Once again this political realist gives us the real story about events in Libya and the Near East.
However, early on he makes reference to a "promise to protect the Gulf Cooperation Council" without any explanation:
The Arab League--routinely dismissed in Western capitals as irrelevant before this decision--is little else than an instrument of the House of Saud's foreign policy.This was a major agreement that has had profound effects on the course of world events.
Its "decision" was propelled by Washington's promise to protect the Gulf Cooperation Council (GCC) kings/sheikhs/oligarchs from the democratic aspirations of their own subjects - who are yearning for the same democratic rights as their "cousins" in eastern Libya.
The Vietnam War in addition to the Cold War proved very costly for the US and they had to go off the gold standard as backing for US currency. In a crucial move to insure its own currency as the prime world currency, they made a mostly secret agreement with the rulers of that oil rich, medieval-like Kingdom of Saudi Arabia. In this 1974 agreement negotiated by Kissinger, the US guaranteed the security of the Kingdom and, in return, the Saudis agreed to sell oil only in US dollars and to recycle those dollars into US Treasury bonds and US stocks. This effectively backed the US dollars with oil. As Michael Hudson stated:
Saudi Arabia realizes that it exists only with U.S. support. Doing what U.S. diplomats tell them to do lets them keep their oil resources rather than being treated like Iraq and Iran.For a much more detailed explanation of the background and the effects of this agreement, check out this report by William Engdahl where he writes:
The crucial shift took place when Nixon took the dollar off a fixed gold reserve to float against other currencies. This removed the restraints on printing new dollars. The limit was only how many dollars the rest of the world would take. By their firm agreement with Saudi Arabia, as the largest OPEC oil producer with a swing role. Washington guaranteed that the world's largest commodity, namely oil, could be purchased on world markets only in dollars. Oil was essential for every nation's economy, being the basis of all transport and much of the industry.
The deal had been fixed in June 1974 by Secretary of State Henry Kissinger when he established the US-Saudi Arabian Joint Commission on Economic Co-operation. In effect, the US Treasury and New York Federal Reserve “allowed” the Saudi central bank, SAMA, to buy US Treasury bonds with Saudi petrodollars. In 1975, OPEC officially agreed to sell its oil only for dollars. A secret US military agreement to arm Saudi Arabia was the quid pro quo.
