Gold, dollar crisis and dangerous new potentials from Europe

In the wake of the 1973 oil crisis, nuclear technology was threatening to become the most rapidly growing source for non-oil energy infrastructure in country after country, both in western Europe and in the developing sector.

GOLD, DOLLAR CRISIS AND DANGEROUS NEW POTENTIALS FROM EUROPE

At a private closed-door gathering convened in Tokyo in April 1975 and organized by Chase Manhattan Bank chairman David Rockefeller and Bilderberg founder George W. Ball, a handpicked group of policy spokesmen met to discuss a special project. Lord Roll of Ipsden, chairman of the S.G. Warburg bank and a director of the Bank of England, was present; David Ormsby Gore, Lord Harlech, who was London’s ambassador to Washington during the fateful Kennedy years of the early 1960s, was also present. Barclays Bank chairman Sir Anthony Tuke also attended the secretive Tokyo discussions that April, as did the Earl of Cromer, George Baring, a man closely tied to Morgan Guaranty Trust in New York and to Royal Dutch Shell. (Baring had been ambassador to Washington during the time of Kissinger’s oil shock, when the U.S. secretary of state acknowledged his unusually close policy coordination with the British Foreign Ministry.) Present too at the fateful Tokyo talks was John Loudon, chairman of Royal Dutch Shell, who also sat on the Advisory Committee of David Rockefeller’s Chase Manhattan Bank.

What concerned the hundred or so infl uential policy makers at the April meeting of Rockefeller’s newly formed Trilateral Commission was the dangerous risk to the Anglo-American establishment of continuing the offensive U.S. foreign policy stance against the rest of the world associated with Secretary of State Henry Kissinger and the Republican administration. Kissinger’s hard-line ‘divide and rule’ tactics had been to isolate one country after another, whether European, developing sector or OPEC, and to portray OPEC as the villain to developing countries whose economic growth had been destroyed by the Bilderberg group’s 1973 oil policy.

By 1975, Kissinger’s thinly-veiled ‘thug’ approach to international diplomacy was risking creating an enormous international backlash. A new ‘image’ was needed to persuade the world of the need for continued American hegemony. Therefore, at the Tokyo gathering of the Trilateral Commission that April, little more than a year and a half from the 1976 American presidential elections, David Rockefeller

introduced a man to his infl uential international friends as the next president of the United States. Few Americans, not to mention foreigners, had ever heard of the small-town Georgia peanut farmer who preferred to be called ‘Jimmy’ Carter.9

Following his initiation at the 1975 Tokyo meeting, Carter received an extraordinary public relations buildup from establishment media such as the liberal New York Times, which hailed him as a dynamic exponent of America’s ‘New South.’ In November 1976, despite allegations of voting irregularities, Carter became president.

Carter brought with him such a large number of advisers who were members of the Trilateral Commission that his presidency was dubbed the ‘Trilateral Presidency.’ Not only was Carter’s vice president, Walter Mondale, like himself, a member of the elite secretive Trilateral organization, but his national security adviser, Zbigniew Brzezinski, his secretary of state, Cyrus Vance, his treasury secretary, Michael Blumenthal, his defense secretary, Harold Brown, his United Nations’ ambassador, Andrew Young and State Department senior offi cials Richard Cooper and Warren Christopher were all part of the exclusive Trilateral club.

The public profi le of Carter’s presidency was ‘human rights’ for the Third World, ‘negotiation, not confrontation.’ He portrayed himself as an ‘outsider’ to the Washington power establishment, but the content of U.S. policy under Carter, with his preselected crew of establishment advisers, was to maintain the American century at all costs. Under a rhetorical facade of ‘reforming the old order’ of U.S. foreign policy, the Carter administration continued the basic Anglo-American neo-Malthusian strategy initiated by Kissinger at the National Security Council under National Security Study Memorandum 200. Third World development was to be blocked, and a ‘limits to growth’ postindustrial policy was to be imposed, to maintain the hegemony of the dollar imperium. Carter’s ‘human rights’ was to become a bludgeon to justify unprecedented U.S. intervention into the internal affairs of targeted Third World nations. The strategy was to fail miserably.

A signifi cant problem arose in the immediate wake of the oil shock, which threatened to undo the edifi ce of the new Anglo-American ‘petrodollar monetary system.’ Already in 1974, the Commission of the European Community proposed to the member country central banks a system for settling intra-EEC trade balances with gold, at a market price that was then around $150 per fi ne ounce. The European proposal would have greatly eased the oil payment burden for a

number of European countries, and reduced the infl uence of the dollar. The U.S. Treasury, for the political reason of dollar hegemony, adamantly insisted that the central banks value gold at the artifi cially low price of $42.22 per fi ne ounce. A valuation of gold at the higher price might have opened the door for the EEC to signifi cant trade possibilities with two leading gold-producing countries, South Africa and the Soviet Union. The U.S. Treasury under-secretary, Paul Volcker, went to London in the autumn of 1974 to deliver a blunt warning against any such European moves to bring gold back into the monetary system in the wake of the oil crisis.

But the idea, naturally, did not die. Rather the opposite. The South African government of John Vorster, dependent on imported oil, was at the time struggling to maintain economic stability in the wake of the severe oil price increase. At the same time, it was extending tentative feelers to neighboring black African states for some form of economic development cooperation, despite the rigid regime of apartheid at home.

Angola was rich in oil; South Africa had industrial technology and infrastructure needed by Angola and other African states. The region required fi nancial investment and secure foreign trade outlets for it to work. In late 1974, South African Finance Minister Nicolaas Diederichs publicly called for a revaluation of the international central bank gold price to a market level, echoing the debate in Europe:

I have consistently pressed for monetary authorities to be allowed to sell gold among themselves at a market-related price … gold in offi cial vaults of central banks would be revalued; and there would be much more money to pay the Arabs; secondly, the dollar would lose value.

At the same time, Germany and Italy initiated a bilateral agreement under which gold was used as collateral for a German loan, valued at 80 per cent of the current market price of $150 per ounce. European discussion about the effective use of gold as an alternative to the tyranny of the dollar standard were clearly gaining momentum.

But these possibilities of closer trade and economic linkage between Continental Europe and South Africa received a devastating blow. Soviet and Cuban support for Angola’s Marxist Movement for the Popular Liberation of Angola (MPLA) brought that country under the control of a regime hostile to Pretoria. In addition, repeated unannounced sales of offi cial U.S. gold reserves, which dumped large

quantities onto the market, severely depressed the world gold price and brought growing economic diffi culties for the vital South African mining industry. Then, in May 1976, riots erupted in the South African township of Soweto. The riots, curiously enough, coincided with a visit of U.S. Secretary of State Kissinger to South Africa. The international political backlash of a brutal South African police repression of the rioters at Soweto made effective economic linkage between South Africa and European governments more diffi cult. But the talks continued as the situation stabilized to some extent over the following months; the involvement of the world’s largest gold-producing country in any attempt to stabilize world monetary relations was absolutely crucial.

In July 1977, a South African business monthly, To the Point International, published an interview with a leading West German banker, Dresdner bank chairman Jürgen Ponto. In the interview, Ponto outlined his vision of a development solution to the economic and racial crises then enveloping all of southern Africa. Speaking of the vital role which Europe must play in resolving the crisis of Africa, Ponto stressed that fi rst Europe must restore order in its economies following the oil and related economic crises. In order to do this, Ponto stated,

priority must be given to the creation of a stable monetary system; when a smaller but economically important region of the world such as the European Community starts the stone rolling, by eliminating its own monetary chaos, then we will be on the way to realize this.

Ponto further elaborated the concept of European economic development initiatives for the entire southern African region, including the wealthy African states such as South Africa, Ivory Coast and Algeria, which would enable those countries to develop the poorest states: ‘They can produce suffi cient food, employment and education possibilities for the entire Continent, provided that the restrictions can be removed in the course of developments.’ Ponto was a close personal friend of the South African fi nance minister, Nicolaas Diederichs, and Diederichs’ designated successor, Robert Smit. Advanced discussion was clearly taking place between infl uential European banking and industry and the resource-rich governments of Southern Africa. A potential combination was emerging which could