25.03.2015 Author: Caleb Maupin

The Global Crisis of Exports: Oil, Steel, and Guns

G67787878The revolutionary government of Venezuela is facing great challenges. In 1999, the Bolivarian government began the process of transforming the country into one that serves the people, and in 2002 successfully defeated a US-backed coup against it. The Venezuelan government has won clear majorities in each election, and the results of these elections have been confirmed by both the United Nations and the Carter Center. The United Socialist Party has won the support of people in Venezuela by providing healthcare, education, and housing. The stated intention of the Bolivarian movement is to move the country toward “21st Century Socialism.”

The primary economic asset of Venezuela is the state-owned oil company. The proceeds from government-owned oil are used to fund the humanitarian projects that have made the socialists and communists who run Venezuela so popular. 

Currently, Venezuela is facing big problems, because the price of oil remains very low. With a significant decrease in revenue to fund the socialist project, an opportunity for the US-backed opposition has opened up. The anti-Bolivarian minority is doing its best to horde goods and create shortages. Coordinated efforts to conduct economic sabotage have been exposed by the Venezuelan government.  The US has done all it can to intensify the crisis by escalating economic sanctions against the country. US media is escalating its demonization of Venezuela’s leaders, describing them as “dictators” despite their undisputed popular mandate.

Like Venezuela, the Islamic Republic of Iran also has a state-owned oil company. The proceeds of the Iranian state-owned oil company are also used to fund education, healthcare, and other programs that provide a better life for the country’s population. Iran’s Supreme Leader Ayatollah Ali Seyed Khamenei has decried western monopoly capitalism in his writings and speeches.  He has proclaimed: “‘Capitocracy’ and the domination of companies and capitalists over social affairs are the distinctive characteristics of the western world. This is unacceptable from an Islamic viewpoint and anything that may lead to this state of affairs should be prevented.”

Iran is also feeling the pressure of low oil prices. Iran is currently in negotiations regarding the illegal, unilateral sanctions that have been imposed on the country. Israel and its network of allies around the world are doing all they can to derail these negotiations, in the hopes of suppressing Iran’s peaceful nuclear energy program.

Russia, whose increasing exports of oil and natural gas make it a rising competitor with the United States, is also feeling the heat. President Vladimir Putin is seen as a champion of the people in Russia as he has repeatedly battled against wealthy “oligarchs.” He has brought Russia a level of stability it has not experienced since the collapse of the Soviet Union in 1991. The conflict in Ukraine, the unexplained assassination of Boris Nemtsov, and every other possible opportunity is being utilized to promote destabilization and discontent in Russia. 

The right-wing opposition to Putin consists of a well funded network of CIA-directed nonprofits and NGOs. They seek to replace Putin, who is supported by over 80% of the Russian people, with a puppet of the hated Wall Street and London monopolists.

Behind the Oil Price Drop

It’s no secret to anyone what is going on. The US and its proxy oil-rich monarchies in the Persian Gulf are flooding the market with cheap oil. Oil is being sold below market value in the hope that there can be international and political consequences.

Middle Eastern oil is largely controlled by US-backed autocratic regimes. The Saudi kingdom, Qatar, Oman, and the list of other gulf states led by emirates, sheiks, and kings are brutally repressive and violate human rights without apology. In addition to the repression and autocratic setup, these regimes are compliant partners of Wall Street oil corporations. These regimes are not competitors with Wall Street and London, but function obediently as mere vassals or proxies. The oil of Saudi Arabia, United Arab Emirates, Bahrain, and a slew of other principalities in the region is in reality the property of Wall Street and London.

The huge section of the international oil markets that remain in the hands of western bankers or their puppets is currently making a coordinated effort to keep oil exports as high as possible, and keep the oil prices lower than ever. The hope is to both beat out their competitors and win back control of the market.

The backdrop to this coordinated effort is the advance of technology. Technology has made oil production much more efficient than ever before. It has enabled a boom of deepsea drilling as well as allowed the opening up of the tar sands. It has opened up far more oil to export than ever before. The process of refining oil is also cheaper and more efficient than at any time in history. The realities of the changing world market have created the perfect storm for a cliff-edge drop in oil prices. The classic problem of capitalism — as it creates more efficient and less costly modes of production and floods the market with unsellable goods — is on display before the entire world.

But the rapid price drop of more than 50% in six months cannot be attributed merely to fluctuations of the market and the gradual advance of technology. The wider situation has arisen because of the inherent capitalist drive toward “overproduction” — but this is only the backdrop. The dramatic situation of the global oil market is the result of direct manipulation conducted for political purposes.

Wall Street and the Pentagon are determined to not let the price of oil go back up until they have had their had chance to pull off a series of regime-change operations. The low prices are straining the markets. Before the prices are allowed to rise, there is going to be a planned escalation of US meddling in Iran, Venezuela, and Russia.

The trick of intentionally flooding the market, which beats out competitors by lowering prices, is nothing new; the Rockefeller dynasty of oil barons used it to create Standard Oil back in 1870. However, in the 21st Century, nationalized oil is the basis for the funding of anti-capitalist and anti-imperialist projects. Public control of natural resources is allowing countries to break free of the economic control of western bankers, and spurring independent economic development.

International oil price manipulation now has direct political implications, and has become a weapon through which western neoliberal capitalism can defend itself from the rising global opposition.

It should be noted that in the midst of the coordinated price drop, oil refineries across the United States have been shut down by strikes. The grievance of the workers is that basic health and safety standards are being flaunted. Workers are dying on the job. The wages of oil refinery workers in the US have significantly declined, alongside almost all other industrial workers. It appears that as the oil prices decline, Wall Street oil firms are cutting their losses at their workers’ expense.

China Strikes Back

Oil is not the only commodity currently flooding the world market. On March 16th, the Wall Street Journal was quick to report that China was creating a “glut of steel” on the international markets. Chinese steel production has increased by 63% over the past year, while domestic steel consumption has risen by only 1%.

While the standard narrative of Chinese history in western media is that prosperity and economic advances have come only with capitalist market reforms, the rise of China’s steel industry tells a different story. China had no real steel production to speak of prior to the 1949 socialist revolution. In 1950s, the Chinese Communist Party erected huge steel mills with Soviet aid. Mao Zedong was particularly committed to the development of steel production, and it became a focus of the “Great Leap Forward” campaign in the early 1960s.

Steel production in China remains mostly government-owned. A nonprofit called “The China Iron & Steel Association” coordinates Chinese steel production in consultation with the Communist Party. The Chinese steel mills that aren’t directly owned by the central government are either owned or completely overseen and controlled by local governments. Socialist central planning has been anything but a failure for Chinese steel production. Since 2013, 50% of the world’s steel has been produced in China. The March 16 Journal speaks of China’s “massive steel making engine” which produces “more steel than the rest of the world combined.”

Communist-run societies have proven to be particularly adept at steel production over the course of the last 100 years. During the 1930s, the Soviet Union rose from being an impoverished agrarian society to becoming an industrial powerhouse and the top steel producer of the era. The Democratic People’s Republic of Korea celebrated the rapid growth of its own steel production in popular films during the 1960s. The Soviet Union helped to fund the erection of steel mills in India during The Cold War.

The dropping of the price of steel as Chinese production zooms ahead under government management and party control is particularly threatening to the steel production in the Republic of Korea (known widely as “South Korea”). The US-backed regime, currently led by the daughter of the military dictator Park Chung Hee, sees the dropping price of steel as a big threat. The autocratic government of South Korea has recently disbanded and imprisoned the leaders of the opposition Unified Progressive Party, while welcoming a growing presence of the US military. The steel glut is a threat to the domestic economy, and leaders of South Korea have been vocal about it.

Japan, the former colonial aggressor that murdered millions of Chinese and Korean people and currently hosts US military bases, is also feeling the crunch. Japanese steel production, which once boomed in the 1980s alongside South Korea, is in danger.

The Chinese boom in steel production is having an impact far beyond Asia. Throughout western Europe, the social-democratic “Keynesian consensus” has involved government subsidies of a domestic steel industry. The “civilized” societies of western Europe have propped up their increasingly irrelevant domestic steel industries. European governments seek to prevent the gradual catastrophe that has wrecked cities like Gary, Cleveland, and Detroit across the midwestern United States. The rise of Chinese steel, and the 28% drop in steel prices in 2014, has made this subsidized production even more unmanageable in a period where the favored political buzzword is already “austerity.”

Just as the countries that have stood up to western imperialism are suffering as the west tries to drown them with oil, the countries which have lined up with the west against the rising economy of China are now being pounded with record tons of steel. The Western European powers who demonize China with allegations about human rights, the Wall Street-aligned pacific states that host US military bases accommodating the Pentagon’s “Asian pivot,” are all crying out with rage. Their anger is directed at a vast network of publicly owned and controlled blast furnaces, in which every single worker is organized into a pro-government labor union, and Communist Party officials have the final say in all matters. Chinese steel, like the rest of the highly government-controlled Chinese economy, appears to be unstoppable.

Guns Keep Flowing

As the markets feel the weight of rising oil and steel exports, another export is also rising: weapons.

The US-aligned Gulf States that are helping to keep the price of oil low are currently buying up record numbers of weapons. The Kingdom of Saudi Arabia is now the fourth-largest weapons purchaser in the world, with the weapons being purchased exclusively from the United States.  Oman, Qatar, Jordan, and other US-aligned regimes in the Middle East are also increasing purchases of military hardware, according to the most recent report from the Stockholm International Peace Research Institute (SIPRI). Military spending in the Middle East increased by 56% between the years 2004 and 2013. Military expenditures in the region for the year 2014 topped $150 billion, with a 4% increase over 2013.

The US-aligned regimes in Asia are also stepping up their military purchases. Azerbaijan, the US-backed regime in Central Asia with a problematic human rights record, has increased its military spending by 493% since 2003.

But US-aligned regimes are not alone in buying up arms. In 2014, Russian arms exports surpassed $15 billion.

As Venezuela feels the pain of the oil crisis, President Maduro is warning the population to be prepared for military attacks and provocations from the United States. In 2014, the US and the domestic Venezuelan opposition attempted to destabilize the country with a series of violent provocations called “La Salida” (The Exit). 43 people died in the fighting, and a global media campaign was mounted. However, the opposition failed to garner any real support in the streets. Most of the fighting took place in the wealthy neighborhoods. In most Venezuelan neighborhoods the opposition would not dare risk bringing its petrol bombs or razor wires.

In addition to the regular armed forces, a network of “Bolivarian Militias” staffed by socialists and communists is being built up in Venezuela. The over 125,000 young men and women who make up the Bolivarian militias have each taken an oath not to surrender “until final consolidation of the socialist revolution.” China has supplied Venezuela with military vehicles and aircraft, as the Latin American country prepares for a possible US attack.

As neighboring Iraq and Syria become more chaotic, the Islamic Republic of Iran is preparing to defend itself. Many living Iranians can recall the lengthy Iraq-Iran war, when the then-US-aligned Iraqi regime used chemical weapons against the newly formed Islamic Republic. Iranian officials have made clear that they understand the threats facing them from “Zionism and Imperialism,” and they are ready to defend their country.

Many US media reports bemoan the fact that Russia and China are increasing their arms exports. These articles often fail to mention that Russian and Chinese arms sales, while increasing, are nowhere near surpassing the astronomical exports of US military contractors. Raytheon, Boeing, General Electric, and other US war manufacturers are certainly facing a new level of competition, but they are by no means going away. The United States still exports 31% of all the weapons on earth.

The Chaos of Global Capitalism

As the market is flooded with oil, steel, and guns, it becomes apparent how absurd modern capitalism has become. In no previous epoch of history would people be rendered homeless because too much steel, a key material in home construction, was being produced. Workers all across the world are unemployed, and scrambling to fill up their gas tanks, because there is too much oil being refined.

In addition to the classic paradox of overproduction, the export crises on the global markets in the 21st Century are becoming conscious and ideological. There is a sometimes open and sometimes subtle and concealed war going on. In the global battle of the 21st century, the apparatus of neoliberal western capitalism is desperately struggling to demolish those who reject it. Their target is all those forces who favor some variety of economic planning, human solidarity, or compassion. The battle lines are not as ideologically clear as during The Cold War. The growing anti-imperialist camp has a variety of religious and political perspectives within it, but each of them rejects a world where profit is in command. The ideology of Milton Friedman and Ayn Rand, championed and imposed on the world by Washington DC, is being forcibly rejected in almost every corner of the world.

As the forces throughout the world are finding their position on the battlefield, the oil is flowing, and tons of steel are being churned out. Aside from places like Ukraine and Syria, the guns still remain silent. Let us hope they can remain this way. 

Caleb Maupin is a political analyst and activist based in New York. He studied political science at Baldwin-Wallace College and was inspired and involved in the Occupy Wall Street movement, especially for the online magazine “New Eastern Outlook”.


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