, that we should mention, and that is, you’ve had in the last month or so all sorts of statements by the United States that as soon as Russia conquers the Ukraine and solidifies its control, it’s going to bring up claims against war crimes, crimes against humanity, against Russia.
America is trying to use the crooked court system. The International Criminal Court is a branch of the Pentagon in the State Department, and it’s the kangaroo court. The idea is that somehow the kangaroo court can give America judgments against Putin as they’ve declared him to be arrested anywhere he goes of people who respect the kangaroo court, and they can have all sorts of sanctions against Russian property elsewhere.
Well, look at how on earth are they going to justify these claims of war crimes against Russia if in the view of what’s happening between Israel and Gaza right now, and in fact, the arms and the bombs that are being used against Gaza are U.S. bombs, U.S. arms. The U.S. is fueling it all.
How on earth can the United States not accuse itself of war crimes on the basis of what it’s trying to accuse Russia of? Part of the splitting of the world that you’re going to see, whether or not the United States can actually bomb Iran, is going to be a whole setup of parallel courts and an isolation, not only of the United States, but as Europe is coming in.
Basically, there’s a fight for who is going to control the world right now, and that’s why I mentioned the Crusades.
I want to say I’ve been writing a history of the evolution of financial policy. I’ve done two volumes already, one on the Bronze Age Near East, …and forgive them their debts, and the other on classical antiquity, The Collapse of Antiquity. I’m now working on the third volume, which covers the Crusades to World War I.
It’s really all about an attempt by Rome, that had hardly any economic power at all, to take over all of the five Christian bishoprics that were made. Constantinople was really the new Rome. That was the head of Orthodox Christianity.
The emperor of Constantinople was really the emperor over the whole Christian world. It was followed by Antioch, Alexandria, and finally Jerusalem.
The Crusades really began, before they attacked the Near East it began in the 11th century. And Rome was finally being attacked by the Norman armies that were coming in and grabbing parts of France and had moved into Italy.
So the papacy made a deal with the Norman warlords, and it said, “We will give you the divine right to rule, we will recognize you as the Christian king, and we will excommunicate all of your enemies, but you have to pledge feudal fealty, loyalty to us, and you have to let us appoint your bishops and control the churches, which control most of your land, and you have to pay us tribute”.
The papacy all during the 10th century was controlled by a small group of aristocratic families around Rome that treated the papacy just as they treat the local political mayor of a city or the local administrators.
The church was just sort of run by a family. It had nothing to do with Christian religion at all. It was just, this is the church property, and one of our relatives, we’re always going to have as the pope.
Well, the popes didn’t have any troops in the late 11th century, and so they got the troops by making a deal with the Normans, and they decided, okay, we’re going to have an ideal, we’re going to mount the Crusades, and we’re going to rescue Jerusalem from the “infidels”, the Muslims.
Well, the problem is that Jerusalem didn’t need a rescue, because all throughout the medieval world, throughout Islam, no matter what the religion of the governing classes was, there was a religious tolerance, and that continued for hundreds of years under the Ottoman Empire.
There was only one group that was intolerant, and that was the Romans, that said, “We have to control all of Christianity, in order to prevent these aristocratic Italian families from taking over again”.
And so they mounted the Crusades, nominally against Jerusalem, but they ended up sacking Constantinople, and two centuries later, by 1291, the Christians lost in Acre.
The whole Crusade against the Near East failed.
I think you can see the parallel that I’m going to be drawing.
So most of the Crusades were not fought against Islam, because Islam was too strong.
The Crusades were fought against other Christians. And the fight of Roman Christianity was against the original Christianity for itself, as it existed over the last 10 centuries.
Well, you’re having something like that today. Just as Rome appointed the Normans as feudal rulers, William the Conqueror in Sicily, the U.S. appoints Zelensky, supports Netanyahu, supports client oligarchs in Russia, supports Latin American dictators.
So you have a U.S. view of the world that is not only unipolar, but in order to have unipolar U.S. control of the world, the U.S. has to be in charge of treating any foreign state, any foreign president as a feudal serf, basically, that they owe feudal loyalty to the United States’ sponsors.
And just as you had the Inquisition formed in the 12th century, really, to enforce this obedience to Rome as opposed to independent southern France, and independent Italy, and Arab science in Spain, you have today the U.S. using the National Endowment for Democracy, and all of the organizations controlled by Victoria Nuland with her cookies, to support things.
Well, you’re having the whole strategy of the Roman takeover, how it was going to take over other countries, how it was going to prevent other countries from becoming independent of Rome, is almost sentence for sentence what you get in American national security reports, how to control other countries. And that’s really the fight that we’re seeing there.
And against that, you’re finding the fight of other countries, the global majority. But in this case, whereas Constantinople was looted in 1204 and sort of destroyed by the Fourth Crusade, Russia, and China, and Iran and the other countries have not been looted.
The only thing that the United States can do right now is it’s setting up this military plan to attack Iran. What is the role going to be of, for instance, India? The attack on Iran and on oil is at the same time an attack on the Chinese-led Belt and Road Initiative, the whole attempt to control transportation, not only oil, but transportation by the global majority for each other’s mutual growth, mutual gain, mutual trade.
And the United States is trying to have an alternative plan for all of this that would run from India, essentially largely through Israel, and making a cut right across Gaza, which is one of the big problems that are being discussed now, to the Israeli control of Gaza, which would control its offshore oil and gas.
So you’re having the wild cards in the U.S. plan, India, Saudi Arabia, what will it do, and Turkey, because Turkey also has an interest in this oil and gas. And if the Islamic countries decide that they’re really under attack, and this attack by the Christian West against Islam is really a fight to the death, then Turkey will join with Saudi Arabia and with all of the other countries, the Shiites, and the Sunnis, and the Alawites will join together and say, what we have in common is the Islamic religion.
That is really going to be essentially the extension of America’s fight against China and Russia.
So what we’re seeing, I’m going to try to summarize now, what we’re really seeing is having fought Russia to the last Ukrainian, and threatening to fight Iran to the last Israeli. The United States is trying to send arms to Taiwan to say, wouldn’t you like to fight to the last Taiwanese against China? And that’s really the U.S. strategy all over the world.
It’s trying to fuel other countries to fight wars for its own control. That’s how Rome used the Norman armies to conquer southern Italy, England, and Yugoslavia.
Israel, and what is in the news over the whole attacks in Gaza, is only the opening stage, the trigger for this war, just as the shooting in Sarajevo started World War I in Serbia started everything.
BEN NORTON: Well, you raised so many interesting points, Michael, and I think your analysis is very fresh and unique and very insightful. I wish we had more time to go into some of these topics, but we’ve already been speaking for about an hour.
So I think we’re going to wrap up here. But I do want to thank you, Michael, for joining us. And of course, we’ll be back very soon for more analysis.
For people who are interested, I actually have interviewed Michael. I did an interview recently on classical antiquity, and Rome and Greece. And he has also written about the history of debt up through the creation of Christianity in his book And Forgive Them Their Debts. And now he is working on this political, economic, materialist history of the Crusades.
MICHAEL HUDSON: I didn’t realize when I began the book in the 1980s, drafting it, I didn’t realize how critical the Roman papacy was, and how similar it was to the State Department, and CIA, and the blob today in its plans for world conquest.
BEN NORTON: Well, I’m sure in the future we will have many opportunities to discuss that research. Of course, for people who want to get more of Michael’s very important analysis, you should check out the show that he co-hosts here with friend of the show, Radhika Desai, and that is Geopolitical Economy Hour.
If you go to our website, geopoliticaleconomy.com, or if you go to our YouTube channel, you can find a playlist with all of the different episodes of Geopolitical Economy Hour. So thanks again, Michael, and we’ll definitely have you back very soon.
MICHAEL HUDSON: It’s good to be here. Thank you.


Instruction: Write an article about: Latin America’s plan to challenge US dollar with new currency and ‘regional financial architecture’. Use the themes and topics represented by the tags provided as guidance for the content. It's not necessary to include the exact tag words in the article, but the article should reflect the essence and context of these tags.

Input: ALBA, Andrés Arauz, Argentina, Banco del Sur, Bank of the South, Bolivia, Brazil, dollar, Ecuador, Latin America, Lula da Silva, Mexico, Rafael Correa, Sucre, Sur, UNASUR, Venezuela

Output:
Advising Brazil’s President-elect Lula, Ecuadorian economist and leftist presidential candidate Andrés Arauz made a blueprint for a “new regional financial architecture” to unite Latin America, including an international currency to challenge the hegemony of the US dollar and IMF.

(Se puede leer esta nota en español aquí.)
The US dollar is used in the majority of international trade, and its status as the global reserve currency gives the United States an “exorbitant privilege” that underpins its geopolitical and economic dominance.
Yet opposition to Washington’s hegemony is growing around the world. Institutions of Eurasian integration are proposing their own currencies and payment systems. Latin America, too, has ambitious plans to end its dependence on the US dollar.
Prominent economist Andrés Arauz, a leftist leader who came close to winning Ecuador’s 2021 presidential elections, published a blueprint for a “new regional financial architecture” to unite Latin America, challenging the hegemony of the dollar and Washington-dominated institutions like the International Monetary Fund.

His plan centers around creating a new regional currency for international transactions, thereby bypassing the dollar.
The framework is based on a proposal made by Brazil’s President-elect Lula da Silva, who pledged before winning the October election that “we are going to create a currency in Latin America,” in order to “be freed of the dollar.”
The currency is expected to be called the Sur (“south” in Spanish), and would be overseen by a newly created Banco Central del Sur (Central Bank of the South).
To do all of this, Arauz has advised Lula to revive and strengthen existing institutions of regional integration like the Union of South American Nations (UNASUR) and the Banco del Sur (Bank of the South), which were undermined by US-backed coups and the rise of right-wing governments.
The goal is “to harmonize the payment systems of” the countries that make up UNASUR in order “to carry out inter-bank transfers to any bank inside of the region in real time and from a cellphone,” explained Arauz.
The Ecuadorian economist also insisted that Latin America should reject the US-dominated International Monetary Fund (IMF) and work with Africa to create debt relief and new economic opportunities.

Both Lula and Arauz have made it clear that the Sur would not replace local currencies, like the European Union’s euro. Countries in Latin America would still have their own national currencies, so they can pursue a sovereign monetary policy.
Rather, the idea is to use the Sur for bilateral trade between countries, in place of the dollar.
The proposal is very popular in Latin America, given that it is the world’s most dependent region on the US dollar.
The dollar was used in 96% of trade transactions between countries in the Americas from 1999-2019, according to the Federal Reserve.
The creation of the Sur currency could fundamentally change this.

Most trade in the Americas is dominated by the United States, which has the world’s second-largest economy (after the People’s Republic of China, when measured with purchasing power parity).
The GDP of the United States is roughly $23 trillion, while that of Canada is nearly $2 trillion.
It is often reported that the nominal GDP of Latin America and the Caribbean is around $5.5 trillion, according to World Bank data, and that the three largest economies in the region are Brazil ($1.6 trillion), Mexico ($1.3 trillion), and Argentina ($491 billion).
But nominal GDP measurements can be misleading, and only reinforce the hegemony of the US dollar. A much more accurate measurement of GDP, purchasing power parity (PPP), takes into account the cost of living in each respective country.
Adjusted accordingly with PPP measurements, the more precise estimate of the GDP of Latin America and the Caribbean is actually $11.4 trillion, with Brazil at $3.4 trillion, Mexico at $2.6 trillion, and Argentina at $1.1 trillion.
This shows that the combined economies of Latin America and the Caribbean make up nearly half of the size of the US economy.
The region is also very rich in natural resources, including oil, minerals, and agriculture.
If Latin America could unify with its own independent financial institutions, it has enormous economic potential.
Latin America’s vast economic potential has long been recognized by left-wing, anti-imperialist leaders in the region.
In the 2000s, the leftist presidents of Venezuela (Hugo Chávez), Brazil (Lula da Silva), Argentina (Néstor Kirchner and Cristina Fernández de Kirchner), Bolivia (Evo Morales), Ecuador (Rafael Correa), and Paraguay (Fernando Lugo) made plans to create alternative financial institutions to challenge the US-dominated World Bank and IMF.
The World Bank and IMF have a history of trapping Global South countries in unpayable odious debt, and subsequently imposing neoliberal “structural adjustment” programs that force governments to implement suffocating austerity policies that benefit US corporations.
Following the vision of Venezuela’s revolutionary President Hugo Chávez, Latin America’s left-wing leaders agreed to create a bank aimed at regional unity, called the Banco del Sur (Bank of the South).
Chávez, Lula, the Kirchners, Morales, and Correa met in Argentina in 2007 and signed a treaty officially creating the bank.
The presidents of (Ecuador, Bolivia, Argentina, Brazil, Paraguay, and Venezuela (from left to right) meet in Argentina in 2007 to sign the treaty forming the Banco del Sur
But the launch of the Banco del Sur was delayed.
In 2009, the leaders of these countries met again for the Africa-South America Summit (ASA) in Venezuela, where they vowed a combined $20 billion in initial capital.
These plans were never realized, however.
Several leftist governments in Latin America were destabilized and overthrown in a series of brutal geopolitical attacks waged by the United States and right-wing oligarchies – namely several US-sponsored coups: a military coup in Honduras in 2009, judicial coup in Paraguay in 2012, internal coup in Ecuador in 2017, soft coups in Brazil in 2016 and 2018, and violent coup in Bolivia in 2019, as well as numerous failed coup attempts in Venezuela and Nicaragua.
These US attacks and the ensuing right-wing surge also led to the sabotage of another key instrument of regional integration, the Union of South American Nations (UNASUR).
While the Banco del Sur was meant to economically integrate the region, political integration was be overseen by UNASUR.
UNASUR was formally created in a 2008 treaty, and officially operational by 2011.
But as Washington prepared another coup attempt against Venezuela, in 2018 and 2019, the right-wing leaders of Brazil, Argentina, Colombia, Chile, Peru, and Paraguay coordinated together to withdraw from UNASUR, leaving the institution very weak.
Another important regional institution created in parallel to the Banco del Sur and UNASUR was the ALBA: the Alianza Bolivariana para los Pueblos de Nuestra América (Bolivarian Alliance for the Peoples of Our America).
Venezuela and Cuba formed the ALBA in 2004 as an economic alliance of left-wing governments in Latin America and the Caribbean.
The ALBA created its own currency for inter-state trade in the region. Adopted in 2009, it was called the Sucre: the “Unified System for Regional Compensation.” (This acronym also referenced the South American revolutionary Antonio José de Sucre, who joined General Simón Bolívar in the anti-colonialist struggle against the Spanish empire in the early 19th century.)
At its peak, the ALBA brought together Venezuela, Cuba, Nicaragua, Bolivia, Ecuador, and Honduras in a trade bloc, and they used the Sucre in more than $1 billion in bilateral trade in 2012.
The symbol for the Sucre, used by the ALBA
Chávez’s dream of unifying the region was undermined by his untimely death in 2013, and what followed was a devastating US economic war waged against Venezuela, including an artificial US-orchestrated commodities crash in 2014, several violent Washington-backed coup attempts, the imposition of harsh sanctions that gradually escalated into a Cuba-style embargo, and the Donald Trump’s attempt to forcibly install unelected coup leader Juan Guaidó as supposed “interim president.”
Despite setbacks in the previous decade, by 2022, the left is back on the rise in Latin America.
For the first time in history, the region’s seven most-populated countries are governed by left-wing leaders (Brazil, Mexico, Colombia, Argentina, Peru, Venezuela, and Chile).
Colombia’s deeply pro-US right-wing governments were always a thorn in the side of the patria grande (the project of Latin American unity). But that changed with the election in June of Colombia’s first-ever left-wing president: Gustavo Petro.
Recognizing the potential of this historic moment to realize true regional unity, Ecuador’s leftist leader Andrés Arauz has laid out a blueprint for not only political but also economic integration.
Arauz has called for reviving both UNASUR and the Banco del Sur, and strengthening them further with a new Banco Central del Sur (Central Bank of the South).
Arauz is an accomplished economist. He spent more than a decade working at Ecuador’s central bank, eventually serving as its general director. He is currently completing his PhD in financial economics.
Under Ecuador’s former socialist President Rafael Correa, Arauz served as minister of knowledge and human talent.
Arauz has since become a leading figure in Ecuador’s leftist Correísta movement, continuing the “Citizens’ Revolution” launched by Correa.
Arauz was Correísmo’s candidate in the 2021 presidential elections. He won the first round in a landslide, but lost the second round with 47.6% of the vote compared to the 52.4% of Ecuador’s current President Guillermo Lasso, a right-wing multi-millionaire banker notorious for his corruption.
Ecuador’s Andres Arauz (right) with former President Rafael Correa (left) in a campaign ad for the 2021 elections
Although he is not formally in office, Arauz has served as an economic advisor for left-wing politicians in the region.
Arauz is a co-founder of the Grupo de Puebla, a political forum bringing together progressive forces in Latin America. He is also a member of the council of the Progressive International.
Lula da Silva, who governed Brazil from 2003 to 2010, is closely allied with both of these organizations. This makes it likely that Arauz will serve in some capacity as an advisor for the new Brazilian government.
In 2020, Lula published an article at the Progressive International website, titled “For a Multipolar World.” In it, the Brazilian left-wing leader said he seeks “the creation of a multipolar world, free from unilateral hegemony and from sterile bipolar confrontation.”
During his presidential campaign, at a rally in May 2022, Lula promised, “We are going to create a currency in Latin America, because we can’t keep depending on the dollar.”
Lula won the October 30 presidential election and will once again become head of state of the largest country in Latin America on January 1, 2023.
In response to Lula’s electoral victory, Arauz wrote a blueprint outlining steps that Brazil can take to help develop “a new regional financial architecture.”
The article, published at the pan-Latin American website NODAL, is a guide that Lula can follow when he becomes president.
“The goal: that on January 1, 2023, in the inauguration of Lula, the treaties are signed for the new UNASUR,” Arauz wrote.
“We must put in operation the Bank of the South and sign the founding treaty of the Central Bank of the South and the Sur, the regional currency – in addition to national currencies – that President Lula proposed,” he added.
“The initial step should be immediate,” Arauz stressed.
The system will seek “to harmonize the payment systems of UNASUR to carry out inter-bank transfers to any bank inside of the region in real time and from a cellphone,” he explained.
Arauz cautioned that these actions must be taken soon and quickly, because “the political window of opportunity is between January and September 2023, the date of primary elections in Argentina.”
Argentina’s right-wing opposition, which is much more pro-US and supportive of dollar hegemony and neoliberal economics, could win these elections, throwing a wrench into the project of regional unity.
Arauz warned, “We can’t give up this historic window of opportunity to the slow inertia of the foreign ministries and the backwardness of malinchismo” – a pejorative term that refers to people in Latin America who feel self-hate toward their own societies and have internalized the inferiority complex of cultural imperialism.
“Progressive presidents must create an immediate channel of communication between each other,” he emphasized. “The political will is there, there is no time to lose.”
If Latin America manages to create this “new regional financial architecture,” the Ecuadorian economist argued, it could “allow a breather for Argentina.”
Argentina has faced a deep economic crisis, caused largely by unpayable odious debt owed to the IMF, after the previous right-wing government in Buenos Aires took the largest loan in the fund’s history.
Arauz has been a vocal critic of the IMF. In his article, he said Latin America should take “collective action to retroactively nullify the illegal surcharges of the International Monetary Fund (IMF).”
IMF surcharges are extra interest payments that the US-dominated financial institution imposes on borrowing countries that owe it large debts.
The Bretton Woods Project noted that “civil society organisations, human rights experts and others have argued that surcharges effectively discriminate against and punish countries that are most in need of IMF assistance.”
Arauz proposed that, in order to annul these IMF surcharges, “if necessary,” Latin America and Africa should propose a resolution in the United Nations General Assembly.
He added that Latin America should work together with Africa to demand that the United States issue them IMF special drawing rights to help their economies.
The region could then “recycle” these special drawing rights to help Argentina, Arauz said.
The Ecuadorian economist also wrote that UNASUR could try to make some of the capital fleeing the region to the United States instead return to its countries of origin, by invoking article VIII.2.b of the founding articles of agreement of the IMF.
Arauz offered economic advice for Brazil’s domestic affairs as well.
Lula should “undo the de facto privatization of the Central Bank of Brazil that was implemented” by current far-right President Jair Bolsonaro, and “rearticulate the Central Bank of Brazil in the line of development, integration, and democracy,” he wrote.
“It is very difficult to be able to meet the goals of eradicating hunger and the reindustrialization the Brazilian people need if he has a central bank permanently boycotting it,” Arauz added.
He noted that Colombia’s central bank has already taken actions to oppose the proposed reforms of new left-wing President Gustavo Petro.
But Arauz pointed out that “this wave of regional integration cannot remain only at the level of presidents; it should be a true integration of the peoples.”
“That implies profound participation of the social movements of all of the region, but above all, immediate and tangible benefits for the citizenry,” he stressed.
“It also implies giving preferential treatment to the smallest countries,” Arauz added. “The leadership of President Lula is crucial to join together the countries with distinct ideological orientations.”
In the article, the Ecuadorian economist proposed another idea: creating a “massive program of student exchange,” so that “the youth of Latin American public education are able to study a semester or a year in another country in the region.”
The goal should be “a million youths in student exchange in” 2023, Arauz wrote. “This will be the motor of integration.”
He called for forms of cultural integration as well, proposing a regional contest inviting musicians, writers, and poets to make a hymn for UNASUR.
Arauz concluded the blueprint suggesting that Lula should create a “plenipotentiary ambassador for regional integration.”
The Ecuadorian leftist leader made it clear that he has major ambitions for the region.
It’s not enough for Latin America only to unite, Arauz argued. It needs more representation in international institutions.
“The countries of UNASUR should demand a collective position at the table of the G20, which the African Union is about to obtain,” he wrote.


Instruction: Write an article about: Western sanctions failing: EU imports more Russian gas, China beats US tech war. Use the themes and topics represented by the tags provided as guidance for the content. It's not necessary to include the exact tag words in the article, but the article should reflect the essence and context of these tags.

Input: China, gas, Huawei, LNG, oil, Russia, sanctions, SMIC

Output:
Western sanctions are backfiring: The EU is importing Russian liquified natural gas at record levels, and China is making high-tech chips despite US export restrictions.

Western sanctions are backfiring: The European Union is now importing Russian liquified natural gas at record levels, and China has made high-tech breakthroughs despite US export restrictions.
Washington’s and Brussels’ economic warfare is, ironically, strengthening the economic sovereignty of Beijing and Moscow while blowing back on Europe.

The world is living through a new cold war: Cold War Two. And one of the main ways in which this war has been waged is through economic means.
Sanctions are the principal instrument of economic warfare. When they are imposed unilaterally by a country, without the support of the United Nations, they are referred to as “unilateral coercive measures” and are illegal according to international law.

One-quarter of the global population lives in countries that have been unilaterally sanctioned by the United States.
The nations sanctioned by the US and Europe represent nearly one-third of global GDP.

The application of sanctions by the United States and its European allies has skyrocketed in recent years.
Among the countries sanctioned by the United States are two of the most powerful nations on Earth: China and Russia.
China has the world’s largest economy, when you measure its GDP at purchasing power parity (PPP). Russia has the sixth-biggest economy on Earth.
The biggest economies in the world by GDP (PPP), according to 2023 IMF data
The US government has made it clear that its goal is to sabotage the economies of these Eurasian giants.
But Washington has failed.
China continues developing state-of-the-art technology, while Russia has only further solidified its role as a global commodities powerhouse, strengthening its own manufacturing sector.
The failure, and even blowback, of this Western economic warfare shows that, while unilateral sanctions can do, and often do, significant damage to smaller countries with less developed economies, like Venezuela, Cuba, or Syria; for big nations with a massive industrial base, like China and Russia, their economies may effectively be “too big to sanction”.
In these cases, Western sanctions do economic damage in the short term, but in the medium to the long term, the unilateral coercive measures actually help the targets by making them more economically and technologically sovereign.
These huge Eurasian economies find alternatives and are no longer dependent on Western corporations; they develop their own high-tech manufacturing sectors, with more value added in the production process.

In 2021, US President Joe Biden insisted he must prevent China from becoming “the leading country in the world, the wealthiest country in the world, and the most powerful country in the world; that’s not gonna happen on my watch”.
Similarly, US Commerce Secretary Gina Raimondo said that Washington’s goal is to “slow down China’s rate of innovation”.
In order to damage China’s economy, and particularly its tech sector, the United States has imposed many rounds of aggressive sanctions, starting first under President Donald Trump and very much continuing under Joe Biden, in a thoroughly bipartisan campaign.
However, these sanctions have failed to prevent China from technologically developing; Beijing has continued taking huge strides.
The Chinese firm Huawei has developed phones with advanced chip technology. The company’s Mate 60 Pro model entered the market this September, and took the world by storm.
Bloomberg revealed that the Mate 60 Pro is Huawei’s first phone to use the most advanced technology produced by Beijing’s state-owned Semiconductor Manufacturing International Corporation (SMIC), a Kirin 9000s chip with a 7 nanometer processor.
“Beijing is making early progress in a nationwide push to circumvent US efforts to contain its ascent”, the media outlet stated.
Both SMIC and Huawei have been sanctioned by the US government.
The Washington Post similarly acknowledged that “the Mate 60 Pro represents a new high-water mark in China’s technological capabilities, with an advanced chip inside that was both designed and manufactured in China despite onerous U.S. export controls intended to prevent China from making this technical jump”.
The newspaper added that the phone’s “launch has sparked hushed concern in Washington that U.S. sanctions have failed to prevent China from making a key technological advance. Such a development would seem to fulfill warnings from U.S. chipmakers that sanctions wouldn’t stop China, but would spur it to redouble efforts to build alternatives to U.S. technology”.
Huawei revealed the new phone when US Commerce Secretary Raimondo was visiting – a clear message of defiance against her office’s campaign of economic warfare.
Russia is one of the most sanctioned countries on Earth. The United States and European Union have imposed many rounds of sanctions on the Eurasian nation over the NATO proxy war in Ukraine.
President Biden made it clear that Washington’s goal with this economic warfare was to turn Russia’s currency, the ruble, into “rubble”.
Biden boasted in March 2022 that one ruble was, at least briefly, worth less than one US penny.
The US president declared:
We are enforcing the most significant package of economic sanctions in history, and it’s causing significant damage to Russia’s economy.
It has caused the Russian economy to, quite frankly, crater.
The Russian ruble is now down by 50 percent since Putin announced his war. One ruble is now worth less than one American penny. One ruble is less than one American penny.
And [we are] preventing Russia’s central bank from propping up the ruble and to keep its value up. They’re not going to be able to do that now.
We cut Russia’s largest banks from the international financial system, and it’s crippled their ability to do business with the rest of the world.
Biden did not mention that there are more than 140 million Russians living in Russia, and they use the ruble in their everyday life; they get paid their wages in rubles.
By trying to destroy their currency, this Western economic warfare has not only harmed the Russian government and Vladimir Putin; it has been hurting the entire country, including more than 140 million civilians.
But sanctions are not a precise instrument – despite the fact that Western governments constantly, and misleadingly, claim they are “targeted” against individuals and have supposed “humanitarian exemptions”.
Sanctions are a brutal instrument of economic warfare, of collective punishment; they often do serious damage, and have major consequences for civilians living in targeted countries.
In Venezuela, for instance, mainstream experts found that at least tens of thousands, and perhaps more than 100,000, civilians have died because of the illegal, unilateral sanctions imposed on the South American nation by the United States, as part of the Donald Trump administration’s coup attempt with Juan Guaidó.
In the case of Russia, however, the economic sanctions have not done as much damage as the West would have hoped.
Initially, the ruble did significantly depreciate against other currencies, but it soon rebounded, largely because of the rise in the price of oil and other commodities. Russia is one of the world’s biggest producers of oil, gas, fertilizers, and wheat.
In fact, not only have the sanctions failed to turn the ruble into rubble and devastate the Russian economy; they have backfired on Europe, unleashing an energy crisis and contributing to high levels of inflation.
In the meantime, the European Union is importing record levels of Russian liquefied natural gas (LNG).
The Financial Times reported that, in the first seven months of 2023, EU members Belgium and Spain were the second- and third-largest purchasers of Russian LNG. The only other country that bought more was Russia’s closest ally: China.
France and the Netherlands have also been importing significant quantities of Russian LNG.
“EU imports of the super-chilled gas were up 40 per cent between January and July this year compared with the same period in 2021”, the Financial Times wrote.
The newspaper added that “the EU did not import significant amounts of LNG before the war in Ukraine due to its reliance on piped gas from Russia”.
What happened to that pipeline gas? Well, Europe pledged to boycott it. But furthermore, some of the most important pipelines connecting Russia to Germany, Nord Stream, were blown up in an international act of terrorism in September 2022.
Who exactly sabotaged this crucial energy infrastructure is not known. But Pulitzer Pitzer-winning journalist Seymour Hersh reported that it was the US government.
So now EU member states are importing Russian LNG at record levels. And ironically, they are paying even more than they had before for the cheap pipeline gas.
The Financial Times reported that Europe has spent roughly €5.29 billion buying Russian LNG on the spot market from January to July 2023.
The newspaper noted, “EU officials have pointed to an overall effort to phase out Russian fossil fuels by 2027, but warned that an outright ban on LNG imports risked prompting an energy crisis akin to last year when EU gas prices hit record highs of more than €300 per megawatt hour”.
Russia is now the second-largest exporter of LNG to the Eurozone. The only country that sells more is the United States.
In fact, due to the energy crisis in Europe and sanctions on Russia, in 2022, the United States became the largest exporter of liquefied natural gas in the world (tied with Qatar).
So while Europe’s economies suffer, US corporations are benefiting.
At the same time, Western ally India has been buying record amounts of Russian oil, below market value, at a neat discount, then refining that crude and selling it to Europe with a fat markup.
So India is handsomely profiting from selling Russian oil to Europe, because Europe refuses to buy the Russian crude directly due to its sanctions.
This suicidal sanctions policy has fueled an energy crisis in Europe, pushing economies into recession and causing de-industrialization at breakneck speed.
Average working people have shouldered the burden of this economic pain.
The real wages of workers in the Eurozone fell by 6.5% from 2020 until 2022.


Instruction: Write an article about: After Ukraine, US readies ‘transnational kill chain’ for Taiwan proxy war. Use the themes and topics represented by the tags provided as guidance for the content. It's not necessary to include the exact tag words in the article, but the article should reflect the essence and context of these tags.

Input: China, Link 16, Russia, Taiwan, Ukraine

Output:
Washington approved the dangerous sale of the Link 16 communications system to Taiwan. This is the final link of what the US military calls a “transnational coalition kill chain” against China, and signals a commitment to kinetic war.

In many traditions, when you paint or sculpt a Buddha, the eyes are the very last to be painted. It’s only after the eyes have been completed that the sculpture is fully alive and empowered.
The United States has approved a $75 million weapons package to Taiwan province, involving the sale of the Link 16 communications system.
The acquisition of Link 16 is analogous to “painting the eyes on the Buddha”: a last touch, it makes Taiwan’s military systems and weapons platforms live and far-seeing.
It confers deadly powers, or more prosaically, in the words of the US military, it completes Taiwan as the final, lethal link of what the US Naval Institute calls a “transnational coalition kill chain”, for war against China.
What exactly is Link 16? It is a key system in the US military communications arsenal. Specifically, it’s the jam-resistant tactical data network for coordinating NATO weapons systems for joint operations in war.
If this sale is completed, it signals serious, granular, and single-minded commitment to kinetic war. It would signal that the Biden administration is as serious and unwavering in its desire to provoke and wage large-scale war with China over Taiwan as it was with Russia over Ukraine, which also saw the implementation of this system.
More important than any single weapons platform, this system allows the Taiwan/ROC military to integrate and coordinate all its warfighting platforms with US, NATO, Japanese, Korean, Australian militaries in combined arms warfare.
Link 16 would be the deadliest piece of technology yet to be transferred, because it allows sea, air, and land forces to be coordinated with others for lethal effect.
It permits, for example, strategic nuclear/stealth bombers  (US B-1B Lancers, B-2 Spirits) to coordinate with electronic warfare and surveillance platforms  (EA Growlers, Prowlers, EP-3s), fighters and bombers (F-16,F-22, F-35s) as well as conduct joint arms warfare with US, French, British carrier battle groups, Japanese SDF destroyers, and South Korean Hyun Moo missile destroyers, as well as THAAD and Patriot radars and missile batteries.
It also allows coordination with low-earth orbit satellites and other Space Force assets.
In other words, Link 16 supplies a brain and nervous system to the various deadly limbs and arms that the Taiwan authorities have been acquiring and preparing on the prompting of the US. It ensures interoperability and US control.
It effectively prepares Taiwan to be used as the spear tip and trigger of a multinational war offensive against China.
To give a shoe-on-the-other-foot analogy, this would be like China giving separatists in a US territory or state (e.g. Hawaii, Guam, Puerto Rico, Texas) not just arms and training – already a belligerent act of war, which the US is currently doing – but connecting insurgent militaries directly to the PLA’s surveillance, reconnaissance, and command/control systems.
This coordinates and completes, to borrow the words of the US Naval Institute (USNI), the final link in a “transnational coalition kill chain” for war.
The current US doctrine of war against China is based on distributed, dispersed, diffused, network-centric warfare to be conducted along the myriad islands of the archipelagic states encircling China in the Pacific.
These are the “island chains” upon which the US has encircled and sown dragon’s teeth: tens of thousands of troops armed with mobile attack platforms and missiles.
This is to be coordinated with subsurface warfare, automated/autonomous warfare, and longer-range stand-off weapons and attacks.
Powerful think tanks like CSBA, CNAS, CSIS, RAND and the Pentagon have been working out the doctrine, details, logistics, and appropriations for this concept intensively for over a decade while advocating intensely for it.
The sale of link 16 to Taiwan realizes and completes a key portion of this, binding the Chinese island as the keystone of this “multinational kill chain”.
This doctrine of dispersion is based on a “rock-paper-scissors” concept that networked diffusion “offsets” (Chinese) precision.
China’s capacity to defend itself and its littoral perimeter with precision missiles can be undermined with diffuse, distributed attacks from all across the island chains.
Note that this diffusion and dispersion of attack platforms across the entire Pacific gives the lie to the claim that this is some inherently deterrent strategy to defend Taiwan island. Diffusion is clearly offensive, designed to overrun and overwhelm defenses: like Ukraine, this is not to deter war, but to enable it.
This thus signals that aggressive total war against China is being prepared, in granular, lethal fashion on tactical and operational levels.
On the strategic level, currently, at the CFR, CNAS, and other influential think tanks in Washington, the talk is all about “protracted warfare” with China, about pre-positioning systems and munitions for war, about ramping up to an industrial war footing for the inescapable necessity of war with China.
This discussion includes preparations for a nuclear first strike on China.
The US senses that the clock is running rapidly down on its power. If war is inevitable, then it is anxious to start war sooner rather than later.
RAND warned in 2016 that 2025 was the outside window for the US to prevail in war with China. The “Minihan window” also hints at 2025. The “Davidson window” is 2027.
The question in Washington regarding war with China is not if, but when–and how.
Link 16 makes “how” easier, and brings “when” closer.
The current administration has hardline Russophobes who want to continue to bleed Russia out in Ukraine. It wants protracted war with Russia. It firmly believes it can wage ambidextrous, multi-front war.
Many US officials also believe that war with Ukraine and war with China are connected. They see Russia and China as a single axis of “revisionist powers” (i.e., official enemies) conspiring against the US to undermine its so-called “rules-based order” (i.e., US hegemony).
Furthermore, if the US abandons Ukraine, this could weaken the Taiwan authorities’ resolve and willingness to wage war on behalf of Washington.
Earlier in the war, when Russian gains in Ukraine were uncertain, Bi-khim Louise Hsiao (Taiwan’s current vice-president elect) gloated publicly and prominently that Ukraine’s victories were a message to China, as well as proof-of-concept of an effective doctrine for waging and winning war against China. As such, the Taiwan authorities were and are a major supporter of the Ukraine proxy war.
But the converse also holds true. Based on the same premise, if the US abandons and loses Ukraine, it sends a clear message to the people on Taiwan island that they will be the next to be used and abandoned; that their US-imposed war and war doctrine (light, distributed, asymmetrical combined arms warfare) for fighting China is a recipe for catastrophic loss.
The US plans on using proxies for war against China: Taiwan, Korea, Japan (JAKUS), Philippines, and Australia (AUKUS). Thus it cannot signal too overtly its perfidious, unreliable, and instrumental mindset.
Washington has to keep up the pretense. It cannot be seen to overtly lose in or abandon Ukraine. It needs a “decent interval”, or a plausible pretext to cut and run.
Still, the US is stretched thin. For example, it is relying on Korean munitions to Ukraine, and South Korea has provided more munitions than all of the EU combined.
Moreover, the US is currently at war with itself. The fracturing of its body politic can only be unified with a common war against a common enemy. Russia is not that enemy for the US. China is. The Republicans want war with China now.
Eli Ratner and Elbridge Colby have been fretting for years about the need to husband weaponry, arms, and munitions in order to wage war against China.
Since the outbreak of Ukraine, Ratner has been working hard to pull India into the US defense industry’s supply chain, and claims to have been successful.
South Korea’s considerable military-industrial complex is being pulled into sub-contracting for US war with China.
Since many of its major Chaebol corporations got their start as subcontractors for the war in Vietnam (for example, Hyundai was a subcontractor for Halliburton/Brown & Root), the Korean economy is simply reverting back to its corporate-martial roots.
South Korea’s economy is currently tanking due to US-forced sanctions on China. Major Korean electronic firms have lost 60 to 80% of their profits due to US-imposed chip sanctions.
Under those conditions, military manufacturing and/or subcontracting looks to be the only way forward.
In this way, the US is forcing a war economy onto its vassals.
Furthermore, US aid to Ukraine benefits its own arms industry.
The business of the US is war. Not only do existing US arms companies gain, but also the entire tech industry and supply chain benefits, and is currently re-orienting around this.
Much of the US tech industry is seeking to suckle from the government teat, now flowing copiously in preparation for war.
On the other hand, the general US economy is not doing well, with massive layoffs, especially in the consumer and business tech sector.
The backstop of military Keynesianism, with the integration of think-tank lobbying groups funded by the arms industry with close ties to the administration (such as CNAS, West Exec Advisors, and CSIS) ensure that war is always the closest ready-to-hand resort for tough economic times.
The US is simultaneously trying to decouple supply chains, which creates opportunities for US firms (both domestically and subcontracting with US vassals).
Automated, AI-enabled warfare will be a key part of this development, as will be dispersed, distributed warfare platforms using proxies such as South Korea and Japan.
This fits the existing historical pattern: the history of Western technology shows that technology and machinery have always been developed first for war.
Afterwards, they become tools of entertainment and distraction, and later productive tools for general industrial use.
This pattern goes back to the earliest machines and inventions of the West: the crane, the pulley, the lever, were all military technologies – machines of war (used in sieges).
Later they became machines of illusion and distraction (used as stage machinery in Greek theater).
Only much later were they applied for general use – and exploitation – in manufacture and production.
This holds true for many other technologies, including:
Nuclear power obviously derives from nuclear weapons.
AI, too, from its inception, was conceived for automated battle management, especially to enable second strike after human life had been destroyed.
An AI war is already in the works, with US sanctions on AI-related chips and computing, along with an algorithmic race to suppress dissent and critique in the information domain.
War and business are intricately related in the west, and war is the first lever pulled when the economy stagnates critically or needs a boost.
The US needs to abandon its neoconservative fantasies of hegemonic global empire and retreat gently into that good night, for there to be peace.
Washington needs to negotiate in good faith with Russia, and begin the process of de-escalating its proxies in Ukraine, as well as in Palestine, and the Pacific.
It needs to seek win-win cooperation in a multilateral order based on international law and mutual co-existence, not its own top-down “rules-based order”.
It needs to respect the One China principle, end its interference in China’s affairs, and stop preparing and provoking war with China.
However, the US ruling class is unwilling to do so. And it has only a few levers left to pull. The military one is the closest and most ready to hand.
As Martin Luther King Jr. said, “The US is the greatest purveyor of violence in the world”.
Like a drunk at the bar after the final call – drunk with power – Washington is determined to go out with a fight.
That fight could involve a nuclear first strike. Palestine has shown what it will try to get away with: brazen genocide with the whole world watching.
The issue is no longer war or peace in Ukraine. Deputy Secretary of State Kurt Campbell sees Ukraine as a “unified field” of war with China. He revels in the possibility of a “magnificent symphony of death” in Asia.
The coda, of course, will be a deafening fermata of silence across the entire planet. Unless we stop this insane march to war.


Instruction: Write an article about: IMF warns of ‘wave of debt crises’ coming in Global South, with war, interest rate hikes, overvalued dollar. Use the themes and topics represented by the tags provided as guidance for the content. It's not necessary to include the exact tag words in the article, but the article should reflect the essence and context of these tags.

Input: dollar, IMF, inflation, interest, International Monetary Fund, neoliberalism, Paul Volcker, Radhika Desai

Output:
The IMF said a “wave of debt crises” may be coming in the Global South, and “the global economy is headed for stormy waters,” due to war, rising US interest rates, and many currencies depreciating against the dollar.

The International Monetary Fund (IMF) has said a “wave of debt crises” may be coming in the Global South, and “the global economy is headed for stormy waters,” as the world faces a “geopolitical realignment” that will be “permanent.”
The US-dominated financial institution warned “the worst is yet to come,” as the depreciation of most currencies against the dollar and rising interest rates make it hard for both governments and companies to service their dollar-denominated debt.
The IMF has a long history of trapping Global South countries in odious debt, and then forcing their governments to implement “structural adjustment” programs, which require the imposition of harsh neoliberal policies and austerity, privatizing state assets and selling them off to Western corporations.
The director of the IMF’s research department, Pierre‑Olivier Gourinchas, made these newest warnings in a press briefing on October 11.
Countries comprising a third of the entire global economy are expected to contract in 2022 or 2023, he prognosticated.
“In short, the worst is yet to come; and for many people, 2023 will feel like a recession,” he said.
Gourinchas explained that “the energy crisis, especially in Europe, is not a transitory shock. The geopolitical realignment of energy supplies in the wake of the war is both broad and permanent.”
Furthermore, the rallying of the US dollar against most other currencies could fuel a global economic crisis, he warned.
“The strength of the dollar is also a major challenge. The dollar is now at its strongest since the early 2000s, mostly against advanced economies but also against emerging markets,” the top IMF researcher said.
He advised Global South nations to conserve “valuable foreign exchange reserves for when financial conditions really worsen,” cautioning, “as the global economy is headed for stormy waters, now is the time for emerging market policymakers to batten down the hatches.”
“Too many low‑income countries are close to or are already in debt distress. Progress toward orderly debt restructuring,” he said, “is urgently needed to avert a wave of sovereign debt crises. Time may soon run out.”
He acknowledged, “there is, effectively, a serious issue of debt restructuring that is needed for a number of especially low‑income countries.”
With the significant appreciation of the US dollar against many currencies, someone at the press conference asked the director of the IMF’s research department, “is it necessary or possible for us to have another Plaza Accord sometime down the road?”
The 1985 Plaza Accord was an agreement between the United States, Britain, France, Germany, and Japan to depreciate the dollar against their currencies. This led to an overvalued Japanese yen, fueling an asset bubble that popped in the 1990s. Japan’s economy has never really recovered from this crisis.
Gourinchas responded to the question stating:
The strength of the dollar is certainly putting a lot of strain on a number of countries. I mean, it works through two channels.
One, it is making the price of imported goods, which often are invoiced in dollars, higher. So that is increasing inflation pressures in other countries.
And then it is also tightening financial conditions. A lot of corporates or governments have dollar debt, and that becomes more expensive to service as the dollar appreciates.
Explaining why the dollar is rallying so much, Gourinchas identified the “fundamental forces” as Fed interest rates and the “energy crisis.”
“It is really the fact that the Federal Reserve has increased interest rates quite aggressively in 2022 so far — is expected to do more — compared to other countries,” he said.
“And it is also reflecting the energy crisis, that a lot of energy importers are impoverished by the high price of energy, and that is reflected in a weaker currency for them,” he added.
In the same press conference, the division chief of the IMF research department, Daniel Leigh, noted that, in Africa, “the higher interest rates, low growth means that two‑thirds of the countries in the region are facing stress or debt distress.”
Leigh warned that they must “avoid the debt crisis from spreading.”
The mainstream financial press has been sounding similar alarm bells.
A market analyst for Reuters, John Kemp, wrote that the “risks to other economies from inflation and rising interest rates in the core have been understood by policymakers and investors for decades.”
He added, “But as long as the Fed’s mandate requires it to focus exclusively on domestic inflation and employment, ignoring international spillovers, and the dollar remains the main reserve currency, rising rates in the United States will continue triggering instability elsewhere.”
Multipolarista editor Ben Norton discussed the comments made in this IMF press conference with geopolitical economist Radhika Desai.
She argued the global economic and political situation today is not like the “Volcker Shock” of the 1980s, when persistent stagflation in the United States led Federal Reserve chair Paul Volcker to substantially raise interest rates, resulting in a highly overvalued dollar that fueled a Third World debt crisis.

“I think we are a very long way away from a 1980s-style crisis,” Desai said.
“Some countries will definitely face a financial crises,” she anticipated, but “the situation is very different, and the context is very different.”
In the Volcker shock, Fed interest rates went to nearly 20%, Desai pointed out, but today many economists do not expect it to surpass 5%.
Desai also stressed that, despite interest rate hikes up to roughly 4% as of November 2022, the real Fed rate is still technically negative, because inflation is larger than the federal funds rate.

“We are not there. And the reason for that can be summed up in a single word… financialization,” she said.
“When Paul Volcker did what he did, he didn’t have to worry about the huge mountain of debt, and speculative asset markets, and so on, which were all reliant on a long regime of low interest rates,” Desai argued.
She also noted that the increasing Fed interest rates in 2022 still “remain short of the peak that they reached in the early 2000s, the peak at which they burst the housing and mortgage credit bubbles.”
Current Federal Reserve chair Jerome Powell knows that “he cannot take interest rates above a certain amount, because it would bring the entire [financial] house of cards crashing down,” Desai said.
She explained:
The Federal Reserve always uses inflation rates and unemployment rates to justify its policy decisions as though it is making policy in the interest of ordinary Americans, and even the world.
But in reality, the main thing that the Federal Reserve, in a long string of chair people of the Federal Reserve, going back to at least Alan Greenspan, what they have been primarily concerned about is the vast quantity of elite wealth that rests on said house of cards.
They will not bring it down, because who pays the piper calls the tune.
…
And we extol it [the Fed] as an “independent” central bank. In reality, it is only independent of ordinary people’s interests. It is completely dependent on the elites. And so they are not going to do anything to destabilize elite wealth.
And already we are seeing the Federal Reserve basically making noises about how they cannot allow interest rates to go very high.
Desai continued:
There will probably be a lot of debt crises, because some countries are far more vulnerable than others. But in this context we will also see something else.
We will see increasing contestations between the Western world and China, where the Western world will constantly accuse China of being responsible for the developing countries’ debt crisis. And there will be a tug of war between the Western powers in China, as to, if there is a debt crisis, who will be paid back first.
So we are going to see all of these shenanigans. But underlying all of them, what we will also see is increasingly a move away, for all the countries which can do it, will try to move away from borrowing from what Michael Hudson and I have called the dollar creditocracy.
Because it is precisely this dollar creditocracy which is subject to such volatility, that you cannot borrow with any security that you will be paying back only what you agreed to pay back, rather than some insane amounts, simply because the Federal Reserve decides to raise interest rates, or simply because speculators decide to leave your currency and your country and go somewhere else.
So the world needs a more secure financial system. And for the last 70 years and more, the world has been prevented from having the international financial system it really needs, that would really promote development, because the United States has wanted to impose its own will and its own currency on the rest of the world.