Monday, January 13, 2020

"If The US Does That, It'll Lose Iraq Forever" - Trump Threatened To Cut Off Baghdad's Access To Its NY Fed Cash

Ed.'s note: The US uses ISIS and Al Qaeda as its "foreign legion" to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar, and now the US is "threatening to cut Baghdad off from accessing NY fed cash." This looks like a bluff since Iraq has been preparing for this by accumulating gold. Should be worth noting many of the illiterate Wahabi ISIS and Al Qaeda fighters have come out of the US dollar-backed petro kingdom of Saudi Arabia. Frightening to think that "terrorism™" is the US's policy to buttress the US dollar. From Iraq's perspective, it turns out the only way Iraq can avoid further destruction of its economy and infrastructure by the US's ISIS Saudi-supplied Wahabi "foreign legion" is to dump the US dollar.

The equation for Iraq and other countries is that if they drop the US dollar, they get bombed then overrun with Wahabi terrorist™ lunatics who come in as paid mercenaries to rip up infrastructure and kill a lot of people. King Abdullah of Jordan is even saying the "Islamic state is on the rise again" in western Iraq. The Islamic state is on the rise to protect the US dollar hegemony along with US military petrodollar shock troops protecting the oil kingdom. Iraq better be prepared because the US is preparing to bomb the shit out of their country again under the false pretext the Islamic state is rising again. What is rising is Iraq's resistance to the US.

OPERATION TERRORIZE IRAQ: A Trumpian Scheme Defined by a Series of War Crimes Staged in Iraq with Imperial Objectives

Trump is 'selling troops': Saudi Arabia has paid $1billion to have U.S. soldiers protect the kingdom
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Source: Zero Hedge

January 12, 2020 | Tyler Durden

After rejecting Iraqi Prime Minister Adel Abdul Mahdi's request to begin talks on the withdrawal of American troops, there are now more signs of the eroding ties between the two countries.


The Wall Street Journal reports that according to Iraqi officials (yes, Iraq has anonymous sources too), the Trump administration warned Iraq this week that it risks losing access to a critical government bank account if Baghdad kicks out American forces.

We are sure, to Schiff et al., that sounds a lot like 'quid pro quo', but how will they balance the need to hammer the president with their neocon/establishment desire to keep boots on the ground, whatever it takes?

The warning regarding the Iraqi central bank account was conveyed to Iraq's prime minister in a call on Wednesday, according to an official in his office, that also touched on the overall military, political and financial partnership between the two countries.

When Iraq needs hard currency, its central bank can request a shipment of bills that it then distributes into the financial system through banks and currency exchange houses. While the country's official currency is the dinar, U.S. dollars are commonly used.
"The U.S. Fed basically has a stranglehold on the entire [Iraqi] economy," said Shwan Taha, chairman of Iraqi investment bank Rabee Securities.
The potential economic and financial fallout is weighing on Iraqi officials
"Whenever you have any amicable divorce, you still have the worry about the children, pets, furniture and plants, some of which are sentimental," said a senior Iraqi politician.
The New York Fed, which can freeze accounts under U.S. sanctions law or if it has reasonable suspicion the funds could violate U.S. law, said it doesn't comment on specific account holders, but as WSJ notes, this financial threat isn't theoretical:
The country's financial system was squeezed in 2015 when the U.S. suspended access for several weeks to the central bank's account at the New York Fed over concerns the cash was filtering through a loosely regulated market into Iranian banks and to the Islamic State extremist group.
The New York Fed doesn't publicly disclose how much money it currently holds for Iraq's central bank. But according to the Central Bank of Iraq's most recent financial statement, at the end of 2018, the Fed held nearly $3 billion in overnight deposits.

The last few years have seen the Iraqi banking system devastated...


An adviser to the prime minister, Abd al-Hassanein al-Hanein, said that while the threat was a concern, he did not expect the U.S. to go through with it.
"If the U.S. does that, it will lose Iraq forever," he said.
Perhaps that is why Iraq has been building its de-dollarizing, gold reserves for the last few years...

Please go to Zero Hedge to read the entire article.
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America Escalates its "Democratic" Oil War in the Near East

By Michael Hudson | Tuesday, January 7, 2020


The mainstream media are carefully sidestepping the method behind America's seeming madness in assassinating Islamic Revolutionary Guard general Qassim Suleimani to start the New Year. The logic behind the assassination was a long-standing application of U.S. global policy, not just a personality quirk of Donald Trump's impulsive action. His assassination of Iranian military leader Suleimani was indeed a unilateral act of war in violation of international law, but it was a logical step in a long-standing U.S. strategy. It was explicitly authorized by the Senate in the funding bill for the Pentagon that it passed last year.

The assassination was intended to escalate America's presence in Iraq to keep control of the region's oil reserves, and to back Saudi Arabia's Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America's foreign legion), to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.

I sat in on discussions of this policy as it was formulated nearly fifty years ago when I worked at the Hudson Institute and attended meetings at the White House, met with generals at various armed forces think tanks and with diplomats at the United Nations. My role was as a balance-of-payments economist, having specialized for a decade at Chase Manhattan, Arthur Andersen and oil companies in the oil industry and military spending. These were two of the three main dynamics of American foreign policy and diplomacy. (The third concern was how to wage war in a democracy where voters rejected the draft in the wake of the Vietnam War.)

The media and public discussion have diverted attention from this strategy by floundering speculation that President Trump did it, except to counter the (non-)threat of impeachment with a wag-the-dog attack, or to back Israeli lebensraum drives, or simply to surrender the White House to the neocon hate-Iran syndrome. The actual context for the neocon's action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.

The balance of payments dimension

The major deficit in the U.S. balance of payments has long been military spending abroad. The entire payments deficit, beginning with the Korean War in 1950-51 and extending through the Vietnam War of the 1960s, was responsible for forcing the dollar off gold in 1971. The problem facing America’s military strategists was how to continue supporting the 800 U.S. military bases around the world and allied troop support without losing America's financial leverage.

The solution turned out to be to replace gold with U.S. Treasury securities (IOUs) as the basis of foreign central bank reserves. After 1971, foreign central banks had little option for what to do with their continuing dollar inflows except to recycle them to the U.S. economy by buying U.S. Treasury securities. The effect of U.S. foreign military spending thus did not undercut the dollar's exchange rate, and did not even force the Treasury and Federal Reserve to raise interest rates to attract foreign exchange to offset the dollar outflows on military accounts. In fact, U.S. foreign military spending helped finance the domestic U.S. federal budget deficit.

Saudi Arabia and other Near Eastern OPEC countries quickly became a buttress of the dollar. After these countries quadrupled the price of oil (in retaliation for the United States quadrupling the price of its grain exports, a mainstay of the U.S. trade balance), U.S. banks were swamped with an inflow of foreign deposits – which were lent out to Third World countries in an explosion of bad loans that blew up in 1972 with Mexico's insolvency. This destroyed Third World government credit for a decade, forcing it into dependence on the United States via the IMF and World Bank.

To top matters, of course, what Saudi Arabia does not save in dollarized assets with its oil-export earnings is spent on buying hundreds of billion of dollars of U.S. arms exports. This locks them into dependence on U.S. supply of replacement parts and repairs, and enables the United States to turn off Saudi military hardware at any point of time, in the event that the Saudis may try to act independently of U.S. foreign policy.

So maintaining the dollar as the world's reserve currency became a mainstay of U.S. military spending. Foreign countries would not have to pay the Pentagon directly for this spending. They simply finance the U.S. Treasury and U.S. banking system.

Fear of this development was a major reason why the United States moved against Libya, whose foreign reserves were held in gold, not dollars, and which was urging other African countries to follow suit in order to free themselves from "Dollar Diplomacy." Hillary and Obama invaded, grabbed their gold supplies (we still have no idea who ended up with these billions of dollars worth of gold) and destroyed Libya's government, its public education system, its public infrastructure and other non-neoliberal policies.

The great threat to this is dedollarization as China, Russia and other countries seek to avoid recycling dollars. Without the dollar's function as the vehicle for world saving – in effect, without the Pentagon's role in creating the Treasury debt that is the vehicle for world central bank reserves – the U.S. would find itself constrained militarily and hence diplomatically constrained, as it was under the gold exchange standard.

That is the same strategy that the U.S. has followed in Syria and Iraq. Iran was threatening this dollarization strategy and its buttress in U.S. oil diplomacy.

The oil industry as buttress of the U.S. balance of payments and foreign diplomacy

The trade balance is buttressed by oil and farm surpluses. Oil is the key, because it is imported by U.S. companies at almost no balance-of-payments cost (the payments end up in the oil industry's head offices here as profits and payments to management), while profits on U.S. oil company sales to other countries are remitted to the United States (via offshore tax-avoidance centers, mainly Liberia and Panama for many years). And as noted above, OPEC countries have been told to keep their official reserves in the form of U.S. securities (stocks and bonds as well as Treasury IOUs, but not direct purchase of U.S. companies being deemed economically important). Financially, OPEC countries are client slates of the Dollar Area.

America's attempt to maintain this buttress explains U.S. opposition to any foreign government steps to reverse global warming and the extreme weather caused by the world’s U.S.-sponsored dependence on oil. Any such moves by Europe and other countries would reduce dependence on U.S. oil sales, and hence on the U.S’s ability to control the global oil spigot as a means of control and coercion. These are viewed as hostile acts.

Oil also explains U.S. opposition to Russian oil exports via Nordstream. U.S. strategists want to treat energy as a U.S. national monopoly. Other countries can benefit in the way that Saudi Arabia has done – by sending their surpluses to the U.S. economy – but not to support their own economic growth and diplomacy. Control of oil thus implies support for continued global warming as an inherent part of U.S. strategy.

How a "democratic" nation can wage international war and terrorism

The Vietnam War showed that modern democracies cannot field armies for any major military conflict, because this would require a draft of its citizens. That would lead any government attempting such a draft to be voted out of power. And without troops, it is not possible to invade a country to take it over.

The corollary of this perception is that democracies have only two choices when it comes to military strategy: They can only wage airpower, bombing opponents; or they can create a foreign legion, that is, hire mercenaries or back foreign governments that provide this military service.

Here once again Saudi Arabia plays a critical role, through its control of Wahabi Sunnis which motivates terrorist jihadis willing to sabotage, bomb, assassinate, blow up and otherwise fight any target designated as an enemy of "Islam," the euphemism for Saudi Arabia acting as a U.S. client state. (Religion really is not the key; I know of no ISIS or similar Wahabi attack on Israeli targets.) The United States needs the Saudis to supply or finance Wahabi crazies. So in addition to playing a key role in the U.S. balance of payments by recycling its oil-export earnings into U.S. stocks, bonds and other investments, Saudi Arabia provides manpower by supporting the Wahabi members of America's foreign legion, ISIS and Al-Nusra/Al-Qaeda. Terrorism has become the "democratic" mode of today U.S. military policy.

Please go to Michael Hudson to read the entire article.
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Source: Fort Russ

Iraqi Expert: 'US Plotting For Extensive Strikes On Key Iraqi Cities'


By Drago Bosnic | Jan 13, 2020

TEHRAN (FNA)- The US is plotting again for recruiting the ISIS terrorist group to attack Baghdad, Karbala and Najaf and set free the ISIS prisoners in Iraq, a prominent Iraqi security expert stated.
"Washington is pursuing different plots after the failure of several of its plans in the region and its inability to prevent the approval of the plan to expel the American forces in the Iraqi parliament," Hafez al-Basharah told the Arabic-language al-Ma'aloumeh news website on Sunday.
He added that the US will in the next stages reinforce the ISIS terrorist group by recruiting their remnants in Iraq and Syria, noting that it also plots to launch massive attacks against Baghdad, Karbala and Najaf and release the ISIS terrorists from Iraqi jails. Al-Basharah said the US seeks to find a pretext for its continued presence in Iraq. Earlier this month, Iraq's Parliament voted to have the US troops removed from the country, heeding a call from Prime Minister Adel Abdul Mahdi to take urgent measures and end the foreign forces’ presence as soon as possible.

The Iraqi Parliament passed a resolution to work to end the foreign troops' presence in the Arab country in the wake of a US targeted assassination of a top Iranian general and a commander of Iraqi popular forces, an act which has only weakened both Iran’s and Iraq’s ability to fight ISISand other affiliated terror groups.

The resolution, which was passed anonymously, instructed the government to cancel a request for military assistance to the US-led coalition, which was issued in response to the rise of the Islamic State of Iraq and the Levant (known as ISIL, ISIS or Daesh) terror group.
"The government commits to revoke its request for assistance from the international coalition fighting the Islamic State of Iraq and Levant due to the end of military operations in Iraq and the achievement of victory," the resolution read, adding, “The Iraqi government must work to end the presence of any foreign troops on Iraqi soil and prohibit them from using its land, airspace or water for any reason."
The resolution stated that Iraqi military leadership has to report the number of foreign instructors that are necessary for Iraqi national security. Earlier, Abdul Mahdi had requested that parliament order the withdrawal of foreign troops from the country.
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Related:

Persian Power Play


Demonstrates that if you even think about tampering with the US dollar your country and its leaders will get pulverized. The assassination of Iran's General Soleimani is now alleged to have been planned for 7 months ago.

US As The Globe's Judge, Jury & Executioner

The Long Planned U.S. Assassinations In Iraq Will Increase Its Political Chaos

Iraq warned to keep US troops or risk financial blow-WSJ

Iran War would be only one letter different from Iraq War


The weaponizing of economics in this case with China, is run out of the US Treasury currently headed by Steven Mnuchin. A country is not allowed to buy oil from whatever country it thinks is best suited for its own internal economics.

US threatens sanctions if China keeps buying Iranian oil




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