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The following is the
prepared statement written by Mr. LaRouche on May 26, 2002 for
presentation at the Zayed Center for Coordination, on "The
Role of Oil and Gas in World Politics" seminar which took
place on June 2-3, 2002. The following is a copy of a
transcript of the keynote address that Mr. LaRouche gave:
The world has come
to a crossroads in modern history. If the world were to continue
along the pathway currently chosen by my government and some
others, civilization will be plunged, for as long as a
generation or more, into a global dark age comparable to that
which struck Europe about seven-hundred-fifty years ago. We must
not pretend that danger does not exist; but, also, we must
commit ourselves to the hopeful alternative which wise
governments will prefer. Therefore, I shall speak frankly, but
also optimistically, of a second crossroads: the Middle East.
The history of oil
in this region, began with the British Navy's plans for what
became known as the Great War of 1914-1918. That Empire intended
to use petroleum extracted from this region, to provide its navy
the crucial strategic advantage of a change to oil-burning, from
coal-burning warships. Since that time, as all nations
represented here know, this region has been dominated by the
great powers' struggles over control of the special,
strategically significant economic advantages of oil extracted
from this region. But, it was never oil alone which shaped the
fate of the Middle East; for as far back as known history of
civilization reaches, long, long before the discovery of oil,
the Middle East has been the strategic crossroads of Eurasia and
Africa combined, as it is today. With or without petroleum, the
historic strategic significance of the Middle East would remain.
Now, there are
ill-conceived plans, including those which have been the subject
of some discussions between my government and Russia's, to
attempt to by-pass present world strategic dependency on Middle
East oil. Such a policy could only bring an added factor of
chaos to an already explosive world monetary-financial and
economic situation as a whole. I would hope that I could
persuade the powers to abandon recklessly incompetent economic
and geopolitical impulses such as those.
In any sane
ordering of the world's strategic economic affairs, Middle East
oil will continue to be an outstanding factor in the petroleum
supplies of the world economy for at least a generation or more
yet to come. This would be so, for what should be the implicitly
obvious economic reasons. However, as in all matters of current
world affairs, given the desperate situation of the world today,
we can not be so naive as to presume that powers which may be
great, or even simply powerful, will, therefore, react sanely to
the relevant strategic facts of the situation.
I focus on the
subject of oil, but do that within the context of the
historically determined strategic options for a Middle East
defined in its ancient and continuing role as a crucial
strategic crossroads of Eurasia. After defining that context, I
shall return our attention to petroleum as such, situating the
production and marketing of petroleum as a presently crucial
factor of vital strategic importance for the Middle East as a
region with special ecological and implicit cultural qualities.
I concentrate on
three distinct, interacting factors to be considered in the
attempt to forecast the prospects of the region, and also its
petroleum: the ecological, the economic, and the
political-strategic factors.
To begin, zoom in,
as if from an orbitting space-station, upon the past and present
ecology of this region of the world's biosphere. In our
imagination, let us watch the long-range historical process, of
melting of the great Eurasian glacier, over the interval from
about 19,000 years ago, when ocean levels were approximately 400
feet below those today. Watch the evolution of the Mediterranean
region over the following millennia. Watch the later phase of
great desiccation of the once-rich, desert regions of the
Sahara, Gulf, and Central Asia. From the standpoint of that
lapsed-time panorama, we are reminded in the most useful way of
a fact we already know: that the most critical of the strategic
economic factors inside the Middle East region as a whole today,
is not petroleum, but fresh water. The characteristic of that
portion of a predominantly Islamic civilization, which extends
from Asia's “roof of the world,” westward, through the
Middle East, and across northern Africa, is the continuing
struggle against the aridization which has continued during
approximately the past six to eight thousand years.
Today, we have the
scientific potential to begin to control, if not entirely
reverse some of the effects of that post-glacier process. That
is the principal strategic ecological challenge which obstructs
the realization of an otherwise great potential, a potential
which has existed for the greater part of two millennia, in Arab
civilization. It is to the degree that we make significant steps
toward applying and improving the methods for production and
distribution of fresh water, that other crucial factors of
development can be brought into play. In that case, we shall see
the implicit strategic potential of the Middle East as the
crossroads of Eurasia. Any long-range forecast of the prospects
of Middle East petroleum must be studied in the context of that
challenge.
The development of
fresh-water production and management, which is interlinked with
the role of petroleum, is the indispensable foundation for all
other optimistic prospects for a peaceful and politically stable
internal development of the Middle East region. If people lack
essential means to live, there is no peace; they will live as
the successive waves of “land pirates,” including the Mongol
empire, swept into Europe, and the Middle East, from across
Eurasia, in times past. There will be no peace without adequate
provision of water.
The
Land-Bridge Concept
This brings me to
the pivotal economic issues. For this purpose, view the Middle
East's greatest economic potential in its role as a pivotal
economic-strategic crossroads for Eurasia as a whole. While the
Suez Canal's strategic importance for the link between the
Mediterranean and Indian Ocean is obvious, I shall indicate why
the cross-land routes across the Middle East are far more
crucial forms of transport for Eurasia as a whole, and also for
the Africa-Asia connections.
It is a simple
fact of accounting, that the cost of transporting a product, as,
for example, by sea, or by other means, must be compared with
cost of production of that product, up to the point of
embarkation. Therefore, we tend to transport products, such as
petroleum and grains, which have a relatively lower price per
ton, by slower, cheaper water transport. The more useful work,
as value added, to the product, as it moves through various
phases of production, lessens the percentile of costs of
transporting the value represented by that product as a whole.
Therefore, the more real value-added, by production, to a raw or
semi-finished material, the greater the relative prosperity the
export of the products, adds to the exporting nation or region
of a nation. This has always been understood by the greatest
economists and statesmen of the Americas and Europe, since about
150 years ago.
Until modern
times, transport by water continued to be the principal roadway
of progress in the material conditions of human life. This
continued until one-hundred-seventy years ago, when the
German-American economist Friedrich List outlined what became
the railway revolution. This development was accelerated by the
successful development of the U.S. transcontinental railway
system, a development of crucial importance for the U.S.
emergence as a leading world economic power, under President
Abraham Lincoln. After 1876, American methods typified by the
development of the American transcontinental railway system,
were adopted in Germany, Russia, Japan, and elsewhere, including
China.
Admittedly, the
effort to connect the Atlantic to the Pacific, eastward, by
rail, as the U.S. had connected the Atlantic to the Pacific
westward, was seen by the British Empire as a threat to that
empire's strategic maritime supremacy in the world as a whole,
with the two so-called geopolitical world wars of the
Twentieth-Century as a result. Admittedly, there is an
influential, utopian faction inside the U.S. today, which is
prepared to unleash a geopolitical war throughout continental
Eurasia, for the purpose of preventing the internal development
of the mainlands of Asia and Africa. Those geopolitical policies
are contrary to all rational definitions of the interests of a
U.S. economy which is now wracked by an onrushing world
monetary-financial collapse. Unfortunately, those policies exist
among some presently very influential circles.
Whatever U.S.
policy might appear to be now, the reality of the present world
economic crisis, will probably force some sweeping changes in
U.S. policy and thinking during the near future. There is no
hope for the economic revival of the U.S.A. from the present
world economic crisis, without precisely such cooperation in the
land-transport-based development of the Eurasian and African
continents as a whole. If the U.S. is to find a solution to the
inevitable early disasters caused by its present policies, this
must include a special role for the Middle East.
The approach to a
solution to that strategic crisis, does not lie in oil as such,
but in the way petroleum production and marketing can be applied
to serve the broader long-term interests of the region. Stable
governments within the region, and stable relations with areas
outside the region, are the first line of defense of the region
from the forces and other perils which presently menace it. The
crucial role of transport development is a leading example of
the measures of defense required.
The special
advantage of modern rail, or magnetic levitation, as compared
with sea-based transport, lies in the elementary fact, that with
rare special exceptions, the product transported by sea does not
improve, in itself, during transport. Under the right
conditions, long-range transportation corridors, which are based
on a central role of modern rail or magnetic-levitation
transport, are, in net effect, cheaper and faster routes of
transport than the seas. As in the case of the original U.S.
transcontinental rail systems, these routes were not merely
roads of transport; the transportation system transformed a
virtual economic wasteland into a rich region of powerful
economic development. In effect, every average kilometer of
investment in the transport system along these main and
subsidiary routes gave back to the nation a net amount of
produced wealth from agriculture, mining, and manufacturing, far
in excess of the cost of developing and maintaining the system.
Instead of
thinking of simply connecting two points with a long-distance
rail line, or magnetic-levitation system, think of the transport
line as the central spine of a development corridor of up to
fifty to a hundred kilometers width. Running parallel to the
spine are main-line conduits of water and power. At appropriate
places along the spine, agro-industrial-residential complexes
are placed. Satellite areas of a similar type also lie within
the same corridor. What I have just described in a summary way,
is a modern equivalent of the methods which produced an
agricultural-industrial revolution in the U.S. approximately a
century and a half ago.
By concentrating
resources of transportation, water, and power within development
corridors, the most efficient use of those resources can be
managed. The most economical use of the total available
land-area is achieved by tending to concentrate development in
those corridors. Under conditions of continued growth,
subsidiary development corridors will branch out from the
principal ones.
This same method
can be applied, with a combination of technologies either
existing, or within reach, to transform the interior of Asia,
including its deserts and tundras.
Under proper
policies, the net cost of such development corridors is less
than zero. As goods flow along the spine of the corridor, new
wealth is being generated in and around each of the nodal
agro-industrial-residential locations along the route.
Now, look at the
core of the Arab world, from the Atlantic to the borders of
Iran, Turkey, and Trans-Caucasus. Center our focus upon the Suez
Canal and Sinai, where Africa joins Asia. Focus on sea-borne
transport between the Mediterranean and Indian Ocean; see the
criss-crossing of the region by relevant natural choices for
routes of land-based development corridors intersecting
seaports. Think of the volumes of raw materials and
semi-finished goods, flowing toward the Middle East, by sea and
by land, from Asia westward, and from Europe eastward.
The Middle East
today is what has been, in principle, for thousands of years,
even long before the building of the Great Pyramids of Egypt. It
was, and remains one of the great natural crossroads in the
development of civilization.
I emphasize, once
again, that each time we combine materials and parts into
semi-finished or finished products, we are decreasing the
percentile of the total cost of that product incurred as a cost
of transportation. The Middle East, once again, represents one
of the world's most natural, strategic locations for
concentration of trade and production. It should not be a
passive tube through which products are transported; it should
become a crucial stage of strategic importance, in the total
process of the world's production of wealth.
What happens to
Middle East petroleum, under those conditions? There will be a
natural shift in patterns of consumption. Domestic consumption
will increase with productive development. Also, there will be
increasing emphasis on the use of oil and natural gas as
chemical, raw material feedstocks for production, especially
Middle East production.
The
Strategic Issues
What, then, can be
forecast for the coming history of Middle East oil? We must ask
ourselves three key questions. First, what alternatives are
available? Second, which alternative is likely to be chosen, and
by whom? Third, will the result be a success, or a disaster like
the thirty-five-year succession of policy-changes, by which the
U.S.A. and Europe have brought the world to the presently
looming global catastrophe?
If intelligent
forces prevail, the world will contrast the failure of the
1971-2002 floating-exchange-rate monetary-financial system, with
the successful system dominant during 1945-1965, the
fixed-exchange-rate monetary-financial system. If those forces
prevail, the most crucial features of the 1945-1965 system will
be copied in launching global emergency reforms. In that case,
we shall soon establish a fixed-rate, protectionist form of
monetary-financial system, a new gold-reserve system similar to
that of the 1945-1965 period.
During a period of
approximately the past thirty-five years, the U.S.A., the U.K.
and other formerly healthy industrial powers, have been ruined
by the utopian delusion of what has been called a
“post-industrial,” or consumer society. This utopian policy
led to the wrecking of the then-existing world
monetary-financial system, by U.S. leadership in the 1971
break-up of the successful 1945-1965 monetary-financial system,
and the avalanche of destruction of the regulatory systems on
which earlier, stable economic development and prosperity had
depended.
Now, that
post-1971 monetary-financial system is hopelessly bankrupt. The
delusion of the so-called “new economy” is collapsing into
an inevitable bankruptcy. So, about thirty-five years ago, the
U.S.A. and U.K. made a change in world policy which has now
shown itself to have been a terrible mistake. It is time to
correct that mistake, to return to proven sound principles, and
to cooperate in organizing the urgently needed global economic
recovery.
Under present
conditions of general bankruptcy of the world's financial
system, while a large-scale reorganization of bankrupt assets is
underway, the crucial margin of economic recovery will be the
creation of new, low-cost, long-term credit, which will be
initially injected, largely, for essential programs of long-term
building of basic economic infrastructure. This investment in
infrastructure will then cause expansion of agricultural and
industrial development. This investment must be supplied largely
by perfectly sovereign nation-states, under terms of simple
interest for loans of up to a quarter-century or greater
maturity.
Under these
conditions, there must be a greatly increased flow of
high-technology to regions and localities of the world in which
there is critical lack of sufficient technological inputs.
As part of this
pattern, we shall require medium- to long-term agreements on
relatively fixed fair prices for certain categories of
commodities, especially in world trade. This system of fair
prices will include energy-stocks, such as petroleum, which has
a very sensitive relationship to the world's circulation of
credit. A fair price means the price at which the average
supplier nation can continue to contribute, profitably, the
volume and quality of product which the world economy requires.
Stable prices of essential raw materials, such as petroleum,
combined with nominal long-term rates of simple interest on
primary flows of international credit, are a crucial necessity,
if a durable process of reconstruction is to exist.
These measures
must be adopted, not as a matter of taste, but as a matter of
survival. Sometimes, when the ship is sinking, no sane passenger
says, “But, I refuse to be seen on a life-raft.”
It will be
objected by some, that we are living under conditions of
spreading war, not the conditions of peace under which the
1945-65 monetary system was installed. That warning is, of
course, true. However, if nations are not willing to establish
the institutional preconditions of durable peace, including
essential economic preconditions, then the immediate future of
civilization everywhere, would be a virtually hopeless one. It
were better to mount the life-raft. The first step, is to
recognize, at last, the simple fact, that the ship, the war-torn
present world financial-monetary system, is sinking, hopelessly.
Then, perhaps, the proper moves toward the peace of prosperity,
the life-raft, will be made by governments and others.
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