01/20/14 – Nick Giambruno – The Scott Horton Show

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All right, y'all.
Welcome to the show.
I'm Scott Horton.
This is my show, The Scott Horton Show.
Nick Giambruno is senior editor of internationalman.com, Doug Casey's internationalman.com.
Well, so I was talking with Nick about getting Doug Casey on the show, and it occurred to me that I want to get Nick on the show, too, because I got things I want to ask him.
So here we go.
Twofer from internationalman.com.
Welcome to the show, Nick.
How are you doing?
Good.
Great to be with you, Scott.
Good, good.
Very happy to have you here.
And so tell me, like you were telling me before, for how long did you live in Lebanon?
And that's in Beirut, Lebanon, correct?
And what were you doing there?
Yeah, that's correct.
I lived there for about two and a half years combined.
I was working for an investment bank, actually, and covering Middle Eastern stocks, Middle Eastern stock markets.
But I originally went to Beirut, which is a beautiful city, by the way, as an undergrad.
And because Lebanon has one of a few, I think there's a couple others.
There's one in Cairo, and there's one in the Emirates, accredited universities, so the credits can transfer back.
And that's when I really fell in love with Lebanon.
And from what years were those?
I worked there from 2010 to 2012, and I was there actually during the 2006 war as a student at the American University of Beirut when that happened.
Wow, so yeah, let's talk about that first.
Summer, what, June, July?
Yeah.
Or no, I guess July, August 2006, right?
Yeah, yeah, that's right.
Late, mid-July, actually.
Okay, I guess it did last two or three weeks is why I'm thinking August.
Yeah, yeah.
But yeah, okay, so mid-July, August.
So where were you, and what did you see worth note?
Yeah, I was at the American University of Beirut, which is kind of near the Hamra area of Beirut, beautiful area.
And one day we woke up to hear the news of what happened, and it seemed like a normal day at first.
And then we started to hear the jets fly over Beirut doing sonic booms and so forth and just all sorts of stuff.
There wasn't any on-the-ground fighting near us, but we did see helicopters and hear the gunships.
And the helicopter, if you're familiar with Beirut, there's this corniche, and at the end of the corniche there's this really famous lighthouse.
And what we saw was what I think was an Apache helicopter shoot some missiles at this lighthouse.
Otherwise, the closest that we came to injury was some sort of ordnance.
I have no idea what it was, but it fell out of a plane, I think, and it landed in a soccer field right next to our dorm room.
And it put a huge, not a huge, but like a three-foot crater in the soccer field.
And if anybody would have been there, they would have been hurt or killed.
But other than that, it was more focused in the south, and the south of Beirut and the southern suburbs.
All right, now, so what I remember from that war, most importantly, was that Hezbollah basically won.
And by winning, I mean they didn't lose, and that was all they needed to do, was be able to stand their ground.
And then I wonder if you were in a position to judge to what degree their political capital increased inside the country among non-Shiite Arabs, beyond their natural constituency, I mean.
Because I remember a lot of talk about, yeah, thanks a lot, Lebanese army, for sleeping in your barracks the whole time, while you're even being shelled, just sitting there.
And meanwhile, Hezbollah is the only one doing the fighting.
And, you know, of course, the reason I ask is because it kind of dramatizes, whatever your answer is, 1% or greater, it dramatizes how counterproductive that sort of strategy by the Israelis always is.
That's where Hezbollah came from in the first place, of course, was in the 1980s when Israel invaded and stayed.
Yes, I would agree with your assessment.
I'd say that's correct.
And they did earn significant political capital after that.
And, yeah, like you said, they won basically by not losing, but I think it was also more than just not losing.
So, yeah, they did gain some political capital, but obviously the situation has changed with the war in Syria next door.
So that political capital is basically blown with those different communities.
Because Hezbollah is taking the side of Bashar al-Assad.
To that effect, I wouldn't say it's completely blown.
I should take that back.
It's blown amongst certain communities, mainly the Sunni community, but, yeah, that's true.
Well, now, see, this is really the point.
This is really what I wanted to have you on to ask about was, you know, how you see the different relationships inside Lebanon changing because of the advent of the Syria war.
And I know you weren't there long enough to see how everything changed because of the Iraq invasion, although you may have, you know, gleaned quite a bit, actually.
But now that, you know, I mean, you were there, certainly the war in Syria broke out in the beginning.
Late spring, I guess it really turned into a war, right?
2011.
So you were, you know, next door in Lebanon for quite a bit of that anyway.
And so I just wonder, I mean, that's one example, Hezbollah losing the respect of a lot of the non-Shiite Arab factions.
But what else can you tell me about, you know, the different relationships of the different factions in Lebanon?
Of course, you know, my interest is I'm worried that there will be another terrible war there because I guess my impression was after their giant 15 year civil war, they had everything set up like a nice little house of cards as long as nobody really messes with it, you know.
And so far so good since, what, the early 90s, right?
Yeah, that's right.
And yeah, I was actually in Syria too as well in 2010.
But to get to your question, Lebanon is a really neat country in the sense that it's kind of, after this post-civil war, it's really built itself as kind of a crisis-proof country.
Whereas, you know, there's not as much dependence on the central government and the central state for many things.
It's not that way in Syria at all.
Syria is the complete opposite.
And that, well, you know, it used to be that way.
There used to be a very strong central state.
And just as an example, in Lebanon, they've only recently gotten traffic lights at many of the intersections.
They've had no traffic lights, no traffic police, just kind of an anything goes.
And this is a good analogy.
In Syria, by contrast, you know, they have very strict, or they had, I haven't been there so I'm not sure if it's the same, but in 2010, traffic was very strictly regulated.
People listened to the police.
They were afraid of the police.
But, you know, it wasn't a free-for-all.
In Lebanon, it was a free-for-all.
So because they don't have that dependence on that central state, it gives them a little bit more of a capacity to absorb when that central state collapses.
So they're not as dependent upon it.
But just to go back to the point of Hezbollah, yeah, they have blown some political capital, but they're still very widely popular in the country as well.
So, yeah, I see what you're saying, that the central state has so little power relative to the different factions and their own kind of homegrown power in their own neighborhoods and parts of the country where they live, that there's not too much to fight over in terms of what the hold on the central power will get you.
Is that what you're saying?
Yes, that's true.
But then you have the dynamic of it was still kind of within Syria's orbit.
So if the Syrian central government collapses, that'll have a lot more repercussions on Lebanon than if the Lebanese government collapses, if you know what I mean.
Right.
And now, let's see, it was 2005 when the Americans insisted that the Syrians leave southern Lebanon, which that may well be what the super-duper majority of the people of Lebanon wanted, but it certainly left all that ground wide open, the power vacuum as they call it, to empower Hezbollah even further.
And in fact, that's really what provoked the war of 06, right?
Was Israel was overreacting to the results of their policy of having the Americans kick the Syrians out of southern Lebanon, right?
Yeah, it's just, you know, dealing with the effects of one intervention with another intervention kind of a thing.
But it's also important to understand the context in which the cedar revolution happened.
And, you know, if I were Lebanese, I probably wouldn't want my country occupied by the Syrians.
But on the international stage at that time, this was the time of the colored revolution.
There was the orange revolution in Ukraine, the one in Georgia, I believe there was one in Kyrgyzstan, too.
And, you know, there was one in Lebanon.
It was the cedar revolution.
And while there were legitimate concerns of the people, those concerns may have been manipulated by, you know, these NGOs and so forth to push a certain agenda.
So, yeah, it's important to understand the international context of what was happening at that time.
Well, in fact, I mean, you can always go back to something, something or something else.
But there was the assassination of Rafik Hariri, which is now finally being tried in the international courts, which at the time is blamed on Hezbollah, i.e. then must have been the Syrians, I guess.
Although I think the prosecutions changed their story a few times, and it looked more like an al-Qaeda attack from here.
But I don't know.
What do you know about that?
Because that was really the excuse for kicking him out in 2005.
Yes, and I think the person who has done the best work on this, bar none, is Gareth Porter, as you know.
Which is kind of strange, because Gareth's arguments are maybe not as well-known in Lebanon as you'd think they might be.
But in terms of somebody who's presented an objective case for what happened, yeah, Gareth Porter has that down the best.
Wow.
So, yeah, the main evidence of this court, too, and, you know, you can't blame people for wanting justice.
I mean, it wasn't a horrific crime, but, you know, you want to get to the truth of the matter.
And I don't think you can get to the truth of the matter necessarily when you're using...
The evidence you're using is this cell phone co-location evidence, which to me just seems extremely weak, subject to manipulation, and so forth.
So I just don't see that as getting to the bottom of what really happened.
Yeah, the article in the New York Times the other day was, well, you know, they have changed their story quite a few times, the prosecutors.
But I guess the good news is that the people of Syria or the people of Lebanon are over it, because they've got bigger problems with suicide bombings going off and people being assassinated and killed.
And there's a very real fear.
I don't know how widespread it is inside Lebanon or what the real balances of power are there.
But it seems like some pretty well-informed people are afraid that Lebanon is going to tear itself back apart again in the face of what's going on in Syria right now.
And that it's going to be like the bad old days.
And, well, there's the music.
So I guess we're going to have to find out your answer to your guess for the medium-term future of Lebanon.
And more with Nick Giambruno from internationalman.com.
Doug Casey's internationalman.com.
We'll be right back after this.
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All right, y'all.
Welcome back to the show.
I'm Scott Horton.
This is my show, The Scott Horton Show.
By the way, Tom Woods interviewed me this morning all about the terror wars and the Iran nuclear deal and Syria and Iraq and Afghanistan and all kind of stuff.
So I think that's going to be airing on his show tomorrow.
So right before my show.
Tomorrow on the Tom Woods Show, me.
There you go.
All right.
Welcome back.
We're talking with Nick Giambruno from internationalman.com.
Doug Casey's internationalman.com.
He's the senior editor there.
And like he was saying in the last segment, was an investment banker, lived in Lebanon for a little while.
And so we're talking about, you know, his impressions and what he knows about a little bit of recent history of American foreign policy in Lebanon and Syria and the consequences of the current so-called civil war.
Anyway, whatever it is, madness going on, reigning in Syria right now.
First of all, do you think that that cushion, that decentralized, what do they call a confessional system there in Lebanon, has enough give in it to withstand the stresses of the war next door?
And, for example, already Hezbollah's involvement in Syria and then Syrian al-Qaeda's involvement in Lebanon with some suicide attacks, et cetera, already breaking out?
Yes, I do.
So long as the Syrian government doesn't collapse and Syria doesn't disintegrate as a nation state, I think it will.
But if that does happen, then all bets are off.
But it doesn't look like that's going to happen at the moment.
It doesn't look like the ISIS guys or the Islamic Front is in any imminent danger of storming Damascus.
But should that happen, it will change the balance of power in Lebanon for sure.
And then that could upset the whole deal.
But for now, everybody, they're taking this horror in stride.
Is that right?
Well, to more or less of a degree, this is not an anomaly for Lebanon.
Lebanon has lived through some pretty rough times.
While there are some horrific things going on there, it's not that people are going about their daily lives and so forth, but just being a little more careful than normal.
All right.
Now, so I want to ask you about something else that I've seen, I see that you've written quite a bit about at internationalman.com.
And that is the international dollar and more particularly the petrodollar.
And so I guess first of all, well, why don't you tell us about what those two things have in common?
Well, I guess first of all, what exactly is a petrodollar and what does that have to do with dollar hegemony, whatever that is?
Yeah, sure.
Actually, the person who introduced me to this topic was Ron Paul.
He has a speech on this that people don't really know about because he gave it, I think it was back in 2005, really before he broke through the national scene for his 2008 election, in which he talks about this.
Basically, the petrodollar is an agreement that the U.S. government made back in the 1970s in the wake of the breakdown of the Bretton Woods system, which is the gold standard, to support the dollar.
Basically, Nixon had Kissinger negotiate with the House of Saud an arrangement whereby they would sell their oil only in dollars and push for OPEC to sell its oil only in dollars, take the revenue from selling oil and reinvest it in treasuries and pay U.S. companies to modernize Saudi Arabia.
In return, the U.S. would protect Saudi Arabia from any sort of military threat, defend its interests politically, and so forth.
This arrangement has benefited both parties enormously.
Saudi Arabia got to survive, essentially, and the Saudi regime, I should say, got to survive, and the U.S. got rich and it gave the dollar real impetus to be the world's reserve currency.
By creating that demand making where every other country has to hold dollars in order to buy oil from the Saudis.
Exactly.
Well, I think the Saudis from OPEC, yeah.
Right, from the cartel as a whole, yeah, even more to the point.
Yeah, so this kind of sets the baseline for the use of the dollar internationally because oil is the most traded commodity, it's the most traded thing internationally.
So if countries are already trading oil in dollars, they're just like, oh, the hell with it, we'll just trade everything else in dollars, even if it has nothing to do with the United States.
For example, if Italy buys oil from Kuwait, Italy has to go on the foreign exchange market and buy U.S. dollars to pay Kuwait for that oil, even though the transaction had absolutely nothing to do with the United States.
That artificial demand for the dollars that are needed to pay for that oil is what gives a lot of value to the dollar and fosters its role as the premier reserve currency.
Well then, so as long as the Saudis are safe in power in Riyadh, cutting off heads and all of that, then what's the problem?
Yeah, well, the problem is that the U.S., from kind of a Zbigniew Brzezinski point of view that's looking at, you know, not necessarily something I'd agree with, but if you're looking to maintain U.S. hegemony over the world, who is a better steward of this petrodollar system?
Would it be Saudi Arabia, which is kind of instable, you know, it's basically a regime full of geriatric people who are fighting constantly?
Or you have Iran, and this opening towards Iran, people are speculating that, you know, maybe they're going to talk about having Iran as the new steward of the petrodollar system.
Now, this doesn't necessarily mean there's a lot of problems with that.
Again, that would be right.
Not in the least, the Israel lobby is opposed to such a thing, but if you're looking from the perspective of like a purely maintaining the American hegemony over the world, Iran is a far better person to maintain this petrodollar system than the Saudis.
All right, now, I actually wrote a thing here.
Let's see, it's from February 2006.
Dr. Paul explains U.S. paper money and Iran's oil bourse at antiwar.com slash blog.
And I'm not certain this is exactly the same speech you were talking about, but along the same theme as well.
Oh, yeah, see, or I reference it anyway.
I don't have time to read the whole thing right now while I'm talking.
But the point being that there was a lot of speculation, I think, even by Ron Paul and then myself in this piece, that this had a lot to do with America's regime change policy, that at least as the story went, Saddam Hussein and Iran and then later even Libya had talked about, yeah, well, maybe we don't want to go along with that at all.
And that was why, more than anything else, they were being targeted was to prop up the dollar, which, of course, seems silly since they have to create so much paper money and debase the currency that much further to wage all these wars to force regimes to accept their paper money.
But not that that's something they wouldn't do necessarily, but I wonder what you think about the role, or if that's even really right, that Saddam, for example, was really threatening to diversify out of dollars and had to be stopped.
Yeah, no, I think it's a reason.
I don't think it's necessarily the only reason.
And certainly, you know, the neocons pushed for war.
They couldn't have cared less about that.
They had other interests.
The issue of using dollar and the euro in oil transactions is one component, but it's not the whole picture.
And, you know, in fact, I think at the time, back then, I interviewed a guy, Chris something or other, who it had been his idea to tell the Iranians, hey, you guys ought to have your own oil bourse, because you can make more money, you know, this or that way.
And how, boy, it didn't have anything to do with trying to undermine America's position in the world.
Please don't shoot me.
Something like that was his position.
He just was, you know, a wonky guy and had come up with this, you know, neat little thing where Iran could have their own little oil market.
And he didn't think that their interest in his proposal was political like that.
You know, at least as far as he was concerned, it didn't seem like it was.
Yeah, well, point of fact is right now, Iran doesn't trade its oil for dollars anyway.
Oh, really?
No, they trade with China and India.
I think they have a swap arrangement with India.
Oh, that's just because we have complete sanctions against them and have illegalized ourselves out of their market, basically, right?
Yes, they have.
And that's one of the main benefits of having the world reserve currency, is that you can effectively shut off anybody from international trade that you want to by simply banning them from using dollars, which they've done with Iran.
So, yeah, Iran already does not use U.S. dollars and hasn't for a number of years.
In fact, they use gold between their trade with Turkey.
They trade with Turkey imports, excuse me, Iran exports most of its natural gas to Turkey, and they pay for that with gold.
Turkey pays Iran gold for that natural gas.
So Iran is already out of the dollar system in that regard.
But they're looking, what people, like I said, people have speculated is, is that if they want to have somebody who's an influential member in OPEC to maintain this system going forward, Iran might be a good candidate.
But it's also a little bit different in that Iran is much more independent than the Saudis are.
The Saudis needed American protection.
The Iranians don't need American protection.
They can protect themselves.
So it's kind of up in the air exactly what's going to happen, but the plates are shifting.
Yeah, well, of course, that's why our government has called them a threat all along, is because they're independent.
But, you know, I forgot which smart person plagiarized and who said that, you know, the sanctions are over either way, whether this deal happens or not.
So this nuclear deal, from the Americans' point of view, better happen, because if it doesn't, the rest of the countries helping the U.S. enforcer are going to walk away and go ahead and start doing business again anyway.
And we've already seen that in, I'm sure you've seen this deal with Russia that Iran has just waiting to be implemented, this oil swap for goods.
And, you know, the U.S. can maintain keeping Iran out of the dollar-based financial system, but they can't stop other countries from bartering with them or using their own currencies, for example, like they would be doing with Russia.
So, yeah, you see these things on the table.
Yeah, well, so, I mean, that really, I hope that bodes well for the argument inside the government that, listen, I mean, this is really, it's our last chance as much as it's their last chance here to resolve this issue, because that's how Obama got the whole world behind these sanctions, and even, you know, to a lesser degree, our eastern allies.
Yeah, I totally agree.
Thanks very much.
Great to talk to you, Nick.
Yep, thanks, Scott.
Appreciate it.
That is Nick Giambruno.
He is senior editor at Doug Casey's internationalman.com.
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