F. William Engdahl — Iran and a Possible New Energy Geopolitics

Read this with the Michael Pettis post linked to recently. While Engdahl is way out of paradigm with MMT, he correctly summarizes the thinking of important factions geopolitically not only in Iran but also Russia, China, Europe and the US. This is very likely why Foreign Policy, the organ of the Council on Foreign Relations, requested Pettis to write an article on it.

Actually, the first country to adopt this view publicly was the French government of Charles de Gaulle. Valéry Giscard d'Estaing coined the term "extraordinary privilege" about the US as issuer of the global reserve currency as a result of the Bretton Woods agreement. But while the economic effect being the issuer of the global reserve currency may be overblown, there is political truth to it.

Much has been made of the economic advantage this gives the US, with many believing that US hegemony stands or falls with it. Michael Pettis debunks that myth. However, since most world trade is conducted in the USD, and the US controls the international and financial institutions that underlie global commerce, the US gains significant geopolitical power that it can bring to bear geostrategically, for example, through sanctions and declaring states or groups terrorist or criminal organizations. This is a large part of current resistance to use of the dollar as a global standard. This resistance is real and there are real reasons for it in addition to the myths about extraordinary privilege economically and financially.

I suspect we will be hearing much more about these matters from the pundits, so it's good to understand the fundamentals behind the thinking. Geopolitics is based not only on global economics, but also perceptions of global economics, in which the perception is taken to be the reality even through it may be wide of the mark. The result will then be geostrategy and tactics that not only miss the mark but may result in unintended consequences, or even boomerang back.

And the matter is greatly complicated by the relationship of global finance to energy, which is the vital resources driving global politics both economically and militarily. Since WWI, the great powers have understood that whoever controls energy resources controls global politics economically and militarily.

New Eastern Outlook
Iran and a Possible New Energy Geopolitics
F. William Engdahl