Chapter 60 The economic impact of the oil crisis

At the end of 1973, the social impact of the oil embargo on the United States can be described as "panic".It is odd that throughout 1972 and early 1973 the large multinational oil companies, led by Exxon, pursued a policy of creating a domestic shortage of crude oil in the United States.Nixon gave the companies the green light through an unusual series of decisions, advised by his staff.Thus, at the time of the oil embargo in November 1973, the impact could be said to be dramatic.Under the U.S. Trade Agreements Act of 1959, the White House is responsible for controlling U.S. oil imports.

In January 1973, Nixon appointed Treasury Secretary George Schultz as assistant to the president for economic affairs, in charge of the White House's oil import policy.Deputy Treasury Secretary William Simon, a former Wall Street bond dealer, was entrusted with the important task of chairman of the Petroleum Policy Committee. The oil import and supply policy for the critical months leading to the oil embargo in October was formulated by this committee. In February 1973, Nixon was persuaded to create a special "energy triumvirate," the White House Special Energy Council, which included Schultz, White House staffer John Ehrlichmann, and National Security Adviser Henry Kissing grid.Although no one in Washington or elsewhere is aware of it, everything is quietly being laid out according to Bilderberg's plan.By October 1973, U.S. domestic crude oil inventories were already at worryingly low levels.The OPEC crude embargo sparked panic among the public buying gasoline, calls for rationing, long fuel lines and signs of recession.

The oil crisis has hit hardest in New York, the largest city in the United States. In December 1974, nine of the world's largest banks, led by David Rockefeller's Chase Manhattan Bank, Citigroup and the London-New York investment bank, Lazard Brothers Bank, informed old-fashioned politicians - Mayor Abraham of New York Beam, that he hand over the management of New York's huge pension fund to a committee formed by these banks, the Municipal Assistance Corporation, or the banks and their media partners will exert influence to destroy New York's finances.Not surprisingly, the powerful mayor capitulated, and the city was forced to slash investment in roads, bridges, hospitals and schools to pay down bank debts, laying off tens of thousands of workers.America's largest city began to fall apart.Felix Rohatyn of Lazard Brothers started out as a collection agent for the new bankers and was dubbed "Big Mac" by the media.

In Western Europe, the shock of rising oil prices and the embargo have also had a huge impact.From Britain to continental Europe, one country after another felt the impact of the worst economic crisis since the 1930s.Across Europe, bankruptcies and unemployment have reached alarming levels. The German government has instituted emergency rules banning cars on weekends in a last-ditch effort to save money on oil imports.By June 1974, the impact of the oil crisis had led to the collapse of the German Herstadt Bank and the Deutsche Mark was in crisis. In 1974, with Germany's spending on imported oil rising to a staggering 17 billion Deutsche Marks and an estimated half a million people out of work due to the oil crisis, inflation had reached a worrying 8%.The fallout from the crisis caused a sudden 400% increase in the price of basic energy in Germany, devastating industry, transport and agriculture.Key industries such as steel, shipbuilding and chemicals are also in deep crisis.

Affected by the domestic oil crisis, coupled with the exposure of his adviser Genscher Guillaume's suspected East German espionage, Willy Brandt's government fell. In May 1974, Brandt submitted his resignation to Federal President Heinemann.The president then appointed Helmut Schmidt as chancellor.At that time, the governments of most European countries were forced to step down due to the impact of the oil crisis on the economy. For the less developed countries of the world, the effects of an overnight quadrupling in energy prices appear even more severe.Most of them don't have much domestic oil resources, and now they suddenly have to face the unexpectedly four times the cost of energy imports, which they can no longer afford, let alone chemical raw materials and fertilizers, because these are all extracted from oil.At this time, commentators began to discuss "triage," a method of deciding which wounded to treat first on the battlefield based on factors such as urgency and likelihood of lifesaving, and the emergence of "third world" and " "Fourth World" (non-OPEC countries) and other new vocabulary.

In 1973, India had a trade surplus and was on a healthy track of economic development. In 1974, India's foreign exchange reserves stood at $629 million, but its annual oil import bill to pay was almost double that, at $1.241 billion.Sudan, Pakistan, the Philippines, Thailand, and all African and Latin American countries faced large trade deficits in 1974.In 1974, developing countries ran a total trade deficit of $35 billion, a huge figure for the time, according to the International Monetary Fund.And, not surprisingly, that was four times the deficit in 1973, and the price of oil was exactly four times higher. In the early 1970s, after several years of rapid growth in industry and trade, the industrial landslide that swept the world from 1974 to 1975 occurred, and the severity exceeded any post-war period.

Just when the 1973 oil crisis planned by Kissinger dealt a devastating blow to world industrial growth, it brought huge benefits to some people-mainly the big banks in New York and London and the so-called "seven sisters" of the British and American multinational oil company.By 1974, Exxon surpassed General Motors to become the largest company in the United States in total revenue.Its sister companies -- which include Mobil, Texaco, Chevron, and Gulf Oil -- are doing much the same with Exxon. Much of OPEC's dollar revenue, Kissinger's "recycled petrodollars," is deposited with major banks in London and New York that not only process dollars but also trade in international oil.Chase Manhattan, Citigroup, Hanwha, Barclays, Lloyds, Midland—all made windfalls in the oil crisis.Next, we'll see how they recycled their petrodollars in the 1970s, and how this set the stage for the severe debt crisis of the 1980s.During the oil crisis of the 1970s, Kissinger had a close relationship with the British Foreign Office.To illustrate this, it is useful to cite a speech given by Dr. Kissinger at the Royal Institute of International Affairs, London, on 10 May 1982.The speech is very candid.After a few minutes of lavishing praise on two centuries of British skilful "balance of power" diplomacy, Kissinger applauded the "special relationship" between the United States and Britain after the war, saying:

"The diplomatic history after the war is full of 'reconciliation' and 'understanding' between Britain and the United States, sometimes even on some key issues, which were not written in official documents... Britain gave the United States a lot of practical help, even as It is to participate in the internal planning of the United States. This level of closeness has never been seen between any two sovereign countries in history. During my tenure, the United Kingdom has played a fundamental role in some bilateral negotiations between the United States and other countries. role... When I was in the White House, I maintained a close exchange of information with the British Foreign Office, even more than I did with the US State Department..."

Later, Kissinger cited the example of the United States in the negotiations on the future of Rhodesia, "When I participated in the Rhodesia negotiations, I didn't even figure out the difference between the working documents and the cabinet approval documents, and I hurriedly took the British Proposals drafted in British English went into battle. Collaboration made us what we are today…”