Belmont Club

On The Track of Mammon

Whoever said the key to solving any mystery was to “follow the money” was a genius.  Foreign Policy noted in an article titled “The Billion Dollar Caliphate”, that ISIS was above all a multi-trillion dollar concern. “According to a 2014 Thomson Reuters study, the terrorist group has more than $2 trillion in assets under its control, with an annual income of $2.9 billion” largely stemming from taxation and oil.  Earlier this year Graeme Wood, argued in the Atlantic that the West has misunderstood ISIS all along.

In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.

Obama was overthinking things.  It was quite simple: the Islamic State was “Islamic”, Wood, said and all it wanted was to be a “State”. Vadim Nikitim at the Independent realized this meant that ISIS was like any other corrupt government with an ideology and predicted that sooner or later the West would simply recognize the organization and make peace with it, like it has with Robert Mugabe, the Ayatollahs and the Kim Family in North Korea. “When pariah states are brought into the international system,” Nikitim says, “they become subject to constraints. Consider the USSR.”

Speaking of which the USSR, now known as Russia, is like ISIS just trying to get by  Jeffrey Hagenmeir notes that the Kremlin is broke and falling deeper into a hole by the day “As recently as 2011, Russia was the 9th ranking economic power. ”  Collapsing oil prices have pushed it down to 13th and falling.  The Kremlin’s straitened circumstances are illustrated by its use of an old Turkish fruit and vegetable refrigerator ship to supply its expeditionary force in Syria.

Its owners, a Ukrainian state company, assumed it would never sail again. When a Turkish company offered to buy it for $300,000, they watched as the hulk was towed away, presumably for scrap.

Nine months later the ship is back at sea, renamed Kazan-60, reflagged as part of Russia’s naval auxiliary fleet, and repurposed as an unlikely part of Moscow’s biggest military operation outside the old Soviet boundaries since the Cold War.

But it’s not just the Russians who are concerned about a buck. The Saudis who for years were believed flush with money are on the verge of going bust. McKinsey and Company wrote in a report released last week that “Saudi Arabia will have to rip up its social contract and invest $4 trillion in its non-oil economy if it is to provide jobs for its swelling population, and cope with an era of lower oil prices.”

Six million young Saudis are set to enter the labour market by 2030, McKinsey says, creating an urgent need for new jobs. “To absorb this influx would require the creation of almost three times as many jobs for Saudis as the Kingdom created during the 2003–13 oil boom,” the report says.

McKinsey expects that even jobs growth above historical trends would result in mass unemployment, and major cuts to standards of living.

This looming crisis means the Saudis must finish off the Islamic rivals who are just waiting for the Kingdom to implode in order to add it to the Caliphate. The Voice of America quotes Algerian author Kamel Daoud who says “Saudi Arabia is a Daesh that has made it.” There can be little doubt that if ISIS should succeed in taking Riyadh, the West will in Nikitim’s formulation, undoubtedly recognize and make peace with it.

There isn’t a dictator on earth that the Obama administration can’t bring itself to like. John Kerry told Vladimir Putin just a few days ago that the US “is not seeking regime change in Syria and that the U.S. and Russia see the conflict ‘fundamentally very similarly’.”

Even after Iran tested ballistic missiles in violation of a UN ban, despite the fact that Tehran was caught lying by the UN about its previous nuclear weapons research, notwithstanding the fact that the Ayatollahs have rejected any restrictions on their missile program the Obama “deal” will proceed as if nothing ever happened.

The Bergdahl hostage swap suggests the administration will go to any lengths to secure an agreement with the Taliban. A US News article suggests the president may have broken a number of laws to get 5 major Taliban war criminals out of Guantanamo Bay as a goodwill gesture.

First, was the violation of section 8111 of the Department of Defense Appropriations Act of 2015 for failing to provide Congress with at least 30 days- notice of the exchange between the single American soldier suspected of desertion and five senior Taliban leaders. This law was a law that Barack Obama himself signed.

Secondly, Obama’s Department of Defense violated the Antideficiency Act by using funds that were not legally available for obligation in order to perform the prisoner exchange due to their previously mentioned violation of section 8111 of the Department of Defense Appropriations Act.

Thirdly, it should be noted that it is illegal to give aid and comfort to the enemy. In a clearly unbalanced exchange, Barack Obama released five senior commanders of the enemy, leaving many to wonder if this is not a move that will provide aid and comfort when the five potentially return to the battle field to lead groups to kill American soldiers.

All of these suggest there is no serious plan to contain ISIS as such. A perusal of Hillary Clinton’s “Plan to Stop the Spread of ISIS” on NBC News reveals an almost completely defensive strategy based on surveilling the American public.

Stopping potential jihadists from getting training overseas is a critical part of a what she dubbed a “360-degree strategy” to keep America safe. She said the U.S. needs to target the “network of enablers” that help finance ISIS, in addition to combating the organization online to cutoff recruitment. Clinton also called for stricter screenings for visa applicants who had been to a country in Islamic State-controlled areas in the last five years.

In addition, the former secretary of state highlighted the importance of working closely with Muslim-American communities and the location for the speech was no accident. The Twin Cities have been at the forefront of the fight against radicalization from terrorist organizations and Clinton praised the work of the law enforcement in Minnesota as a successful model for combating homegrown radicalization.

“We must all stand up against offensive, inflammatory, hateful, anti-Muslim rhetoric,’ Clinton said. “These Americans might be our first, last and best defense against homegrown radicalization and terrorism.”

Follow the money, remember?  The administration is not about to make enemies of states, not even Islamic ones, whether their names are Iran, Saudi Arabia or even ISIS, which after all may rule Saudi Arabia one day.

Yet there are actual levers the administration can employ to manage the situation that are not too distasteful for them to use.  They are 1) the price of oil and 2) rebuilding the American nuclear arsenal. While neither lever was their invention, both came fortuitously to hand. The recently announced Fed decision to raise interest rates will have the effect of making the dollar stronger and oil cheaper.

The Federal Reserve today announced it would raise short-term interest rates by a quarter of a percentage point. One of the immediate effects of the decision was to push the price of oil downwards, erasing gains from earlier in the week.

No matter where in the world oil is produced, the price of a barrel of crude is set in U.S. dollars. The stronger the dollar gets, the lower that price per barrel goes.

This will weaken the Saudis, who are overextended in Yemen and Syria.   The interest hike will also create layoffs among domestic American energy workers, which is an ironic reward for an industry which gave a Climate Change obsessed, anti-fracking administration the weapon against ISIS they could not make themselves.  But there it is.

In an even greater irony, Loren Thompson in Forbes notes that the president who promised the planet a “world without nuclear weapons” in 2009 has, in the last year of his administration signed off on “the biggest U.S. buildup of nuclear arms since Ronald Reagan left the White House.”

This isn’t what most observers expected from Obama. A longtime supporter of nuclear disarmament, he gave a speech shortly after being inaugurated in 2009 highlighting “America’s commitment to seek the peace and security of a world without nuclear weapons.” He backed up that commitment with concrete actions. When his administration completed the third post-Cold War review of America’s nuclear posture in April of 2010, it called for “a multilateral effort to limit, reduce, and eventually eliminate all nuclear weapons worldwide.” A nuclear arms pact signed with Russia the same year called for cutting the number of warheads in the strategic arsenal to a quarter of the level agreed to in 1991 — about 1,500. The New York Times reported early the following year the administration wanted to cut the warhead count yet again to 1,000. …

So what changed? … What changed was that the White House ceased believing it could work with Russia at a time when much of the Cold War nuclear arsenal was reaching an advanced state of decay.

This buildup will may keep Putin from clamping his hands around the prize just as it seemed within his reach. What he will do when the money runs out without being able to replenish it by requisition, who knows?

The Western elite indeed followed the money — straight into near catastrophe. Now after having given themselves over to cynicism almost completely, they are being forced — not by Republicans but by the disastrous consequences of their own policies — to grudgingly shelter behind the very things they regarded surplus to requirements.

The one thing stronger than “follow the money” is “save me please”. If the world escapes the disaster that has come so near, it will be thanks to the American economy and the US military — and not the feckless schemes of politicians in Washington.

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