Reposted from TomDispatch.com.

Closure of the Strait of Hormuz?

Michael T. Klare

Ever since December 27th, war clouds have been gathering over the Strait of Hormuz, the narrow body of water connecting the Persian Gulf with the Indian Ocean and the seas beyond.  On that day, Iranian Vice President Mohammad Reza Rahimi warned that Tehran would block the strait and create havoc in international oil markets if the West placed new economic sanctions on his country.

“If they impose sanctions on Iran’s oil exports,” Rahimi declared, “then even one drop of oil cannot flow from the Strait of Hormuz.”  Claiming that such a move would constitute an assault on America’s vital interests, President Obama reportedly informed Iran’s supreme leader Ayatollah Ali Khamenei that Washington would use force to keep the strait open.  To back up their threats, both sides have been bolstering their forces in the area and each has conducted a series of provocative military exercises.

All of a sudden, the Strait of Hormuz has become the most combustible spot on the planet, the most likely place to witness a major conflict between well-armed adversaries.  Why, of all locales, has it become so explosive?

Oil, of course, is a major part of the answer, but — and this may surprise you — only a part.

Petroleum remains the world’s most crucial source of energy, and about one-fifth of the planet’s oil supply travels by tanker through the strait.  “Hormuz is the world’s most important oil chokepoint due to its daily oil flow of almost 17 million barrels in 2011,” the U.S. Department of Energy noted as last year ended.  Because no other area is capable of replacing these 17 million barrels, any extended closure would produce a global shortage of oil, a price spike, and undoubtedly attendant economic panic and disorder.

No one knows just how high oil prices would go under such circumstances, but many energy analysts believe that the price of a barrel might immediately leap by $50 or more.  “You would get an international reaction that would not only be high, but irrationally high,” says Lawrence J. Goldstein, a director of the Energy Policy Research Foundation.  Even though military experts assume the U.S. will use its overwhelming might to clear the strait of Iranian mines and obstructions in a few days or weeks, the chaos to follow in the region might not end quickly, keeping oil prices elevated for a long time.  Indeed, some analysts fear that oil prices, already hovering around $100 per barrel, would quickly double to more than $200, erasing any prospect of economic recovery in the United States and Western Europe, and possibly plunging the planet into a renewed Great Recession.

The Iranians are well aware of all this, and it is with such a nightmare scenario that they seek to deter Western leaders from further economic sanctions and other more covert acts when they threaten to close the strait.  To calm such fears, U.S. officials have been equally adamant in stressing their determination to keep the strait open.  In such circumstances of heightened tension, one misstep by either side might prove calamitous and turn mutual rhetorical belligerence into actual conflict.

Military Overlord of the Persian Gulf

In other words, oil, which makes the global economy hum, is the most obvious factor in the eruption of war talk, if not war.  Of at least equal significance are allied political factors, which may have their roots in the geopolitics of oil but have acquired a life of their own.

Because so much of the world’s most accessible oil is concentrated in the Persian Gulf region, and because a steady stream of oil is absolutely essential to the well-being of the U.S. and the global economy, it has long been American policy to prevent potentially hostile powers from acquiring the capacity to dominate the Gulf or block the Strait of Hormuz.  President Jimmy Carter first articulated this position in January 1980, following the Islamic Revolution in Iran and the Soviet invasion of Afghanistan.  “Any attempt by an outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America,” he told a joint session of Congress, “and such an assault will be repelled by any means necessary, including military force.”

In accordance with this precept, Washington designated itself the military overlord of the Persian Gulf, equipped with the military might to overpower any potential challenger.  At the time, however, the U.S. military was not well organized to implement the president’s initiative, known ever since as the Carter Doctrine.  In response, the Pentagon created a new organization, the U.S. Central Command (CENTCOM), and quickly endowed it with the wherewithal to crush any rival power or powers in the region and keep the sea lanes under American control.

CENTCOM first went into action in 1987-1988, when Iranian forces attacked Kuwaiti and Saudi oil tankers during the Iran-Iraq War, threatening the flow of oil supplies through the strait.  To protect the tankers, President Reagan ordered that they be “reflagged” as American vessels and escorted by U.S. warships, putting the Navy into potential conflict with the Iranians for the first time.  Out of this action came the disaster of Iran Air Flight 655, a civilian airliner carrying 290 passengers and crew members, all of whom died when the plane was hit by a missile from the USS Vincennes, which mistook it for a hostile fighter plane — a tragedy long forgotten in the United States, but still deeply resented in Iran.

Iraq was America’s de facto ally in the Iran-Iraq war, but when Saddam Hussein invaded Kuwait in 1990 — posing a direct threat to Washington’s dominance of the Gulf — the first President Bush ordered CENTCOM to protect Saudi Arabia and drive Iraqi forces out of Kuwait.  And when Saddam rebuilt his forces, and his very existence again came to pose a latent threat to America’s dominance in the region, the second President Bush ordered CENTCOM to invade Iraq and eliminate his regime altogether (which, as no one is likely to forget, resulted in a string of disasters).

If oil lay at the root of Washington’s domineering role in the Gulf, over time that role evolved into something else: a powerful expression of America’s status as a global superpower.  By becoming the military overlord of the Gulf and the self-appointed guardian of oil traffic through the Strait of Hormuz, Washington said to the world: “We, and we alone, are the ones who can ensure the safety of your daily oil supply and thereby prevent global economic collapse.”  Indeed, when the Cold War ended — and with it an American sense of pride and identity as a bulwark against Soviet expansionism in Europe and Asia — protection of the flow of Persian Gulf oil became America’s greatest claim to superpowerdom, and it remains so today.

Every Option on Every Table

With the ouster of Saddam Hussein in 2003, the one potential threat to U.S. domination of the Persian Gulf was, of course, Iran.  Even under the U.S.-backed Shah, long Washington’s man in the Gulf, the Iranians had sought to be the paramount power in the region.  Now, under a militant Shiite Islamic regime, they have proven no less determined and — call it irony — thanks to Saddam’s overthrow and the rise of a Shiite-dominated government in Baghdad, they have managed to extend their political reach in the region.  With Saddam’s fate in mind, they have also built up their defensive military capabilities and — in the view of many Western analysts — embarked on a uranium-enrichment program with the potential to supply fissile material for a nuclear weapon, should the Iranian leadership choose someday to take such a fateful step.

Iran thus poses a double challenge to Washington’s professed status in the Gulf.  It is not only a reasonably well-armed country with significant influence in Iraq and elsewhere, but by promoting its nuclear program, it threatens to vastly complicate America’s future capacity to pull off punishing attacks like those launched against Iraqi forces in 1991 and 2003.

While Iran’s military budget is modest-sized at best and its conventional military capabilities will never come close to matching CENTCOM’s superior forces in a direct confrontation, its potential pursuit of nuclear-arms capabilities greatly complicates the strategic calculus in the region.  Even without taking the final steps of manufacturing actual bomb components — and no evidence has yet surfaced that the Iranians have proceeded to this critical stage — the Iranian nuclear effort has greatly alarmed other countries in the Middle East and called into question the continued robustness of America’s regional dominance.  From Washington’s perspective, an Iranian bomb — whether real or not — poses an existential threat to America’s continued superpower status.

How to prevent Iran not just from going nuclear but from maintaining the threat to go nuclear has, in recent years, become an obsessional focus of American foreign and military policy.  Over and over again, U.S. leaders have considered plans for using military force to cripple the Iranian program though air and missile strikes on known and suspected nuclear facilities.  Presidents Bush and Obama have both refused to take such action “off the table,” as Obama made clear most recently in his State of the Union address.  (The Israelis have also repeatedly indicated their desire to take such action, possibly as a prod to Washington to get the job done.)

Most serious analysts have concluded that military action would prove extremely risky, probably causing numerous civilian casualties and inviting fierce Iranian retaliation.  It might not even achieve the intended goal of halting the Iranian nuclear program, much of which is now being conducted deep underground.  Hence, the consensus view among American and European leaders has been that economic sanctions should instead be employed to force the Iranians to the negotiating table, where they could be induced to abandon their nuclear ambitions in return for various economic benefits.  But those escalating sanctions, which appear to be causing increasing economic pain for ordinary Iranians, have been described by that country’s leaders as an “act of war,” justifying their threats to block the Strait of Hormuz.

To add to tensions, the leaders of both countries are under extreme pressure to vigorously counter the threats of the opposing side.  President Obama, up for re-election, has come under fierce, even hair-raising, attack from the contending Republican presidential candidates (except, of course, Ron Paul) for failing to halt the Iranian nuclear program, though none of them have a credible plan to do so.  He, in turn, has been taking an ever-harsher stance on the issue.  Iranian leaders, for their part, appear increasingly concerned over the deteriorating economic conditions in their country and, no doubt fearing an Arab Spring-like popular upheaval, are becoming more bellicose in their rhetoric.

So oil, the prestige of global dominance, Iran’s urge to be a regional power, and domestic political factors are all converging in a combustible mix to make the Strait of Hormuz the most dangerous place on the planet. For both Tehran and Washington, events seem to be moving inexorably toward a situation in which mistakes and miscalculations could become inevitable.  Neither side can appear to give ground without losing prestige and possibly even their jobs.  In other words, an existential test of wills is now under way over geopolitical dominance in a critical part of the globe, and on both sides there seem to be ever fewer doors marked “EXIT.”

As a result, the Strait of Hormuz will undoubtedly remain the ground zero of potential global conflict in the months ahead.

Michael T. Klare is a professor of peace and world security studies at Hampshire College, a TomDispatch regular, and the author, most recently, of Rising Powers, Shrinking Planet. His newest book, The Race for What’s Left: The Global Scramble for the World’s Last Resources (Metropolitan Books), will be published in March. 

Copyright 2012 Michael T. Klare

Today’s author will give us his tw0 cents on what we can look forward to in 2012. As he descibes our potential future, I find myself in full agreement, if we continue using MARKET and MAJORITY RULE DEMOCRACY. However, humanity has the option of choosing Co-OPERATION and UNANIMOUS RULE DEMOCRACY, if we do so we could have a radically different tomorrow. Reposted from the author’s website.

2012 Forecast: Bang and Whimper

There’s a lot to be nervous about, even if you don’t subscribe to the undercooked Mayan apocalypse lore moving through the gut of the Internet like a Staphylococcus-infected tamale. The casual observer might say that nothing seemed to give on the world scene in 2011 despite the Fukushima meltdown, the Arab Spring uproars, the train wreck of European finance, the disappearing act at MF Global, and the assorted injuries done to the Kardashian brand by the giant walking dildo Kris Humphries.

I demur. On close examination, the industrial world underwent complete zombification in 2011. Its member states and their institutions are now lurching across the stage of history like so many walking dead. Whole European nations are dead, their citizens squirming around the ruined bones of failed speculative condo projects, housing estates, and luxury hotels like botfly larvae. The USA lies in complete moral ruin despite the exertions of ten thousand evangelical preachers in dusty back-road tilt-up chapels from Texas to Carolina, several new museums of Creation Science, and the shining example of former Senator Rick Santorum. Just look at how we behave, from the cloakrooms of Congress to the piercing parlors of West Hollywood to the 7-Elevens of suburban Maryland: a nation of thieves, racketeers, reality TV sluts, wannabe road warriors, light-fingered gangsta-boyz, and crybabies living in an anomie-drenched decrepitating demolition derby landscape of failure. When everybody is a zombie, whose brains are left to eat? Echo answers…. On to the predictions for 2012 then.

The biggest political shock awaiting us is the massive disruption of the major party nominating conventions next summer, when thousands of angry citizens descend on Tampa and Charlotte demanding a reality test. The parties will attempt to go about their ritual business, ignoring the mischief outside the convention centers, and both parties will make the mistake of siccing the cops on the protestors. The result will be a much bigger mess than the one I personally witnessed on the streets of Chicago, 1968, when the party hacks anointed the grinning sell-out Hubert Humphrey to run against Ole Debbil Nixie. Just before getting tear-gassed on Michigan Avenue that night, I saw some kid hoisting a sign that depicted the nominee with a Hitler mustache over the epithet: Mein Humph! It made my night, despite the subsequent retching in the gutter.

The two major parties are completely bankrupt zombie organizations and this election may be their last stand – if they even survive the conventions. Neither of them can come to grips with the reality-based issues of the day: epochal financial and economic contraction, peak energy (and many other resources), climate change, the absence of the rule of law in banking, and generational grievance – or, perhaps more to the point, the manifestations of these giant trends as presented in unemployment, debt slavery, foreclosure, bankruptcy, homelessness, hunger, and X-million family tragedies. Both parties can only promise the return to a bygone status quo that is largely mythical.

President Obama, the putative “progressive” – spokesman of the Ivy League, Silicon Valley, Lower Manhattan, and all the other precincts where “folks” imagine themselves to be advanced thinkers – can’t even wrap his mind around the simple fact that we will never be “energy independent” if we think that means running 260 million cars and trucks, no matter how many algae farms we pretend to invest in. Here is man who ought to know better and either doesn’t, or is lying about it. He has other failures to answer for, too. Why, following the Citizens United decision in the Supreme Court, did Mr. Obama not prompt his party to sponsor federal legislation (or a constitutional amendment) that would redefine a corporation as not identical in “personhood” to a human being? Why does he still employ an Attorney General who has not started one prosecution for financial misconduct amid a panorama of arrant swindling and fraud? (Ditto: heads of the SEC, CFTC, etc.) And why did he not object loudly to the provision in the latest defense appropriations bill that allows for the capricious arrests and indefinite detention of anyone in the USA on suspicion of “terrorism?” Does this graduate of Harvard Law remember what habeas corpusmeans?

A lot of voters projected on Mr. Obama some notion of supernatural brilliance – our Hollywood fantasies are rife with wishes to be saved, and therefore redeemed, by our former victims – but he turned out to have a pedestrian mind. Could he possibly believe we have “a hundred years of natural gas” in the ground? Or that we’re in a position to ramp up another cycle of industrial economic “growth?” Or that we can continue the web of cruel rackets that passes for medical care in this country? When the Democratic Party re-nominates Obama, it will be sealing its death warrant, and it will be on its way to the same cosmic vacuum where the memory of the Whigs lingers on.

Meanwhile, the Republicans labor to convert themselves into the party of corn-pone Nazism with all their unconcealed lust to push everybody around under the plastic eagle rubrics of “Freedom” and “Liberty.” Look at the dismal lineup of morons, hypocrites, and religious fanatics arrayed for the Iowa caucus: a doctor who is also a creationist!? A leveraged buyout artist! A grifter fresh from K Street! A lady Christian theocrat wholly owned by the “dominionist” New Apostolic Reformation cult! A George W. Bush imitator showing symptoms of early onset senility! The whole posse is preoccupied with things supernatural. And being so dedicated to things unreal, they’re the prime representatives of the suburban clusterfuck, who will do anything to keep that obsolete machine running, even if it means national suicide, because they lack the brains to understand where history is taking us and what the mandates of reality are shouting at us about the urgent need to reorganize American life. They are also the vassals of corporate despotism – where the Democrats are mere footservants. They masquerade as “job creators,” but they promote the off-shoring of every activity that corporate America can shed in its quest for ever-greater executive compensation. The lip-service they pay to “freedom” is belied by their intent to control everybody’s personal life, commoditize the public interest, and sell out their grandchildren’s future for a few extra rounds of golf.

I think this gang, too, will be sent packing by the mobs of 2012. I have a nagging intimation that some third party candidate will emerge. The two personalities I keep seeing in that role are Howard Dean and Michael Bloomberg. Both of them are imperfect, but both of them are clear-headed and action-oriented, and I have a feeling that both of them are stewing in the background over the spectacle of idiocy, inertia, and dithering they see at every political compass point. Maybe somebody else will crawl out of the woodwork. I’ve said before in the weekly blog that conditions could deteriorate so badly that a Pentagon general might have to step into national leadership just to keep the grocery stores supplied with basic rations – but that is an outcome in my personal asteroid belt of  probabilities.

Whatever party ends up running things, and whomever fronts it, is going to be in for a helluva wild ride. The USA is diving into an economic depression that will make the 1930s look like a Busby Berkeley production number. Compressive contraction will have its way with us, whatever Ben Bernanke thinks. There will simply be less activity of the kinds we’re used to – Big Box shopping sprees, hamburger sales, theme park visits, house closings, you name it – than our hypertrophic system requires to keep its own destructive momentum going. Instead, the whole thing will just topple over, inert, like a 99-cent gyroscope giving into the forces of entropy. There will be a lot of bewildered, angry, dispossessed people from sea to shining sea. Not a few of them will “act out,” that is, start breaking things, stealing things, targeting easy prey, hurting bystanders, and even tangling with police. Personally, I don’t believe in the internment camp meme so popular among the doomer paranoiacs, but surely a lot of people will be cooling their heels in some slammer – while many other miscreants will just get away with crimes against persons and property.

The global banking system was on death-watch all through 2011. Somehow the various doctors in the central banks and finance ministries were able to muster enough accounting legerdemain to give the appearance of a system still showing a pulse. But in a compressive debt deflation, there are only so many accounting tricks you can pull off as money (and wealth) literally disappears down a cosmic worm-hole. In Europe, the process has moved from the margins toward the center. The people of Greece, Portugal, Ireland, Spain, Italy, Belgium will have less income, fewer government services, lost wages and pensions, less comfort than they have had for a couple of generations. Meanwhile, France is drowning in bad paper and the German banks are choking on it. There is really only one plausible outcome and that is default. The reckoning of the bondholders is at hand. Everybody will get poorer simultaneously – and if not, there will be not just regime change but civil war and revolution. The fantasy of a fiscal union in Europe is impossible because it means two things: that Germany will have to issue orders to everybody else; and that Germany would have to pick up the tab for everybody else while telling them what to do. Both are intolerable and implausible. Let’s just think of the Euro experiment as an interesting side effect of the peak energy era… now drawing to a close.

These professional economists with their jabber about QEs and “financial repression” and bond-term “twists” and debt-to-GDP ratios are missing the point. The advanced industrial nations will not be re-jiggered onto any “growth” runway. Rather, we’re entering the rutted wagon-road of de-industrializing and un-advancing. What awaits us in a “time-out” from hyperbolic technological progress. Forget about Ray Kurzweil’s nanobot nirvana. That is not in the cards. Instead, wrap your mind around life in an economy organized around farming, with a much sparser distribution of big urban centers, and far fewer people overall. Don’t imagine for a moment that your grandchildren will be zinging across the landscape in electric cars sampling one theme park after another while “networking” with “friends” on cyborg social networks implanted in their brain jellies. Think of them grooming their mules in the summer twilight. Anyway, you get the picture: everything that the finance ministries and treasuries and central banks are affecting to do is mere shadow theater performed in support of wishful thinking.

The question, then, is what kind of hardship and disorder will attend our journey out of the industrial era into post-technological age we are entering. Will we just turn the world into a Michael Bay movie and blow everything up? Or will we make some graceful descent and retain what is really best about the human spirit?

2012 will be the year of internal strife in these “advanced” nations, of people fighting over the table scraps of modernity among their own, in their own backyards, a desperate sorting out of the remnants. I don’t think we’ll see fighting between the European nations until the internal conflicts are resolved and that will take a few years.

The hot-spots for 2012 are very likely to be in the Middle East. You already know that. What could be more obvious than the tinderbox character of that region? Islamic extremism is poised to take over governments (and armies) in Egypt, Syria, Libya, possibly Algeria, and probably Pakistan.  Iran lost its mind decades ago and seems determined to dominate the region by means of a strategy that can only get it into trouble (and perhaps the whole world if it goes really badly). Saber-rattling is one thing; making an actual move something else. Block the Straits of Hormuz? Not if you don’t want Teheran to turn into an ashtray. That may happen anyway if Iran rattles a nuclear saber. Germany, France, Britain, and Italy, all struggling with terrible problems at home, would breathe a sigh of relief if the mullahs were chastened. The chatter around the Web about an Israeli preemptive attack never ceases.

But it is a possibility.

Oh, and don’t forget Turkey. Formerly the “sick man” of Europe, Turkey has become strangely resurgent, prompting some recollections that the Ottoman Empire actually administered over much of the Middle East until 1914, and not with complete incompetence, either. They just sort of imploded from empire fatigue, which is not the worst way to go down, if history is taking you there anyway. But empires come back, too, and what passes for Turkey today is a polity that in one incarnation or another has been around since the ancient Greek days, and was, for quite a long while, Rome Release 2.0.

Don’t be surprised if some hostilities break out between Turkey and Iran, since a battleground named Iraq lies between them. Iraq is a basket-case despite an immense reserve of oil under its sands, and having had the US military babysit it for eight years. The last American combat units left Iraq this fall, but there are still plenty of US soldiers there, maintaining our garrisons and keeping an eye on things. The question is: can they control what the Kurds do in the north, and whatever meddling Iran engages in around the Basra oil region in the South? These American support troops remaining in Iraq could find themselves looking like a ham-and-cheese sandwich between a lot of crusty mischief north-and-south. The Turks have already had a dustup or two with Syria lately – Syria occupies a big wedge between Turkey, Iraq and the Mediterranean Sea – and Turkey will take a dim view of that nation falling into the hands of Islamic extremists if Assad gets booted.

All bets are off in Egypt. Anything can happen there.

The dangerous position of Israel vis-à-vis all these quarreling players is probably as bad as it has been in two generations. An attack by a neighbor or getting caught in a crossfire between neighbors would stimulate a lusty response, and perhaps World War Three. As if the world needed this added aggravation. It makes my kishkas ache just to think about it. Sometimes I wonder why the whole Israeli nation doesn’t just pack up and move to Nebraska.

2012 is the year that China proves to be a mortal nation and rolls over with a very bad case of the vapors. Their banking system is a sham. Their property bubble is a fiasco. Their government has no formal legitimacy and will install a new leadership group this year, while exports crash and mass factory layoffs happen. There will be a lot of pissed off people in China, and they may express themselves politically in ways that have seemed unthinkable for decades. The aura of social control looms large in China, but an aura is a light garment not recommended for stormy political weather. 2012 could be the year that China begins its journey into a “Balkanized” collection of smaller autonomous parts, which is the big fat trendline for all the nations of the world, including the USA.

It is hard to think about the bizarre case of India, a nation with one foot in the modern age and the other in a colorful hallucinatory dreamtime. Their climate-change related problems are doing heavy damage to the food supply. Their groundwater is almost gone. The troubles of the wobbling global economy will take a lot pep out of their burgeoning tech and manufacturing sectors. It wouldn’t be surprising if these travails prompted distracting hostilities with its failed-state neighbor, Pakistan. Pakistan, with its inexhaustible supply of Islamic maniacs could easily start a rumble with some crazy caper like the Mumbai hotel assault of two years ago, but this time India would answer with a heavy cudgel, perhaps even a nuclear sortie designed to neutralize Pakistan’s dangerous toys at a stroke. And that would be that. Like cleaning out an annoying neighborhood crack house. It’s not a very appetizing scenario, but what else can you do about failed states with nuclear bombs?

Turning to Japan….That sore beset kingdom is suffering all the blowback of modern times at once: the Godzilla syndrome up in Fukushima; a demographic collapse; an imminent bond crisis; the collapse of export market partners; and a long, agonizing death spiral of its banks. I stick by a prediction I tendered back in March, after the deadly tsunami: Japan will decisively opt for a return to pre-industrial civilization. Why not? The rest of the world will be dragged kicking and screaming to the same place. Let Japan get there first and enjoy the advantage of the early adapter – back to an economy of local, hand-made stuff, rigid social hierarchy, folkloric hijinks in whispering bamboo groves, silk robes, and frequent time outs for the tea ceremony.

Russia? The big bear might have just sat out another decade and enjoyed its remaining fossil fuel supply, but the temptation to project power is a demanding habit, so they make all sorts of noises about watching Iran’s back – though mutual hatred abounds – and generally rushing into the power vacuum occupied by a US with dwindling mojo. There were stirrings of political discontent just  few weeks ago, after the rigged early rounds of national elections, and who knows where that will lead. Vlad Putin has held things together there impressively after the meltdown of the 1990s, but apparently the tranquil veneer is thin. Except for two big cities, the sprawling nation is broke and decrepitating, with little to offer the world but oil and gas – not an inconsiderable offering, but one with certain limits especially as they drain their oil fields for export cash. The rule of law is also pretty sketchy there. The government, as ever, is a kind of gangster affair, only this time one that allows some people to get really rich, not just connected. Their 70-year experiment with Marxian dogma has probably put them off ideology for a few centuries to come, which means less money spent on prisons for people with independent thoughts and more for call girls and home furnishings. I imagine that Putin will maintain his grip through the year. The Russians will appreciate relative order more when they see a few other countries devolve into internal conflict.

I don’t see much action around South America this year. Some Americans are already fleeing to Argentina. Perhaps they’ll enjoy it, but there is always the menace of property confiscation, and worse. Brazil will continue to appear vibrant while it grows more population, shoving it toward eventual ruin. They will see setbacks in the development of their deep-sea oil due to an international shortage of investment capital.

Mexico’s fortunes depend on its oil industry, Pemex, which faces remorseless depletion. Revenue from oil production and (dwindling) exports can’t hope to keep up with continuing population growth (and ever more poverty). These trends suggest a continued loss of control for the central government and more territorial fighting among the drug gangs and other criminal mafias. As long as all those loose heads roll on the south side of the Rio Grande the US will just tut-tut off to the side. But if the gangs get bold and start venturing cross border to make mischief we will make like Woodrow Wilson did and send the regular army down to spank them. It would be a satisfying diversion for that portion of the US demographic that enjoys Ultimate Fighting on TV, though it won’t get them their job back at the Pontiac plant.

The global oil picture is not so reassuring. The fragility of our supply is simply unnoticed by commuters enjoying Lady Gaga on their iPods. Meanwhile, our politicians retail fantasies of endless domestic reserves, which is total horse shit. Global exports are in remorseless decline, apart from geopolitical fissures and strains that could just paralyze allocation cold. If a hot war breaks out in the Middle East, you’ll see the American supermarket shelves empty in three days. Won’t that be fun. Note, too: the manias over shale oil and shale gas will reveal themselves as just more bubbles in a long cavalcade of bubbles, and both will begin to founder on a shortage of investment capital. The shale plays will prove to have been a national self-esteem-building program, not any part of an energy policy.

The abiding question as we turn the corner into the New Year is: how come Jon Corzine is still at large? (Not to mention Angelo Mozilo, plus the entire executive floor of Goldman Sachs, and about 5000 other assorted Wall Street grifters still on the loose.) There is plenty of dire talk that the collapse of MF Global, and the shenanigans around its demise involving the evaporation of segregated accounts, has gravely and permanently damaged the entire investment industry, but especially the commodities funds, who can no longer depend on the Chicago Mercantile Exchange to honestly clear trades and regulate behavior. The whole affair, and the thundering silence from the oval office, makes Barack Obama seem not just inept but somehow complicit in the looting of America. As if he needs another mark of discredit in his record of consistent fumbling. There are signs that a lot of people who still have something resembling money invested in various funds will go to cash in the weeks ahead, including under-the-mattress style. The distrust and paranoia is palpable now, with the frenzies of Yuletide bygone for another year. After all, why trust banks, especially the TBTF monsters. Such a mass move could take the starch even out of highly manipulated equity markets.

Nemesis may have her day, though. Jamie Dimon might have just gone a swindle too far for the fates to ignore him another year. JP Morgan looks to be in a peck of trouble for its role in the confiscation of MF Global accounts, not to mention its hijinks in the precious metals markets. The impudence of these rascals! In a nation when all sorts of people are murdered every day for little more reason than being in the wrong place at the wrong time, is it not a wonder that some poor swindled Grampa with nothing left to live for has not tossed a Molotov cocktail through the window of a Wall Street watering hole known to be frequented by banking poobahs? Perhaps this sort of action awaits us in 2012.

Longtime readers of this blog know how much I love predicting the Dow Jones Industrial Average to crash down to 4000 every year. I never disappoint – though I am often disappointed. In 2011, the SP index managed the delightful trick of finishing a fraction below its previous January kickoff. The stock markets have churned in range-bound purgatory for a decade while the price of a jar of pickles has multiplied four-fold. Applying the calculus, and given the pickle-DOW differential, I’d say my call was actually pretty good. In any case, this year I change the tune slightly: I predict the DJIA will go to 4000, with the catch that the number is only a way-station to 1000, which it will hit in 2014. We may be short of snow here in the Northeastern US – thanks to La Nina – yet not short of confidence that the mills of the Gods grind slowly, but grind exceedingly fine.

Finally, look for the publication of my next book round July 2012, a non-fiction work titled Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation… from The Atlantic Monthly Press. In a week, I begin work on World Made By Hand3.

Good luck to you in 2012, and report any suspicious characters adorned with ear-plugs, quetzel feathers, and carrying obsidian knives to your nearest office of Homeland Security.

Ten years later. … I wrote this essay in 2002. It could have been written today with a few modifications.

Why We Must Make Peace

Timothy Wilken, MD

Capitalism and the Great Market are features of Neutrality. Neutrality requires unlimited resources. Humanity has had unlimited resources in our endless supply of fossil fuels.

Our present economic crash, which is now being compared to the Great Depression, is the result of approaching end of fossil fuels. As of August 2001, 23 out of 44 nations [representing 99% of world oil production in 2000] have passed their production peaks.

Most of humanity is unaware of this approaching crisis, but the governments of the world are aware and are now acting to control the last of the fossil fuel on the planet. This of course is the real purpose of America’s coming war with Iraq. Our leaders are trying to secure control of the Iraqi oil.

Saddam Hussein has threatened to set the Iraqi oil fields on fire if pressed too hard in the coming war. During the Persian Gulf War from the fall of late 1990 to early 1991, Iraq embarked on a systematic destruction of Kuwait’s oil industry, and Iraqi forces set fire to 789 individual Kuwaiti oil wells. It took Red Adair, hundreds of millions of dollars, and over 11 months to put out the fires. How many million barrels of oil were burned is unknown. The attendant results of the fires were catastrophic both from an economic and ecological standpoint.

Recently the workers of Venezuelan oil industry have gone on strike. Prior to the strike Venezuela was exporting 3 million barrels of oil a day to the United States. Now they are exporting none. They have even started to import gasoline because the autos and trucks of their nation are running dry.

This past friday oil closed at $32.72 a barrel. If things don’t go well in the new Gulf war, and Hussein does successfully torch the oil fields, the price of oil could triple.

This would mean gasoline at the pump could rise to over $5 a gallon and the cost of energy four powering our homes and businesses could triple.What would the effect of such a tripling have on the economy and our personal lives?

As I said at the top of this essay. Neutrality is obsolete. We humans need to move on the next stage of our evolution. We need to reorganize synergically.  We all need air, water, food, shelter, security, love and meaning. We humans are all the same. We are the same species.

We need to make peace. If we humans won’t work together to solve our mutual problems, then we will perish separately fighting like animals.

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What’s wrong with wishing others a Merry Christmas?

Timothy Wilken MD

Recently it has become politically incorrect to wish your fellow humans a Merry Christmas. We are supposed to use the generic term Happy Holidays to avoid religious discrimination and hurting the feelings of others.

The term Christmas comes from a contraction of two words Christ and Mass. It is believed that the first Christmas was celebrated in the 4th century AD. The term Christ refers to the coming of a messiah to save the Jewish people as foretold in the Old Testament of the Bible. The term Mass referred to a special religious ceremony of the newly created Catholic Church based on the belief that the man known as Jesus of Nazareth was this foretold Christ. The Mass ceremony centers around the sharing of bread and wine of Communion (the Eucharist) which represents the body and blood of Jesus (transubstantiation), and Christ is sacrificed (offered up) again at each mass.

Like all new religions, the early Catholic Church began accommodating the pagan practices of that time. The merrymaking and exchanging of gifts came from the festival of Saturnalia (a festival to the god, Saturn) and the date, December 25, was an adaptation of the birthday of Mithra (the sun god). The actual birth date for Jesus of Nazareth is unknown. Christmas trees, mistletoe, candles, carols and gift giving rituals – all of these Christmas traditions are of pagan or non Christian origin.

So who are we offending by wishing someone a Merry Christmas?

There are those Christian religions that are purists. They believe in Christ and Jesus of Nazareth, but are offended by the pagan contamination surrounding Christmas. This includes the Jehovah’s Witnesses. And while the Jews believe in the Old Testament chapters of the Bible, and even in the coming of Christ, they do not accept that Jesus of Nazareth was that foretold messiah so Christmas is out for them. And then there are the many religions who do not accept the Bible so the Old Testament’s foretold Christ has no meaning to them. This includes the Hindu’s, Buddhists, and Muslims. And, don’t forget the Agnostics (the existence of God is unknowable) and Atheists (God does not exist) who naturally don’t believe in Christ, and so therefore might be offended when wished a Merry Christmas. And, I am sure the reader can think of many others who may be offended that I have left out.

I find all of this rather sad.

Probably for two reasons, first I remember growing up when Christmas was a positive event–A time to celebrate family, friendship and community–A time for Peace on Earth and Good Will to All. From that perspective, I can’t see how wishing anyone a Merry Christmas can be insulting.

But secondly, and more importantly, I very much want to celebrate the birth of Jesus of Nazareth. I don’t care whether he was the Christ foretold in the Old Testament or not. I don’t care if there is a mixing of pagan and christian tradition in celebrating his birth. I don’t care whether December 25th is his real birth-date or not. I just want to celebrate Jesus of Nazareth, the human being.

Jesus of Nazareth was a good and decent man. He was a synergist. He taught that we should love one another, and that we should help each other. So (Merry Christmas) and …

Happy Jesus of Nazareth Day!

Read the essay: Happy Jesus of Nazareth Day

The following article was written in 1945. The author was the founder of the Werkplaats Community School in Holland, where three of Queen Juliana’s children received their early education. At the end of World War II, he was imprisoned by the Germans for harbouring Jews, and in his pocket was found a declaration entitled “No Dictatorship”, which came near to causing his death. This was a scheme for a kind of democratic society, based on the experience of his school and of the business meetings of the Quakers. This article is a shortened version of his subsequent elaboration of the scheme.

SOCIOCRACY: Democracy As It Might Be

Kees Boeke
(1884-1966)

We are so accustomed to majority rule as a necessary part of democracy that it is difficult to imagine any democratic system working without it. It is true that it is better to count heads than to break them, and democracy, even as it is today, has much to recommend it as compared with former practices. But the party system has proved very far from providing the ideal democracy of people’s dreams. Its weaknesses have become clear enough: endless debates in Parliament, mass meetings in which the most primitive passions are aroused, the overruling by the majority of all independent views, capricious and unreliable election results, government action rendered inefficient by the minority’s persistent opposition. Strange abuses also creep in. Not only can a party obtain votes by deplorably underhand methods, but, as we all know, a dictator can win an election with an “astonishing” majority by intimidation.

Political parties out, more democracy in

The fact is that we have taken the present system for granted for so long that many people do not realise that the party system and majority rule are not an essential part of democracy. If we really wish to see the whole population united, like a big family, in which the members care for each other’s welfare as much as for their own, we must set aside the quantitative principle of the right of the greatest number and find another way of organising ourselves. This solution must be really democratic in the sense that it must enable each one of us to share in organising the community. But this kind of democracy will not depend on power, not even the power of the majority. It will have to be a real community-democracy, an organisation of the community by the community itself.

For this concept I shall use the word “sociocracy”. Such a concept would be of little value if it had never been tried out in practice. But its validity has been successfully demonstrated over the years. Anyone who knows England or America will have heard of the Quakers, the Society of Friends. They have had much influence in these countries and are well-known for their practical social work. For more than three hundred years the Quakers have used a method of self-government that rejects majority voting, group action being possible only when unanimity has been reached. I too have found by trying out this method in my school that it really does work, provided there is a recognition that the interests of others are as real and as important as one’s own. If we start with this fundamental idea, a spirit of goodwill is engendered which can bind together people from all levels of society and with the most varied points of view. This, my school, with its three to four hundred members, has clearly shown.

As a result of these two experiences I have come to believe that it should be possible some day for people to govern themselves in this way in a much wider field. Many will be highly sceptical about this possibility. They are so accustomed to a social order in which decisions are made by the majority or by a single person, that they do not realise that, if a group provides its own leadership and everyone knows that only when common agreement is reached can any action be taken, quite a different atmosphere is created from that arising from majority rule. These are two examples of sociocracy in practice; let us hope that its principles may be applied on a national, and finally an international scale.

Before describing how the system could be made to work, we must first see what the problem really is. We want a group of persons to establish a common arrangement of their affairs which all will respect and obey. There will be no executive committee chosen by the majority, having the power to command the individual. The group itself must reach a decision and enter into an agreement on the understanding that every individual in the group will act on this decision and honour this agreement. I have called this the self-discipline of the group. It can be compared to the self-discipline of the individual who has learnt to set certain demands for himself which he obeys.

There are three fundamental rules underlying the system. The first is that the interests of all members must be considered, the individual bowing to the interests of the whole. Secondly, solutions must be sought which everyone can accept: otherwise no action can be taken. Thirdly, all members must be ready to act according to these decisions when unanimously made.

The spirit which underlies the first rule is really nothing else but concern for one’s neighbour, and where this exists, where there is sympathy for other people’s interests, where love is, there will be a spirit in which real harmony is possible.

The second point must be considered in more detail. If a group in any particular instance is unable to decide upon a plan of action acceptable to every member, it is condemned to inactivity; it can do nothing. This may happen even today where the majority is so small that efficient action is not possible. But in the case of sociocracy there is a way out, since such a situation stimulates its members to seek for a solution, that everyone can accept, perhaps ending in a new proposal, which had not occurred to anyone before. While under the party system disagreement accentuates the differences and the division becomes sharper than ever, under a sociocratic system, so long as it is realised that agreement must be reached, it activates a common search that brings the whole group nearer together. Something must be added here. If no agreement is possible, this usually means that the present situation must continue for the time being. It might seem that in this way conservatism and reaction would reign, and no progress would be possible. But experience has shown that the contrary is true. The mutual trust that is accepted as the basis of a sociocratic society leads inevitably to progress, and this is noticeably greater when all go forward together with something everyone has agreed to. Again it is clear that there will have to be “higher-level” meetings of chosen representatives, and if a group is to be represented in such a meeting, it will have to be by someone in whom everyone has confidence. If this does not prove possible, then the group will not be represented at all in the higher-level meeting, and its interests will have to be cared for by the representatives of other groups. But experience has shown that where representation is not a question of power but of trust, the choice of a suitable person can be made fairly easily and without unpleasantness.

The third principle means that when agreement is reached the decision is binding on all who have made it. This also holds of the higher-level meeting for all who have sent representatives to it. There is a danger in the fact that each must keep decisions made in a meeting over which he has only an indirect influence. This danger is common to all such decisions, not least in the party system. But it is much less dangerous where the representatives are chosen by common consent and are therefore much more likely to be trusted.

A group that works in this way should be of particular size. It must be big enough for personal matters to give way to an objective approach to the subject under discussion, but small enough not to be unwieldy, so that the quiet atmosphere needed can be secured. For meetings concerned with general aims and methods a group of about forty has been found the most suitable. But when detailed decisions have to be made, a small committee will be needed of three to six persons or so. This kind of committee is not new. If we could have a look at the countless committees in existence, we should probably find that those which are doing the best work do so without voting. They decide on a basis of common consent. If a vote were to be taken in such a small group, it would usually mean that the atmosphere is wrong.

Of special importance in exercising sociocratic government is the leadership. Without a proper leader unanimity cannot easily be reached. This concerns a certain technique which has to be learnt. Here Quaker experience is of the greatest value. Let me describe a Quaker business meeting. The group comes together in silence. In front sits the Clerk, the leader of the meeting. Beside him sits the Assistant Clerk; who writes down what is agreed upon. The Clerk reads out each subject in turn, after which all members present, men and women, old and young, may speak to the subject. They address themselves to the meeting and not to a chairman, each one making a contribution to the developing train of thought. It is the Clerk’s duty, when he thinks the right moment has come, to read aloud a draft minute reflecting the feeling of the meeting. It is a difficult job, and it needs much experience and tact to formulate the sense of the meeting in a way that is acceptable to all. It often happens that the Clerk feels the need for a time of quiet. Then the whole gathering will remain silent for a while, and often out of the silence will come a new thought, a reconciling solution, acceptable to everyone. It may seem unbelievable to many that a meeting of up to a thousand people can be held in this way. And yet I have been present at a Yearly Meeting of the Quakers in London, held during war-time (the first world war), at which the much vexed problem of the Quaker attitude to war was discussed in such a manner, no vote being taken. So I believe that if we once set ourselves the task of learning thismethod of co-operation, beginning with very simple matters, we shall be able to learn this art and acquire a tradition which will make possible the handling of more difficult questions.

This has been confirmed by my experience at Bilthoven in building up the school which I called the Children’s Community Workshop. Very early on I suggested that we should talk over how we should organise our community life. At first the children objected, saying they wanted me to take the decisions for them. But I insisted, and the idea of the ‘Talkover”, or weekly meeting, was accepted. Later I suggested that one of the children help me with the leadership of the meeting; and from that time on it has become an institution, led by the children, which we should not like to lose.

When I began to hold these talkovers, I was aware that I was using the procedure of the Quaker business meeting, and I saw in the distance, as it were, the great problem of the government of humanity. It was also curious to discover whether the art of living together, understood as obeying the rule we had all agreed upon, would be simple enough to be learnt by children. An experience of some 20 years bas shown me that it certainly is.

But something more is necessary before this method can be applied to adult society. When we are concerned, not with a group of a few hundred people, but with thousands, even millions, whose lives we wish to organise in this way, we must accept the principle of some sort of representation. There will have to be higher level meetings, and these will have to deal with matters concerning a wider area. Higher-level meetings will also have to send representatives to another higher body, which will be responsible for a still wider area, and so on.

After my hopes for the success of school meetings had been confirmed by practice, I was very curious to know if a meeting of representatives would work also in the school. One day when the number of children had grown too large for one general meeting at which all could be present, I suggested the setting up of a meeting of representatives. At first the children did not like the idea; children are conservative. But, as often happens, six months later they suggested the same plan themselves, and since then this institution has become a regular part of the life of the school.

Of course such meetings, if ever they are to be used by adults for the organisation of society as a whole, will have a very different character from those of our children’s community. But how in practice could such methods be introduced? First of all, a Neighbourhood Meeting, made up of perhaps forty families, might be set up in a particular district, uniting those who live near enough to one another. so that they could easily meet. In a town it very often happens that people do not even know their neighbours, and it will be an advantage if they are forced to take an interest in those who live close by. The Neighbourhood Meeting might embrace about 150 people, including children. About 40 of these Neighbourhood Meetings might send representatives to a Ward Meeting, acting for something like 6000 people. In general it will be true to say that the wider the area the Meeting governs the less often it will need to meet. The representatives of about 40 Ward Meetings could come together in a District Meeting, acting for about 240,000 people.

In approximately 40 or 50 District Meetings the whole population of a small country might be covered. To a Central Meeting the interests of all the Districts would be brought by their representatives. It is an essential condition that representatives have the confidence of the whole group: if they have that, business can usually be carried on quickly and effectively.

As the whole sociocratic method depends on trust, there will be no disadvantage if, alongside the geographical representation of Neighbourhood, Ward, District and Central Meetings, a second set of functional groupings be established. It seems reasonable that all industries and professions send representatives to primary, secondary and, where necessary, tertiary meetings, and that the trusted representatives of the “workers” in every field should be available to give their professional advice to the government. I have here used the word “government”. It is not my intention to put forward a plan according to which the government itself could one day be formed on sociocratic lines. We must start from the present situation, and the only possibility is that, with the government’s consent, we make a beginning of the sociocratic method from the bottom upwards; that is, for the present, with the formation of Neighbourhood groups. We, ordinary people, must just learn to talk over our common interests and to reach agreement after quiet consideration, and this can be done best in the place where we live. Only after we have seen how difficult this is, and after, most probably, making many mistakes, will it be possible to set up meetings on a higher level. If leaders should emerge in the Neighbourhood Meetings, their advice would gradually be seen to be useful in the existing Local Councils. Later, in the same way, the advice of leaders of Ward Meetings would be of increasing value.

The sociocratic method must recommend itself by the efficiency with which it works. When the governing power has learnt to trust it enough so as to allow, perhaps even to encourage, the setting up of Neighbourhood Meetings, the system will be able to show what possibilities it has, and then the confidence of the governing bodies and of people at large will have a chance to grow. I can well believe that trusted leaders and representatives of Neighbourhood Meetings may be allowed, or even invited, to attend Local Meetings. These men and women will of course take no part in the voting, for sociocracy does not believe in voting; but they might be allowed a place in the centre between the “left” and the “right”. After a time it may even be deemed desirable to ask them for advice about the matter in hand, since it would previously have been discussed in their Neighbourhood Meetings, and a solution sought acceptable to all. It is conceivable that, as confidence grows, certain matters might be handed over to the Neighbourhood Meetings with the necessary funds to carry them out. Only when the value of the new system is realised, could the higher-level meetings be begun.

Is such a development as this a fantasy? When we consider the possible success of government on the sociocratic principle, one thing is certain; it is unthinkable unless it is accompanied and supported by the conscious education of old and young in the sociocratic method. The right kind of education is essential, and here a revolution is needed in our schools. Only latterly have attempts been made in them to further the spontaneous development of the child and encourage his initiative. Partly because the stated aim of the school is to impart knowledge and skills, and partly because people regard obedience as a virtue in itself, children have been trained to obey. We are only beginning to realise the dangers of this practice. If children are not taught to judge for themselves, they will in later life become an easy prey for the dictator. But if we really want to prepare youth to think and act for themselves, we must alter our attitude to education. The children should not be sitting passively in rows, while the schoolmaster drills a lesson into their heads. They should be able to develop freely in children’s communities, guided and helped by those who are older acting as their comrades. Initiative should be fostered in every possible way. They should learn from the beginning to do things for themselves, and to make things necessary in their school life. But above all they should learn how to run their own community in some such way as has already been described.

Finally we must return to the question of representation. We have not gone further than the government of our own country. But the great problem of the government of mankind can never be solved on a national basis. Every country is dependent for raw materials and products on other countries. It is therefore inevitable that the system of representation should be extended over a whole continent and representatives of continents join in a World Meeting to govern and order the whole world. Our technical skill in the fields of transport and organisation make something of this kind possible. Finally a World Meeting should invite representatives of all the continents to arrange a reasonable distribution of all raw materials and products, making them available for all mankind. So long as we are ruled by fear and distrust, it is impossible to solve the problems of the world. The more trust grows and the more fear diminishes, the more the problem will shrink.

Everything depends on a new spirit breaking through among men. May it be that, after the many centuries of fear, suspicion and hate, more and more a spirit of reconciliation and mutual trust will spread abroad. The constant practice of the art of sociocracy and of the education necessary for it seem to be the best way in which to further this spirit, upon which the real solution of all world problems depends.

This article was made available by Beatrice C. Boeke
Holland