we'll. bring you the latest in science technology from. the future. in the united kingdom. house bill and. the old way even if. it gets in the millstone hutto some country house. the. towns. the crew me to feel. the oil the ruben's hotel. wealthy british.

markets why not. find out what's really happening to the global economy in. the e.u. commission chief has written to euro zone nation leaders saying the bailout fund may need to be increased yet again as fears mount europe's sovereign debt crisis could engulf spain no relief in sight on the u.s. front where investors fear the country could be staring down another recession fleeing american stocks that have plunged into wall street's worst day three year. anti-government protesters in syria reject president assad legalising opposition parties activists say more than one hundred have died since the weekend and a continuing assault by troops on the rest of the city of reacting to the bloodshed the u.n. security council condemned the government's crackdown on demonstrators and called for internal political dialogue to end the violence. and the story of

a palestinian woman on a mission for peace after one speeding a would be suicide bomber jailed after launching a failed attack in israel. crosstalk discussing whether middle east instability could trigger higher oil prices and worsen the global economic picture stay with us . for. lo we welcomed across the computor lavelle the price of oil the curse of oil with the ongoing unrest in the arab world petroleum markets are more than reacting is

the global economy on the edge of another deep recession and are all high oil prices here to stay is the price of oil time to arab revolutions and aspirations. and. to discuss the impact of all of this on oil prices i'm joined by michael klare and in springfield he is director of five colleges program in peace and world security studies and author of rising powers shrinking planet the new geopolitics of energy in new york we go to and he's director of communications and marketing at euro pacific capital and in frankfurt we cross to william engdahl he is an economic researcher and the author of a century of war anglo-american oil politics and the new world order and another member of our cross talk team in the hunger for a gentleman this is cross talk and you have different opinions i want my viewers to see them william let's go to you first let's talk about the possibility of what's

people are calling the return to the great recession so if you do have a magic number what the price of oil would be for the entire economy to take another major dip name your price well i think we have to differentiate here the. the price of oil reserves in the u.s. economy i think will have relatively little effect on recovery because there is no recovery in the u.s. economy it's going into a deep depression and it's deepening by the hour by the month by the by the year in europe it can have an impact in so far as it has an impact on growth in china big. does the local mode of the marvelous german recovery over the last eighteen months has been exports of machine goods and industrial products to china primarily so that could have an effect i don't think it would have an effect unless there's a sustained prize at least above one hundred fifty or thereabouts and we're not we're not there yet but by a long shot i think the hedge funds and the big players like goldman sachs and

morgan stanley j.p. morgan chase are having a field day with what they see is a perfect storm a beautiful excuse to manipulate the icy futures in london and jack this thing up for all it's worth as long as it lasts ok so the typical people are going to the bank michael if i can go to you do you have a magic number that way you think where we really did rail the global economy you know i think that we have to see the multiple ripple effects of what's going on it's not just the price of oil it's also the price of food food is now higher than it's been ever according to the food and agriculture organization as the price of oil rises it pushes up the price of food and this i believe is going to generate more protests and up tables around the world this will create more chaos and more disturbances and this could have further effects on the price of oil so the crisis

that we see today in the middle east as far as i'm concerned is nowhere near that conclusion i think we'll see more ripple effects and the economic consequences of that are yet to be seen and if we're going to if i go to you right now what about you i mean that's a very good point because we see we see a lot of these riots that brought about these revolts in maybe revolutions we have to see how it's played out because of food prices and we have the added in element here that some of these countries like libya are major oil producers. right well it's ironic that you know the trigger of these really evolutions were were food prices were the cause of the rise of inflation these markets no i'm not saying that was the only cause of these riots these are long simmering. regimes that have never been popular with that with with their people so the rise in inflation was really the spark not the cause but those prices were rising in the first place because of federal reserve policy i mean it's the united states that's primarily flooding the

world with cheap money. that in order to bail us out of our own recession i agree with the first guest that we're not really seeing a real recovery in the united states but we are seeing a recovery based on the metrics that the federal reserve uses they see low inflation because they don't really count food and energy and they see a lot of spending which they consider economic growth now these higher oil prices and i do agree that oil prices it's a sustainable now north of one hundred twenty dollars a barrel that'll take a sizeable chunk out of u.s. g.d.p. growth that will slow the economy down but it's not going to raise inflation as the fed sees if they don't count energy as inflation so that will cause them to reliquefy the markets even more to try to keep us out of a recession and that will again ignite food inflation around the world and add more fuel to the fire william i don't think you and andrew are going to agree so much do you want to elaborate because you've talked a lot about this in the past on crosstalk. well first of all the link that

michael mentioned between food and energy since two thousand and seven we've had a and insidious link through the subsidization by the bush administration and now the obama administration the european union this madness called biofuels because that takes grain acreage out of production for corn forty percent of the american corn crop is now burned as a fuel alternative more c o two and more toxic if you want to measure c o two then even normal gasoline but it has a beautiful effect in terms of the the grain cartel companies buying the a.t.m. and cargo and so forth to boost the grain prices wall street is having a ball with this so and that the twin effects of these two the synergies between the two are really a devil's circle that is highly dangerous i think that's something we have to address if countries in the o.e.c.d. really want to do something about this they should end the biofuels subsidy madness

they should reduce taxes on gasoline it's sixty seven percent of the tank of gasoline in germany is is state federal taxes so. you know there is much leeway here to move around but. ok and you want to. head the yet a bio fuel subsidy is very destructive it's a boon not just for the big big conglomerates but also the. regular corn farmers the united states get it we have a huge lobby they benefit from it but i think the more important subsidy is not so much the biofuels but the subsidy the u.s. dollar i mean again the fact that there's so many countries around the world that have to maintain their dollar peg in order to maintain their role in the global monetary system that allows this place and that we're creating here the united states to take root around the world and by by ending that dollar subsidy by allowing american america to create its own inflation have that inflation be to

remain at home that will lessen the burden that we're seeing in a lot of these places and that what is taking this are a level two as a reserve currency if i understand you correctly you're saying that we're all or no longer be a major reserve currency that ends the american hegemony in the world and of ok i think i'd like to go down that path a little bit later here michael if i go to you you know i started the program with geopolitics in our other two guests have gone to finance very quickly and there's that's an element of it but let's continue with the geopolitics of it all i mean when we see the spread of protests in the arab middle east we have to think of other cut the other producers that have been relatively quiet and very autocratic when we look at some of the places like saudi arabia now we see instability there and we have all as i was sitting down to do this program i mean iraq is on fire now with protest as well i mean not that it's a major exporter right now but i mean we're looking at the entire exporting region

now that then we get into a really different ballpark here because different types of regimes could come into power not necessarily friendly to the united states could even be hostile to the united states now we're changing the oil. that dynamic in the world in a very big way. right to raise this question that's why the developments in teeny bahrain assume they've been shoved off the news the past few days because of developments in libya but what's happening in bahrain is very significant even though the population there is less than one million people it is significant because it is a clash between a shiite majority and a sunni men minority and a monarchy as well and if the if if that conflict plays out and spreads to saudi arabia then we're in a very different ballpark now in saudi arabia of course you have

a sunni majority and the shiites are only a minority but they are a majority in the oil producing region in the eastern province adjacent to bahrain so if they rise up as they have in the playoffs they could cripple oil production in saudi arabia and that would have a catastrophic effect production around the world that would send oil prices way above one hundred fifty dollars a barrel i'm not sure that's going to happen but certainly the saudi leadership is concerned about it or freeing ten billion dollars in new payments to young saudis this is a sign in my mind that they have very worried and william if i can go to you i mean the reason why i bring this up is that less than two months ago nobody expected any of these things happening in the greater middle east except for really insightful people like robert fisk and other writers on the middle east you have c.n.n. and fox and everybody else thought oh everything was hunky dory you know and all our great dictator friends are are still in power for stability reasons but i mean

i bring up the saudi card because the unexpected is happened and who knows what the future consequences of what we're seeing happening right now will be. well let's go back ten years to one condi rice and the bush administration introduce the greater middle east in the g. eight in two thousand and four well in seven years and. this is part of a long planned scenario the pentagon is involved in at the state department is involved in it i think the reason that we're seeing these these are riots the i.m.f. cause the food crisis in tunisia just at the time that the hedge funds and wall street were pushing prices up using the biodiesel and the harvest failures in russia and such things but the there's a geo political trigger to this that is coming out of washington they're trying is there one person in washington turned it creative destruction in the middle east to upset the chess board and make sure that in fact what has been happening since two thousand and one is many of these arab countries are fed up with washington's

militarization of the middle east are fed up with the mess in iraq they're fed up with the heavy handedness that's coming out of washington and they're looking to china they're looking to russia they're looking to the european union for a alternative to the dollar and that i think is why we're seeing all this right now and yes if saudi arabia blows it's going to be ok i'm going to jump in on this i want to go to a great restaurant short break we'll continue our discussion on oil and global economic state with our.

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feeds now in the palm of your. question on the dot com. welcome back to crossfire i'm peter lavelle to remind you we're discussing the prospects for sustained global economic recovery. but first let's see what russians think about their country's economy. on waves omegas protestants with the ongoing outrage happening in the oil rich middle east region prices for black gold have risen dramatically many now say the andras has a direct effect on oil prices and global economic recovery the russian public

opinion research center all citizens above their prospects for russia's economic situation forty four percent believe it will experience positive trends during the next twelve months however another twenty eight percent do not see this in such a positive light how will these attitudes change in the life to approach the oil prices hikes as protests grip the north africa and the middle east and will it eventually derail the global economic recovery. ok michael before we went to the break we were talking about the strategic impact of all of these changes in the arab middle east inexpressibly the oil producers and you want to jump in and it may be extrapolated to continue with something that william was saying if it's say for example of saudi arabia were to go off the rails. yes well i i wanted to test the notion that the united states was somehow behind what we see or seeks to benefit from this my sense is that

washington's default position is to favor authoritarian governments in the middle east whether the qaddafi version or the mubarak version or the king abdullah version this is the been american policy for generations and i don't think that that michael that's not only is the reality this is something different excuse me with an alternative all right william this is crosstalk go ahead jim so let me use the reality since under different if hillary clinton brought in the leaders of the egyptian cafaro movement to washington to be trained to have a picture on my website of in the reshaping hands with many of these people well before this kicked off two thousand and eight the pentagon sent the rand corporation to train come. to be successful after they made some mistakes in an earlier attempt the national endowment for democracy is up to their ears in all of

this in every single country there is no neutrality of washington ok please will you be well you know barak start ok if you're not attempting that walking to try to control events on the ground in the middle east and that's patently absurd i mean there's no way we could i mean it's so chaotic it's so although i believe these are the way we go non-central i mean there was a man when they were that the cia is calling the shots it really defies description i mean i don't think america is necessarily doing if you're already on this and it was my you're not up to speed on the latest i mean there was a look at on the right on. your i was saying was he or or tripoli and you can realize this is not being dictated by washington but i mean certainly we did have a i think i'd interest in the status quo we weren't happy with these dictators i was unhappy with these dictators but you know the devil you. you know it was generally better than devil you don't know and we certainly don't know what's going to happen here i'm not so concerned about what's going to happen in egypt and in

libya i think those populations are are relatively modern and have some pro western tendencies the big question as i said earlier is saudi arabia i mean we don't know what's going to happen now right now saudi arabia looks quiet but two months is an eternity you know know what's going to happen there and if things do stabilize in saudi arabia i see a much greater islamised undercurrent in that country which could veer saudi arabia off in a very dangerous direction and that would have a severe geo political consequence and economic consequence argument michael if i can go to you you know we all worry about the outcomes of these situations here but nonetheless i think logic would kind of dictate if you have a natural resource that other people want new governments hopefully democratic governments or governments supported by the people they're going to want to sell this oil and reap the profits from that resource that they haven't been able to do for decades it's been stolen by dictators backed up by washington and and their european allies now we could have

a situation where we have different governments with legitimacy that would obviously want to export their oil to benefit themselves so i mean it's not a catastrophic situation it's just how we get there. well you have to distinguish me lately because i might go here legally michael michael you know michael first michael let me just finish my point yes this is a difference between pumping oil and pumping enough oil to satisfy the ever growing thirst of the world world market and my sense is that just because these new governments will pump oil i'm sure they will but will they pump enough to keep adding to world supply that i'm not sure if you look at venezuela where you have a radical populist government they have not been able to increase production this is what i think is likely i think no matter what the outcome is this is my prediction no matter what the outcome of all of this is we will not see the ever

rising production levels that the department of energy and the international energy agency predict for the years ahead we should expect from now on diminishing levels of oil coming from these countries for technical and political and other reasons that's what i think. i only have now a little reason why do you think it's a ok william going to be bad only as a political factor the idea that we're peaking on oil worldwide this absolute peak is scientifically invalid and it can be demonstrated that's a longer discussion about the resources are there is just a political question of getting at them we saw that in the caribbean cuba the b.p. disaster was probably because they had one of the deepest migration channels going going. into the deep sea there and find oil the some some scientists think it's another saudi arabia. or brazil it's the oil is there it's

a political question of whether the anglo american oil giants and the governments behind them the military are going to let the let these countries develop that for their own use. this is us in a political little decision this is it's a cheat a logical question those fields you describe are at the very edge of the technological capacity and they may defy even the most strong this political will to do so or even on the model of these whether you like all the trees the peak oil thing is a myth that was created by more importation offering and selling oil and the oil giant think ok maximum prices and you've been very very melody and you've been very patient go right ahead go ahead. thank you a lot of the projections about all demand kind of discount how much demand will be coming from china over the next twenty or thirty years and i think there is soon being a wealth growth in china because of course china wants a lot more energy they're going to import a lot more oil and if they do if the rev if the chinese come to their senses and

allow their greater appreciation of the r. and b. not only that will unleash their domestic demand because they'll have greater purchasing power and will be able to buy more oil around the world as oil becomes cheaper price than their own currency and they're going to experience a significant significant address was asian which could put severe strains on global global production and that would especially in dollar terms of the dollar remains a currency that we're using in europe and a lot of must much of the world use a reserve you'll see the dollar price of oil go crazy. whether or not they they start tapping offshore offshore brazilian oil fields ok well you know you think about that i mean again i mean i guess we're going in different directions here i still think that we will have these exporting countries and list they with the middle east because that's in the news right now they're still going to want to get their oil to market aren't they if they're going to want to have even the same customers they don't really care they want the money and russia is an energy exporter it just wants the money it doesn't play politics with it i was told by

someone in washington about twelve years ago who formed won't give details that there's enough yet enough. oil. u.s. intelligence satellite reconnaissance and other physical tests in the disputed territory between yemen and saudi arabia to feed the entire world economy for the next fifty years that's only one example somalia is another one the world is swimming in the oil we're running into oil not running out of it so again i say this is a political a geo political question american power since one thousand nine hundred five has rested on control of oil control of oil everywhere and. how that middle east situation develops is going to have a massive impact on that but that's a political question not a resource question michael if i hear your answer the question peter is yes they want to sell oil ok all right michael if i can go to you irrespective irrespective of the anybody irrespective if you agree in the peak oil theory or not it let's put

that aside right now it's still going to be an issue of price you know input political turbulence will always for exporters drive up the price i mean again the kind of in the program where we began i mean how we lasted is that when we going through in a recovery i mean where do we get a tripping point where then it doesn't really matter how or how much oil is because it will be too expensive because it will break economies. well i think that's the right question and i do worry very much about the american economy because this is an economy and life style that is heavily dependent on petroleum and there's already signs i mean i drive up to the gas tank every day and the price is really rising very rapidly in front of our eyes and that's going to have a dramatic effect on people's spending habits. ok andrew what do you think i mean i think i've been you know i know you know everything's fine are still fine and

refined going to be i think i think we're going to see right now we're seeing in the united states gas prices closing and closing in on four dollars a gallon. at that's four leaders by the way it is getting close if you get up to five or six i mean people are very strong out to begin with really trying to make ends meet if that oil price and we're very into energy intensive united states that could really send our economy into into a double dip recession and when that happens is that as i said earlier the federal reserve is going to are going to pull out more monetary open up the floodgates even more to flood the world again with more liquidity which is going to create even more problems around the world so it's this oil situation the list does not help unfortunately was kind of inevitable given given what's been going on there for thirty or forty years yes inevitability here we're going to give you the last word ten seconds go ahead ok i think the oil price at this level of one hundred hundred twelve the is not a disaster if it's short term the u.s.

economy is already a basket case and this is not going to tip it over it's already in a depression not a double dip recession already really so thank you very much you know many thanks my guest today in springfield frankfurt and in new york and thanks to our viewers for watching us here r.t. see you next time and remember of crosstalk. hungry for the full story we've got it first hand the biggest issues get a human voice face to face with the news makers.

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