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Oil & Economic Crisis

Oil & Economic Crisis image
Parent Issue
Day
11
Month
October
Year
1974
OCR Text

The energy shortage may be a capital[ ist fabrication, but the economie crisis it is causing is real, and a lot of the reason has to do with the prices being charged by ' the oil cartel. Petroleum prices are as much as 400% h higher than a year ago. Not only indus[ trial countries like the United States, L Britain and Italy, but also Third World countries like India and Bangladesh are [ plunging their balance of payments deeply into the red to buy oil. According to projections, the Middle ■ East oil-exporting countries are piling up foreign currency reserves at the rate of $100 billion a year, an accumulation which, it is widely being predicted, will ' bleed importing economies white, . tle the monetary system and collapse k governments. r Secretary of State Henry Kissinger has L recently spoken of oil as "the main reason i for a possible collapse" of the present governments in Western Europe, making them "ripe for Communist domination." k At the Energy Conference in Detroit r President Ford talked of the "dangers of confrontation" over the oil issue. Both statements were interpreted as references to possible U.S. military intervention in the Middle East, but response from allies was cool and from heads of oil stateiswift and angry. "No one can shake a finger at us," retorted the Shah of Iran, "because we will shake a finger right back." One of the reasons the Shah can shake his finger is, of course, the armaments which the U.S. and Russia have been pouring into the area for years, making it considerably riskier to wield the big stick. At the United Nations last week Chinese Deputy Foreign Minister Chiao Kuanhua called the oil cartel's price hike a "historie pioneering action" in the struggle against "imperialist plunder and exploitation." "To fly into a rage is futile," Chiao said of Ford's and Kissinger's statements, "to bluff is also futile." "The profound signifïcance of the oil battle," Chiao added "lies in the fact that the developing countries have united themselves and independently exercised control over their national resources and [ fought against plunder, exploitation and . the shifting of abuses onto them." Wliile Chiao admitted that some devel' oping countries would suffer temporary . hardships, he said this should not negate the "historie significance" of the oil producer's actions. In private meetings with European fi nance ministers, Kissinger has since suggested that oil consumption be cut as much as 15% to force down prices and break apart the oil cartel. In the United States this would mean gas rationing, with. an impact about as severe as ocurred dur ing the gasoline shortage last winter. Besides sending balance of payments ] déficits to near soundless depths, the oil . i crisis is also aggravating in complicated ■ ' ways the inflation rampant in capitalist [ economies. Even capitalist economists . i are no,longer;very convinced of the ■ ness of their explanations and prescrip] tions for inflation, deepening suspicion . ( that inflation's cause is in the very nature - 1 of the system itself. f