Europe vs USA – A New Reality in Iran

One figure sums up the asymmetric functioning of the world economy; since 1995, nearly 60% of world growth is attributable to the US, which represents “only” 30% of the world economy. The general thesis is that the world cannot continue indefinitely to rely on American spending. If nothing else, the debacle in 2009 and its global impact clearly show this.

A simple analysis of the relative curves shows that if nothing changes, the trade deficit, already beyond 5% of GDP, will continue to grow to reach closer to 6.5% of GDP, to which we should add the growing mass of interest that the US should pay on its foreign debt. This net flow of interest at about 300 billion+, which will remain roughly around 10% of the current account deficit as a whole. This is a big deal.

To significantly reduce the deficit, most economists believe that dollar devaluation, of the order of 40% would be necessary, which will bring the dollar to an unprecedented low.

Naturally, foreign holders of US assets would then be tempted to sell these assets to limit the loss. These sales would unleash a new downward movement of the dollar that could only be dealt with by a hefty rise in interest rates that would affect growth. An aggressive devaluation of the dollar could lead to the opening of a trade war with Europe.

US structural imbalance should be viewed in comparison to European countries that are still behind the U.S level of GDP per capita. The difference in the level and growth of productivity is the most important figure behind a country’s GDP. Without higher growth of GDP, productivity and market working hours, European countries will hardly sustain the convergence towards the U.S level of GDP per capita. Then add to this the looming European pension/retirement crisis as a consequence of generous systems and lower employment-to-population ratios and you have the makings of significant global economic tensions.

Since the 1950’s European nations have not enjoyed grand colonial opportunities to supplement their economies. Any ambitions to rise to an American standard of living, was tempered by a core operational strategy to partner with the United States globally in a joint pursuit of low cost natural resources – sharing in the spoils of war and peace to sustain their post colonial economies. During the cold war era, with a bi-polar world, European nations, acting independently, were content to play second fiddle, and be a supportive partner with the United States. Second fiddle meant that while the US would get the lion share of any winnings, Europe would be happy with any spoils and in exchange (and more critically) receive political security by the US armies stationed in Europe. The threat of Russian invasion has now diminished. Germany has been reunified. The ‘Iron Curtain’ has dropped. One by one, former communist countries have joined the European Union.

Europe is now an increasingly unified and coordinated economic and political force. The European Union is now a single market with a population of 500 Million (greater than the United States) and a total output of $18.4 Trillion (greater than the United States).

While Britain and Norway have enjoyed relative prosperity with income from North Sea oil, the rest of Europe did not do as well. And, in any case North Sea oil revenues have diminished. Europe is now facing compounded problems.

Every time Europeans are pushed to a corner, they have always resorted to shadowy political policies. The easiest thing to do, when your own economy can not pull a rabbit out of hat, is to steal wealth from other nations! European colonial history is a testament to that approach. Partnership during the cold war era however, has now increasingly developed into outright manipulation of the USA.

There is a trade war looming, and Americans must understand that in very subtle and maybe not so subtle ways, the Europeans have banded together and are undermining American interests globally – in their favor.

I have Four Cases in point: Iraq, Iran, Central Asia and Israel


It turns out now, in retrospect that the core decision to invade Iraq was based on faulty intelligence fed to the United States by its so called allies. (Allies that by the way, are now holding hearings to ‘pretend’ that they were somehow bullied into ‘supporting’ the United States in the war…who do they think they are fooling?). Here we are, many years later, the United States has spent over a trillion dollars and literally given up thousands of lives to topple Saddam. And who is now in charge of Iraq’s principal oil fields? The largest fields have been awarded to Britain and Russia! It’s not just that they are the largest fields, but they are strategically positioned in Southern Iraq, near the port of Basra. The Russians were given their West Quma fields largely as a concession for better relations by the Obama administration. The Russians did after all have a $40 Billion contract with Iraq before the war, and felt ‘cut out’ by the invasion; and were as a result supporting the insurgency ‘secretly’. Call it the price for peace. The Brits of course, were our stalwart allies providing 10,000 troops who quickly controlled southern Iraq around Basra and now control the giant Rumaila oil field there (one of the largest …that is multi-Billion barrel plus…fields in the world). And the Majnoon oil fields (30 Billion + barrels) has been awarded to guess who “Royal Dutch Shell” (British/Dutch enterprise). What’s left? Not much. There is this very large oil field in Kirkuk (in Iraq’s Kurdistan) that has major logistical issues …the oil has to piped out through foreign countries to tankers. (Basra, in Southern Iraq, is a port on the Persian Gulf). There are these smaller fields scattered across Iraq, with similar logistical issues. All the nice spoils have gone to Europeans. America spent the resources, Europeans took the spoils.

Central Asia:

In 1979, Ayatollah Khomeini trounced into Tehran on board an Air France 747 – having manipulated a popular uprising for freedom and democracy into a cry for a theocracy largely branded and promoted by the BBC Persian Radio service! In 1977, in Guadeloupe, Jimmy Carter had agreed to European proposals (James Callaghan, Helmut Schmidt, Valerie Giscard d’Estaing) have America’s stalwart ally in the region (the Shah) toppled, and relished the potential of locking Russia up with an anti-communist, ‘Islamic Green Belt’ across its southern borders. Trying to slip out of the lock, the Russians invaded Afghanistan, only to find a mindless and fanatic enemy. It bogged the Soviets down into a protracted war that bankrupted them. It was a brilliant strategy…backed by billions of dollars of illicit US foreign aid to the Afghans. It not only weakened the Soviets, but also weakened Iran and eventually led to the break up of the Soviet Union. Suddenly, the Caspian Sea was surrounded by western client states like Azarbaijan, Turkmenistan, Uzbekistan… The Caspian Sea, the world’s largest untapped Oil and Gas with over 23 Trillion dollars (at today’s valuation) of reserves, was suddenly available for exploitation…and Iran’s 50% ownership (ratified by numerous treaties over 200 years) transformed into a 10% claim overnight. Brilliant!

Fast forward today, and what do we find? Who is the largest oil company in Azerbaijan? Do you really need the answer? BP (British Petroleum) of course. Who is number two? Luk Oil of course. Iraq mirrored!


Not long after the Shah was toppled, American embassy staff were held hostage in Tehran for 444 days. We now know that this whole event was stage managed for political effect in the U.S. One of central players in this secret drama (involved in the famous October Surprise meeting in Paris with George Bush) was Mehdi Karroubi (one of the ‘reformist’ candidates opposing Ahmadinejad in Iran’s recent mired Presidential elections).

One major consequence of the ‘embassy hostages’ event has been that the United States has in essence had no direct relations with Iran for the past 30 years. Iranians import all their products from Europe or the Far East. Sanctions by the United States have been largely ineffectual. The big winners in Iran have been the Europeans and the Chinese. The Russians are building multi-billion dollar nuclear plants; the Germans (Siemens) have provided Iran with major industrial products such as components for its electric grid, power plants; the Italians have built large chemical plants; the Brits had the double benefit of shutting down Iran’s output (and therefore maintained prices for their own North Sea oil) and at the same time dominated trade to Iran through their Dubai protectorate. Despite the rhetoric, the Europeans have been able to maintain a very high degree of influence within Iran’s theocracy; and have been very effective at ensuring a distance between Iran and the U.S. The Europeans have continued active trade with Iran. Again, let’s not forget Ayatollah Khomeini came to Tehran on board a charted Air France 747; riding a propaganda wave executed by the BBC’s Persian Language service. The Mullahs have been and are European pawns. That is why the current effort to supplant the regime with “pro-American” agents like Moussavi and Karroubi will fail. Despite the show in London last week with Tony Blair, the Europeans will take care of that. Iran will not fall to America. The Europeans have already won. There will be no revolution in Iran.


Lest we not forget that one of the biggest issues, impacting American business and reputation in the world – is American support for Israel. Ironically, it was the Europeans that created that mess: remember Hitler caused the holocaust, and the Brits promised “Palestine” to the Arabs and the Jews at almost the same time …and created the conflict. Now it’s been up to America to ‘clean up the mess’ and the Europeans are viewed very favorably throughout the Middle East. Israel, a country with no natural resources, of no vital strategic value to the United States, is America’s largest recipient of Foreign aid! You can not even get elected in the US without swearing allegiance to Israel…AIPAC will make sure of that. What a weird situation?

The Europeans have manipulated the United States – and thrown America at the fore, and are now cleverly supplanting American interests in favor of their own. The Europeans (and now Israeli’s) have leveraged US resources – treasure and blood.

You can not blame them after all – they can get away with it. Bush fell for Tony Blair’s bullshit. Bush believed the bogus intelligence. So did Eisenhower (from Churchill) in 1953. All they have to do is open their mouths and Americans swoon towards a Brit and forget their self interests. American girls just swoon to European dudes …pants down.

Your best friend can sometimes be your biggest enemy.

Ask Wayne Bridge about his best friend England Soccer team captain: John Terry…and you might understand a few things about the British mind. Wayne Bridge’s wife (who cheated on him with John Terry) is French! The rest of Europe is not too different.

There really needs to be a fundamental review of American foreign policy – if only to dig America out of its financial mess. The situation is much more perilous than anyone can imagine.

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