Running on Empty, Part III
The Implications of the Petrodollar System for America and World Geostrategy
Welcome to Part III of Running on Empty, my three-part analysis of the Petrodollar system. Part I of this series explained what the petrodollar system is, how it came to be, and what its financial effects have been on the United States. Part II explained the petrodollar’s implications for foreign policy in the Middle East. If you haven’t read those yet, check them out!
In Part III, below, we look at how those implications scale to at the geostrategic level. In Part IV, we’ll discuss how the sanctions brought about by the Russo-Ukraine War might cause the petrodollar system to break down. (I’d hoped to wrap up the series in three parts, but due to length, I had to break it up.)
Ruler of the World Ocean
Many of history’s leading nations — and all of its commercial empires — have been thalassocracies. For the last 207 years, the globe has been dominated by maritime powers. The United Kingdom began the trend in 1815. Emerging as the winner of the Napoleonic Wars, the UK established the so-called Pax Britannica and enforced it with the world’s greatest navy. While Britannia ruled the waves, the sun never set on her flag. Germany tried twice to unseat Britain at sea, and failed both times. Japan tried to turn the Pacific into its own thalassocracy in the form of the “Greater East Asian Co-Prosperity Sphere,” but suffered defeat at the hands of the UK and the US. Since 1945, the UK has gradually ceded control of the oceans to the US. America rules the waves today. The World Ocean is mare nostrum, our pond.
Why was sea power been the basis of national power? The answer is trade. Since the Bronze Age, the sea has been the most profitable means of carrying out international trade. Phoenicia, Carthage, and Rome grew rich on maritime trade in a time when sea travel was far more dangerous and commerce far less widespread than today.
Today, despite amazing advances in air and ground transportation, the sea remains the most important method of shipping cargo around the world. According to the Organization for Economic Co-operation and Development (OECD), 90% of all trade goods are carried by sea. And of that, 40% of maritime trade consists either of fossil fuels on their way to be burned or of chemicals derived directly from fossil fuels.
America’s control of the World Ocean is what makes the petrodollar system possible. If the ocean became a war zone, or was riddled with privateers and pirates, fossil fuel shipments and international trade would collapse. If America could not project power over the ocean, it could not guarantee the security of Saudi Arabi, nor intervene in wars where necessary to enforce the system.
Conversely, no one can hope to unseat the petrodollar system while these conditions sustain. If 90% of all commerce must cross the ocean, and America controls the ocean, then America controls 90% of all commerce. “The power to destroy a thing is the absolute control over it,” as Frank Herbert so aptly put it in Dune.
To unseat America then, one must wrest from it control over global trade. But does that mean a war for naval supremacy? Not necessarily.
Ruler of The World Island
In a 1904 paper called “The Geographical Pivot of History,” an English geostrategist named Sir Halford Mackinder developed the theory of the “World Island.” According to the theory, the world is best understood as having just one ocean and one continent:
“There is one ocean covering nine-twelfths of the globe; there is one continent — the World Island — covering two-twelfths of the globe; and there are many smaller islands … which together cover the remaining one-twelfth.”
The single continent is the Eurasian-African landmass. According to Mackinder, North America, South America, Australia, and the rest are merely archipelagoes and islands next to the mighty World Island.
At the center of the World-Island sits the “Heartland”. This was Mackinder’s term for Eastern Europe, which he believed would be the key to global dominance:
Who rules Eastern Europe commands the Heartland
Who rules the Heartland commands the World Island
Who rules the World Island commands the world
The World Island gives a ruling power everything it needs. More than half of the manpower and resources of the world lie upon it.
Only two empires have ever ruled come close to ruling the World Island. The first was the Mongol Empire, which at its height stretched from Southeast China all the way to Ukraine. However, it was halted in Eastern Europe and North Africa, and so never came to dominate the whole landmass.
The second was the Cold War empire of the Soviet Union. The Soviet Union, by itself, encompassed more than 22 million square kilometers - nearly as much as the Mongol Empire at its height. When its Communist client states were added in, the Soviet Union dominated much more: all of Eastern Europe, most of Asia and North Africa, and half of the Middle East. This the closest any power has ever come to ruling the World Island.1
World Ocean Against World Island
The Cold War fought between the US and the USSR was a conflict between the power that controlled the World Ocean and the power that controlled the World Island. The winner won the world.
When America triumphed, the Soviet Union vanished from the world stage. In the aftermath of its victory, American policy makers vowed they would never again allow a great power to seize the World Island. In the new world order, American thalassocracy would reign.
The so-called Wolfowitz Doctrine embodies this national priority. Originally developed by US Undersecretary of Defense Paul Wolfowitz in a confidential 1992 planning document, it has more-or-less guided US foreign policy for the past 30 years. The Wolfowitz Doctrine states that:
Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.
There is only one region whose resources would be sufficient to generate global power, and that region is the World Island. Thus the Wolfowitz Doctrine states that America will never allow another power to take control of the World Island again. Who might try to do that? The Wolfowitz doctrine emphasized that Russia was still the primary adversary:
We continue to recognize that collectively the conventional forces of the states formerly comprising the Soviet Union retain the most military potential in all of Eurasia; and we do not dismiss the risks… from efforts to reincorporate into Russia the newly independent republics of Ukraine, Belarus, and possibly others... We must… be mindful that… Russia will remain the strongest military power in Eurasia and the only power in the world with the capability of destroying the United States.
5 years later, former National Security Advisor Zbigniew Brzezinski reiterated the Wolfowitz Doctrine. He was even more explicit about where the threat would come from:
For the first time, ever a non-Eurasian power has emerged… as the world’s paramount power. The defeat and collapse of the Soviet Union was the final step in the rapid ascendance of… the United States.
American foreign policy must… employ its influence in Eurasia in a manner that creates a stable continental equilibrium, with the United States as the political arbiter. … It is imperative that no Eurasian challenger emerges, capable of dominating Eurasia and thus also challenging America.
Eurasia is the chessboard on which the struggle for global primacy continues to be played.
Brzezinski’s use of the word “Eurasian” is fitting, as the Russians call their own version of World Island theory Eurasianism. Its leading proponent is Aleksandr Dugin, a Moscow State University professor sometimes called “Putin’s Rasputin” or “Putin’s Brain.”
Working in the tradition of continental philosophy, Dugin argues that the conflict between the World Ocean and the World Island has a psycho-spiritual elemental, with the thalassocratic powers inevitably aligned with individuality and capitalism while the continental align with collectivism and tradition. This 2016 article summarizes Dugin’s views:
Dugin sees Russia to be the leading nation in the Eurasian Union and has founded the International Eurasia Movement to make that happen…. Dugin digs even deeper into his very controversial historical analysis, claiming Eurasia’s current opponent is not just the United States, but Atlanticism, the axis of cooperation between Europe, US and Canada that crosses the Atlantic Ocean. These maritime, liberal nations value individuality and market forces.
Eurasia, on the other hand, represents the conservative philosophy of land-locked continentalism, which according to Eurasians, has among its values a hierarchical structure, law and order, traditionalism and religion... Thus we have Atlantis vs Eurasia. In fact, Dugin claims all history can be viewed as a battle between maritime and land-based nations.
After the Cold War, then:
American concluded that maintaining its national hegemony meant it had to forestall the rise of a Eurasian power on the World Island.
Russia concluded that reclaiming its national destiny meant had to again become the leading Eurasian power on the World Island.
These are inherently incompatible foreign policy goals and they have put the two powers back at odds. In the 30 years since the Cold War ended, Russia has systematically worked to rebuild its continental greatness, and the US has systematically worked to keep Russia from doing this.
Russia’s strategic actions have been widely reported in the west, ranging from the 2008 invasion of Georgia to the 2014 conquest of Crimea to the 2022 assault on Ukraine.
Less well reported are America’s operations. The US has expanded the Western sphere of power eastward, bring more nations into the NATO military bloc, the EU economic bloc, and the globalist-progressive cultural bloc. An example of the sort of methods that America uses can be found in this RAND report, Overextending and Unbalancing Russia: Assessing the Impact of Cost-Imposing Options. The 2019 report suggested actions such as:
Undermining Russia’s image abroad would focus on diminishing Russian standing and influence, thus undercutting regime claims of restoring Russia to its former glory. Further sanctions, the removal of Russia from non-UN international forums, and boycotting such events as the World Cup could be implemented by Western states and would damage Russian prestige.
Deploying additional tactical nuclear weapons to locations in Europe and Asia could heighten Russia’s anxiety enough to significantly increase investments in its air defenses.
Providing lethal aid to Ukraine would exploit Russia’s greatest point of external vulnerability. But any increase in U.S. military arms and advice to Ukraine would need to be carefully calibrated to increase the costs to Russia of sustaining its existing commitment without provoking a much wider conflict…
Most American are unaware of our own nation’s geostrategy and hence oblivious to the sometimes-ugly means by which our hegemony is maintained. Thus, when Russia claimed in January 2022 that it was being provoked by the United States, most Americans dismissed this as merely Russian propaganda.
Russia insisted that our inviting Ukraine into NATO was violating a promise that the US made to the USSR at the end of the Cold War. We insisted we’d never made such a promise.
Despite our protestations to the contrary, America did in fact make an “iron-clad” promise. We just didn’t make in writing. Newly declassified documents show that Gorbachev was verbally assured NATO wouldn’t expand. This is now an established matter of historical fact:
According to transcripts of meetings in Moscow on Feb. 9 , then-Secretary of State James Baker suggested that in exchange for cooperation on Germany, U.S. could make “iron-clad guarantees” that NATO would not expand “one inch eastward.” Less than a week later, Soviet President Mikhail Gorbachev agreed to begin reunification talks. No formal deal was struck, but from all the evidence, the quid pro quo was clear: Gorbachev acceded to Germany’s western alignment and the U.S. would limit NATO’s expansion.
What changed between 1990 and 1992? As the LA Times so sweetly puts it, “U.S. policymakers soon realized that ruling out NATO’s expansion might not be in the best interests of the United States.” E.g. the Pentagon formulated the Wolfowitz Doctrine.
What is America’s long term goal vis a vis Russia? I don’t have access to Yankee White security clearance to know for sure — but I’d bet my Substack that our goal is to break the Russian Federation up into a bunch of smaller countries.
That’s not a conspiracy theory; that’s a quote. Secretary of Defense Dick Cheney (later Vice President Cheny, architect of the petrodollar wars of the 2000s) stated he wanted to dismantle not just the Soviet Union but Russia itself, so it “could never again be a threat.” A gaff is when a politician accidentally tells the truth. I believe that policy has been quietly pursued ever since. Journalist Benjamin Norton, writing for Multipolarista, analyzes the situation as follows:
The Russian Federation of today consists of 22 republics. Moscow has long accused Washington of supporting secessionist movements within its borders, aimed at breaking away some of these republics, with the goal of destabilizing and ultimately dismantling Russia. Russian security services have published evidence that the United States supported Chechen separatists in their wars on the central Russian government.
The idea that America might see Russia as so threatening that it needs to be broken up might seem, on first blush, implausible. Nowadays, Russia is being ridiculed in many quarters as all bark and no bite, a Potemkin empire with a smaller GDP than Italy. But a better understanding of Russia’s economic power comes from looking at the real, not nominal, output of its economy:
The world’s largest exporter of wheat.
The world’s largest exporter of fertilizer.
The world’s largest exporter of natural gas.
The world’s second largest exporter of oil.
The world’s third largest exporter of coal.
The world’s fifth largest exporter of steel.
Food. Fertilizer. Gas. Oil. Coal. Steel. Russia has all the resources needed to feed the people and power the machines. One nation more than any other needs what Russia has: China.
China and Russia: A Match Made in Shangdi
Some historians have argued that the decisive turning point in the Cold War actually came when China rejected Russia and embraced America.2 From the vantage point of World Island theory, it makes a lot of sense.
Today, China also seeks to rule the World Island. By organizing the combined resources of Eurasia and Africa under its own hegemony, it expects to topple the existing world order and replace it with one of its own design. Since empire is nowadays a term verboten, China calls this effort “The Belt and Road Initiative” or BRI.
As the illustration above shows, the Belt and Road Initiative is aimed squarely at the World Island. The purpose of the BRI would be immediately apparent to Sir Halford Mackinder.
China’s Belt and Road Initiative has been devised in order to disrupt America’s thalassocracy. China will let American spend enormous money to deploy aircraft carriers around the ocean… while the raw materials that China needs, and the finished goods it manufactures, are shipped overland under its own control.
But China’s strategy cannot succeed without Russia. It needs Russia’s wheat, gas, coal, oil, steel, and most of all, it needs rights-of-way across its land for roads and pipelines. The longest segments of the BRI all run through Russia.
Since Russia also knows and understands the importance of the World Island, and believes its national destiny is to lead Eurasia, it’s easy to imagine a future where China and Russia fight it out. But that future is not at hand.
Right now, neither China nor Russia can unseat America. But as a coalition, they are the quintessential “hostile power” that the Wolfowitz Doctrine fears, the one “whose resources would, under consolidated control, be sufficient to generate global power.”
America cannot maintain its pre-eminence if the World Island replaces the World Ocean as the center of global trade. Actually it’s worse than that. America can’t even maintain Medicare without the petrodollar system. Having transformed itself into a managed financial economy instead of an industrial capitalist economy, America must protect the petrodollar system or face economic collapse. (See Part I if you need a refresher on this.) And it can’t protect the petrodollar if the World Island replaces the World Ocean. Therefore, America must block the rise of the World Island.
That means war.
Russia vs Ukraine is actually World Island vs World Ocean
Since the invention of the atomic bomb, the threat of mutual assured destruction has kept nuclear-armed superpowers from waging war on each other directly (though they’ve come very close.) Instead, the nuclear superpowers have fought proxy wars. There are three types of proxy wars:
Type 1: Superpower-Backed Rebel vs Client. A superpower can support an uprising in the territory of a client or ally of the enemy superpower. The Soviet Union supported numerous Latin American revolutions in order to erode American power in South America.
Type 2: Superpower vs Client. A superpower can wage war against a client or ally of another superpower. The US waged war against the Soviet Union’s allies North Korea and North Vietnam in order to contain communism.
Type 3: Client vs Client. An ally of one superpower can fight a client or ally of the other superpower. Neither superpower fights directly, but each expects to improve its geopolitical position if its client wins. The foremost example is the 1973 Arab-Israeli War, in which Russia’s Arab allies fought America’s Israeli ally.
The Russo-Ukraine War is, depending on your perspective, either a Type 2 or Type 3 war. From China’s perspective, it’s Type 3. China’s proxy (Russia) is fighting America’s proxy (Ukraine) for control of the World Island’s Heartland (Ukraine, in particular access to the Crimea and Black Sea). From America’s perspective, it’s Type 2. America’s proxy (Ukraine) is fighting Russia.
Going into the war:
China’s long-term goal is to establish itself as the World Island power with a BRI network that runs from Pacific to Atlantic. Its short-term goal is to weaken the United States.
Russia’s long-term goal is to establish itself as the leading World Island power with a wheat, oil, gas, coal, and steel trade that runs from Pacific to Atlantic. Its short-term goal is to stop the eastern advance of NATO and EU blocs.
America’s long-term goal is to maintain its hegemony. To do so, it believe it needs to keep Russia down, preferably split into a bloc of smaller nations that will be easier to control, it needs to forestall China’s rise until the regime falls or weakens.3 In this way, the World Ocean power will remain dominant, its currency regime will continue to enrich the American elite, and the world order will stay in place.
Who is going to win? Right now, it looks like no one is winning the Russo-Ukraine War.
Russia wanted to stave off the encroachment of NATO, capture valuable territory, and return Russians to Greater Russia. It entered the war believing that Ukraine would quickly fall, and that sanctions would be modest and manageable. It did not expect the West to respond with such militancy, nor the Ukrainians to fight with such vigor. Russia has instead suffered tremendous losses of manpower and material and been placed under severe hardship.
China wanted to see its ally gain a quick win against the West while it was left in peace to continue building the Brick and Road Initiative. It has been advancing its interests step-by-step for decades, and was confident that the US would decline and fall in a decade or two. It did not expect the West to unite in outrage against Russia over what it saw as little different than its own territorial claims on stolen territory. It did not expect Russia to botch the invasion.
America wanted to bring Ukraine into NATO, further weakening and isolating Russia, in preparation for eventually bringing Russia down. It expected that punitive sanctions would deter the Russians from further aggression, bring them to the bargaining table, and perhaps provoke regime change. The war has certainly weakened and isolated Russia from the West, but it has, I believe, also destroyed the world order that made the petrodollar system viable.
We’ll turn to that in the last part of this essay series. Part IV will be the final installment, I promise.4
Perhaps Mackinder would have been gratified to see that the Soviet Union ruled the World Island from a position of power in the Heartland, just as he had predicted… Certain he would not have been surprised that when the Soviet Union lost Eastern Europe, it lost the World Island.
Americans in the 1980s viewed China as a valuable ally if the Cold War went hot. John Milius, in his epic Red Dawn, has the rescued pilot explain that it was “600 million Chinese” allies who kept America from losing World War III.
Arguably, America only needs to do this long enough for demographic collapse to destroy China’s ambitions. China’s population is expected to plummet between now and 2100 due to the disastrous effects of the one-child policy.
I will break this promise if it is in my national interest.