Lethal Trajectories - Michael Conley [207]
Significance of the petrodollar: The fifth of Mustafa’s Five Demands in the book calls for the abolition of the petrodollar oil transactional system. It is worth noting why this would be such a crucial issue to the United States. Following the Bretton Woods meeting in 1971, the gold standard was discontinued. Without gold or silver to back the currency, the American dollar became, in essence, the international reserve currency of choice, in effect a fiat currency not backed by a precious metal. In addition, OPEC in 1973 agreed that oil transactions should be made in dollars, which came to be called petrodollars. The fiat currency reserve and petrodollar status conferred upon the American dollar provides an enormous financial advantage to the United States. Among other things, central banks throughout the world prop up the American dollar as a transactional reserve, and the lower cost of capital and reduced debt-servicing charges accruing to the United States as a result of the dollar’s special status are of great financial advantage.
Unfortunately, the United States has not fully protected the cherished position of the dollar through prudent fiscal and monetary policy management. The continued devaluation of the dollar has had a serious impact on the price of commodities—particularly oil. Recent Federal Reserve policies, called quantitative easement, have appeared to critics as little more than a policy to print money and monetize debt. However that move is interpreted, the salient point to remember is that any loss in the currency’s petrodollar or fiat currency reserve status could be a devastating blow to America’s financial position and, therefore, greatly resisted by the United States.
Chapter 32:
Camp David: Built as the Naval Support Facility Thurmont in 1935, this military camp in Catoctin Mountain Park in Frederick County, Maryland, was converted into a presidential retreat by President Franklin D. Roosevelt in 1942 and renamed Shangri-La. It was later named Camp David by President Eisenhower after his grandson, David.
Alleged to be one of the most secure facilities in the world, guarded by elite U.S. Marine units, it has often been the host site for historic meetings. With a helipad, state-of-the-art communications systems, eleven residential cabins within the compound, a main lodge, swimming pool, bowling alley, and scenic walkways, it has all the amenities of an upscale resort. It has hosted such world leaders as Nikita Khrushchev and Winston Churchill, and it was the site of the now-famous Camp David Accords in which Egyptian president Anwar Sadat and Israeli prime minister Menachem Begin met to arrange an Egyptian–Israeli peace.
Several key assumptions and concepts outlined in this chapter’s Camp David dialogue and CIA report are noteworthy:
CIA supply-and-demand scenario: The CIA report, supposedly written in 2017 to summarize the Saudi oil crisis, represents the author’s projection of the future oil situation. It was developed after extensive research and represents a composite of estimates from various sources. Many believe it will be a critical decade in which the demand for oil exceeds the available supply.
From a supply-side perspective, most of new growth projected in oil supply is expected to come from either OPEC countries or what are generally categorized as “unidentified” or “undiscovered” sources. The latter is particularly disconcerting because it assumes the scope of new oil discoveries will somehow match