Tuesday, September 25, 2007
March 8, 1992
U.S. Strategy Plan Calls for Insuring No Rivals Develop
A One-Superpower World
Pentagon’s Document Outlines Ways to Thwart Challenges to Primacy of America
WASHINGTON, March 7 – In a broad new policy statement that is in its final drafting phase, the Defense Department asserts that America’s political and military mission in the post-cold-war era will be to ensure that no rival superpower is allowed to emerge in Western Europe, Asia or the territories of the former Soviet Union.
A 46-page document that has been circulating at the highest levels of the Pentagon for weeks, and which Defense Secretary Dick Cheney expects to release later this month, states that part of the American mission will be “convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests.”
The classified document makes the case for a world dominated by one superpower whose position can be perpetuated by constructive behavior and sufficient military might to deter any nation or group of nations from challenging American primacy.
Rejecting Collective Approach
To perpetuate this role, the United States “must sufficiently account for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established political and economic order,” the document states.
With its focus on this concept of benevolent domination by one power, the Pentagon document articulates the clearest rejection to date of collective internationalism, the strategy that emerged from World War II when the five victorious powers sought to form a United Nations that could mediate disputes and police outbreaks of violence.
Though the document is internal to the Pentagon and is not provided to Congress, its policy statements are developed in conjunction with the National Security Council and in consultation with the President or his senior national security advisers. Its drafting has been supervised by Paul D. Wolfowitz, the Pentagon’s Under Secretary for Policy. Mr. Wolfowitz often represents the Pentagon on the Deputies Committee, which formulates policy in an interagency process dominated by the State and Defense Departments.
The document was provided to The New York Times by an official who believes this post-cold-war strategy debate should be carried out in the public domain. It seems likely to provoke further debate in Congress and among America’s allies about Washington’s willingness to tolerate greater aspirations for regional leadership from a united Europe or from a more assertive Japan.
Together with its attachment on force levels required to insure America’s predominant role, the policy draft is a detailed justification for the Bush Administration’s “base force” proposal to support a 1.6-million member military over the next five years, at a cost of about $1.2 trillion. Many Democrats in Congress have criticized the proposal as unnecessarily expensive.
Implicitly, the document foresees building a world security arrangement that pre-empts Germany or Japan from pursuing a course of substantial rearmament, especially nuclear armament, in the future.
In its opening paragraph, the policy document heralds the “less visible” victory at the end of the cold war, which it defines as the “integration of Germany and Japan into a U.S.-led system of collective security and the creation of a democratic ‘zone of peace.’”
The continuation of this strategic goal explains the strong emphasis elsewhere in the document and in other Pentagon planning on using military force, if necessary, to prevent the proliferation of nuclear weapons and other weapons of mass destruction in such countries as North Korea, Iraq, some of the successor republics to the Soviet Union and in Europe.
Nuclear proliferation, if unchecked by superpower action, could tempt Germany, Japan and other industrial powers to acquire nuclear weapons to deter attack from regional foes. This could start them down the road to global competition with the United States and, in a crisis over national interests, military rivalry.
The policy draft appears to be adjusting the role of the American nuclear arsenal in the new era, saying, “Our nuclear forces also provide an important deterrent hedge against the possibility of a revitalized or unforeseen global threat, while at the same time helping to deter third party use of weapons of mass destruction through the threat of retaliation.”
U.N. Action Ignored The document is conspicuously devoid of references to collective action through the United Nations, which provided the mandate for the allied assault on Iraqi forces in Kuwait and which may soon be asked to provide a new mandate to force President Saddam Hussein to comply with his cease-fire obligations.
The draft notes that coalitions “hold considerable promise for promoting collective action” as in the Persian Gulf war, but that “we should expect future coalitions to be ad hoc assemblies, often not lasting beyond the crisis being confronted, and in many cases carrying only general agreement over the objectives to be accomplished.”
What is most important, it says, is “the sense that the world order is ultimately backed by the U.S.” and “the United States should be postured to act independently when collective action cannot be orchestrated” or in a crisis that demands quick response.
Bush Administration officials have been saying publicly for some time that they were willing to work within the framework of the United Nations, but that they reserve the option to act unilaterally or through selective coalitions, if necessary, to protect vital American interests.
But this publicly stated strategy did not rule out an eventual leveling of American power as world security stabilizes and as other nations place greater emphasis on collective international action through the United Nations.
In contrast, the new draft sketches a world in which there is one dominant military power whose leaders “must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role.”
Sent to Administrators
The document is known in Pentagon parlance as the Defense Planning Guidance, an internal Administration policy statement that is distributed to the military leaders and civilian Defense Department heads to instruct them on how to prepare their forces, budgets and strategy for the remainder of the decade. The policy guidance is typically prepared every two years, and the current draft will yield the first such document produced after the end of the cold war.
Senior Defense Department officials have said the document will be issued by Defense Secretary Cheney this month. According to a Feb. 18 memorandum from Mr. Wolfowitz’s deputy, Dale A. Vesser, the policy guidance will be issued with a set of “illustrative” scenarios for possible future foreign conflicts that might draw United States military forces into combat.
These scenarios, issued separately to the military services on Feb. 4, were detailed in a New York Times article last month. They postulated regional wars against Iraq and North Korea, as well as a Russian assault on Lithuania and smaller military contingencies that United States forces might confront in the future.
These hypothetical conflicts, coupled with the policy guidance document, are meant to give military leaders specific information about the kinds of military threats they should be prepared to meet as they train and equip their forces. It is also intended to give them a coherent strategy framework in which to evaluate various force and training options.
Fears of Proliferation
In assessing future threats, the document places great emphasis on how “the actual use of weapons of mass destruction, even in conflicts that do not directly engage U.S. interests, could spur further proliferation which in turn would threaten world order.”
“The U.S. may be faced with the question of whether to take military steps to prevent the development or use of weapons of mass destruction,” it states, noting that those steps could include pre-empting an impending attack with nuclear, chemical or biological weapons or “punishing the attackers or threatening punishment of aggressors through a variety of means,” including attacks on the plants that manufacture such weapons.
Noting that the 1968 Nuclear Proliferation Treaty is up for renewal in 1995, the document says, “should it fail, there could ensue a potentially radical destabilizing process” that would produce unspecified “critical challenges which the U.S. and concerned partners must be prepared to address.”
The draft guidance warns that “both Cuba and North Korea seem to be entering intense periods of crisis – primarily economic, but also political – which may lead the governments involved to take actions that would otherwise seem irrational.” It adds, “the same potential exists in China.”
For the first time since the Defense Planning Guidance process was initiated to shape national security policy, the new draft states that the fragmentation of the former Soviet military establishment has eliminated the capacity for any successor power to wage global conventional war.
But the document qualifies its assessment, saying, “we do not dismiss the risks to stability in Europe from a nationalist backlash in Russia or effort to re-incorporate into Russia the newly independent republics of Ukraine, Belarus and possibly others.”
It says that though U.S. nuclear targeting plans have changed “to account for welcome developments in states of the former Soviet Union,” American strategic nuclear weapons will continue to target vital aspects of the former Soviet military establishment. The rationale for the continuation of this targeting policy is that the United States “must continue to hold at risk those assets and capabilities that current – and future – Russian leaders or other nuclear adversaries value most” because Russia will remain “the only power in the world with the capability of destroying the United States.”
Until such time as the Russian nuclear arsenal has been rendered harmless, “we continue to face the possibility of robust strategic nuclear forces in the hands of those who might revert to closed, authoritarian, and hostile regimes,” the document says. It calls for the “early introduction” of a global anti-missile system.
Plan for Europe
In Europe, the Pentagon paper asserts that “a substantial American presence in Europe and continued cohesion within the Western alliance remains vital,” but to avoid a competitive relationship from developing, “we must seek to prevent the emergence of European-only security arrangements which would undermine NATO.”
The draft states that with the elimination of United States short-range nuclear weapons in Europe and similar weapons at sea, the United States should not contemplate any withdrawal of its nuclear-strike aircraft based in Europe and, in the event of a resurgent threat from Russia, “we should plan to defend against such a threat” farther forward on the territories of Eastern Europe “should there be an Alliance decision to do so.”
This statement offers an explicit commitment to defend the former Warsaw Pact nations from Russia. It suggests that the United States could also consider extending to Eastern and Central European nations security commitments similar to those extended to Saudi Arabia, Kuwait and other Arab states along the Persian Gulf. And to help stabilize the economies and democratic development in Eastern Europe, the draft calls of the European Community to offer memberships to Eastern European countries as soon as possible.
In East Asia, the report says, the United States can draw down its forces further, but “we must maintain our status as a military power of the first magnitude in the area.”
“This will enable the United States to continue to contribute to regional security and stability by acting as a balancing force and prevent the emergence of a vacuum or a regional hegemon.” In addition, the draft warns that any precipitous withdrawal of United States military forces could provoke an unwanted response from Japan, and the document states, “we must also sensitive to the potentially destabilizing effects that enhanced roles on the part of our allies, particularly Japan but also possibly Korea, might produce.”
In the event that peace negotiations between the two Koreas succeed, the draft recommends that the United States “should seek to maintain an alliance relationship with a unified democratic Korea.”
Excerpts from Pentagon’s Plan: ‘Prevent the Re-Emergence of a New Rival’
Special to The New York Times
WASHINGTON, March 7 – Following are excerpts from the Pentagon’s Feb. 18 draft of the Defense Planning Guidance for the Fiscal Years 1994-1999:
This Defense Planning guidance addresses the fundamentally new situation which has been created by the collapse of the Soviet Union, the disintegration of the internal as well as the external empire, and the discrediting of Communism as an ideology with global pretensions and influence. The new international environment has also been shaped by the victory of the United States and its coalition allies over Iraqi aggression – the first post-cold-war conflict and a defining event in U.S. global leadership. In addition to these two victories, there has been a less visible one, the integration of Germany and Japan into a U.S.-led system of collective security and the creation of a democratic “zone of peace.”
• • •
DEFENSE STRATEGY OBJECTIVES
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. These regions include Western Europe, East Asia, the territory of the former Soviet Union, and Southwest Asia.
There are three additional aspects to this objective: First, the U.S. must show the leadership necessary to establish and protect a new order that holds the promise of convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests. Second, in the non-defense areas, we must account sufficiently for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established political and economic order. Finally, we must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role. An effective reconstitution capability is important here, since it implies that a potential rival could not hope to quickly or easily gain a predominant military position in the world.
The second objective is to address sources of regional conflict and instability in such a way as to promote increasing respect for international law, limit international violence, and encourage the spread of democratic forms of government and open economic systems. These objectives are especially important in deterring conflicts or threats in regions of security importance to the United States because of their proximity (such as Latin America), or where we have treaty obligations or security commitments to other nations. While the U.S. cannot become the world’s “policeman,” by assuming responsibility for righting every wrong, we will retain the pre-eminent responsibility for addressing selectively those wrongs which threaten not only our interests, but those of our allies or friends, or which could seriously unsettle international relations. Various types of U.S. interests may be involved in such instances: access to vital raw materials, primarily Persian Gulf oil; proliferation of weapons of mass destruction and ballistic missiles, threats to U.S. citizens from terrorism or regional or local conflict, and threats to U.S. society from narcotics trafficking.
• • •
It is improbable that a global conventional challenge to U.S. and Western security will re-emerge from the Eurasian heartland for many years to come. Even in the highly unlikely event that some future leadership in the former Soviet Union adopted strategic aims of recovering the lost empire or otherwise threatened global interests, the loss of Warsaw Pact allies and the subsequent and continuing dissolution of military capability would make any hope of success require years or more of strategic and doctrinal re-orientation and force regeneration and redeployment, which in turn could only happen after a lengthy political realignment and re-orientation to authoritarian and aggressive political and economic control. Furthermore, any such political upheaval in or among the states of the former U.S.S.R. would be much more likely to issue in internal or localized hostilities, rather than a concerted strategic effort to marshal capabilities for external expansionism – the ability to project power beyond their borders.
There are other potential nations or coalitions that could, in the further future, develop strategic aims and a defense posture of region-wide or global domination. Our strategy must now refocus on precluding the emergence of any future potential global competitor. But because we no longer face either a global threat or a hostile, non-democratic power dominating a region critical to our interests, we have the opportunity to meet threats at lower levels and lower costs – as long as we are prepared to reconstitute additional forces should the need to counter a global threat re-emerge ….
REGIONAL THREATS AND RISK
With the demise of a global military threat to U.S. interests, regional military threats, including possible conflicts arising in and from the territory of the former Soviet Union, will be of primary concern to the U.S. in the future. These threats are likely to arise in regions critical to the security of the U.S. and its allies, including Europe, East Asia, the Middle East and Southwest Asia, and the territory of the former Soviet Union. We also have important interests at stake in Latin America, Oceania, and Sub-Saharan Africa. In both cases, the U.S. will be concerned with preventing the domination of key regions by a hostile power ….
Former Soviet Union
The former Soviet state achieved global reach and power by consolidating control over the resources in the territory of the former U.S.S.R. The best means of assuring that no hostile power is able to consolidate control over the resources within the former Soviet Union to support its successor states (especially Russia and Ukraine) in their efforts to become peaceful democracies with market-based economies. A democratic partnership with Russia and the other republics would be the best possible outcome for the United States. At the same time, we must also hedge against the possibility that democracy will fail, with the potential that an authoritarian regime bent on regenerating aggressive military power could emerge in Russia, or that similar regimes in other successor republics could lead to spreading conflict within the former U.S.S.R. or Eastern Europe.
• • •
For the immediate future, key U.S. concerns will be the ability of Russia and the other republics to demilitarize their societies, convert their military industries to civilian production, eliminate or, in the case of Russia, radically reduce their nuclear weapons inventory, maintain firm command and control over nuclear weapons, and prevent leakage of advanced military technology and expertise to other countries.
• • •
NATO continues to provide the indispensable foundation for a stable security environment in Europe. Therefore, it is of fundamental importance to preserve NATO as the primary instrument of Western defense and security as well as the channel for U.S. influence and participation in European security affairs. While the United States supports the goal of European integration, we must seek to prevent the emergence of European-only security arrangements which would undermine NATO, particularly the alliance’s integrated command structure.
• • •
The end of the Warsaw Pact and the dissolution of the Soviet Union have gone a long way toward increasing stability and reducing the military threat to Europe. The ascendancy of democratic reformers in the Russian republic, should this process continue, is likely to create a more benign policy toward Eastern Europe. However, the U.S. must keep in mind the long history of conflict between the states of Eastern Europe and those of the former Soviet Union ….
The most promising avenues for anchoring the east-central Europeans into the West and for stabilizing their democratic institutions is their participation in Western political and economic organizations. East-central European membership in the (European Community) at the earliest opportunity, and expanded NATO liaison …..
The U.S. could also consider extending to the east-central European states security commitments analogous to those we have extended to Persian Gulf states.
• • •
Should there be a re-emergence of a threat from the former Soviet Union’s successor state, we should plan to defend against such a threat in Eastern Europe, should there be an alliance decision to do so.
East Asia and the Pacific
… Defense of Korea will likely remain one of the most demanding major regional contingencies …. Asia is home to the world’s greatest concentration of traditional Communist states, with fundamental values, governance, and policies decidedly at variance with our own and those of our friends and allies.
To buttress the vital political and economic relationships we have along the Pacific rim, we must maintain our status as a military power of the first magnitude in the area. This will enable the U.S. to continue to contribute to regional security and stability by acting as a balancing force and prevent emergence of a vacuum or a regional hegemon.
• • •
Middle East and Southwest Asia
In the Middle East and Southwest Asia, our overall objective is to remain the predominant outside power in the region and preserve U.S. and Western access to the region’s oil. We also seek to deter further aggression in the region, foster regional stability, protect U.S. nationals and property, and safeguard our access to international air and seaways. As demonstrated by Iraq’s invasion of Kuwait, it remains fundamentally important to prevent a hegemon or alignment of powers from dominating the region. This pertains especially to the Arabian peninsula. Therefore, we must continue to play a role through enhanced deterrence and improved cooperative security.
• • •
We will seek to prevent the further development of a nuclear arms race on the Indian subcontinent. In this regard, we should work to have both countries, India and Pakistan, adhere to the Nuclear Non-Proliferation Treaty and to place their nuclear energy facilities under International Atomic Energy Agency safeguards. We should discourage Indian hegemonic aspirations over the other states in South Asia and on the Indian Ocean. With regard to Pakistan, a constructive U.S.-Pakistani military relationship will be an important element in our strategy to promote stable security conditions in Southwest Asia and Central Asia. We should therefore endeavor to rebuild our military relationship given acceptable resolution of our nuclear concerns.
• • •
Cuba’s growing domestic crisis holds out the prospect for positive change, but over the near term, Cuba’s tenuous internal situation is likely to generate new challenges to U.S. policy. Consequently, our programs must provide capabilities to meet a variety of Cuban contingencies which could include an attempted repetition of the Mariel boatlift, a military provocation against the U.S. or an American ally, or political instability and internal conflict in Cuba.
You work and work for years and years, you're always on the go; You never take a minute off, too busy makin' dough. Someday, you say, you'll have your fun when you're a millionaire - Imagine all the fun you'll have in your old rockin' chair. Refrain: Enjoy yourself, it's later than you think; Enjoy yourself, while you're still in the pink. The years go by as quickly as a wink - Enjoy yourself, enjoy yourself, it's later than you think. You're gonna take that ocean trip, no matter, come what may; You've got your reservations but you just can't get away. Next year, for sure, you'll see the world, you'll really get around - But how far can you travel when you're six-feet under ground? Your heart of hearts, your dream of dreams, your ravishing brunette; She's left you and she's now become somebody else's pet. Lay down that gun, don't try, my friend, to reach the great beyond; You'll have more fun by reachin' for a redhead or a blonde. (Refrain) You never go to nightclubs and you just don't care to dance; You don't have time for silly things like moonlight and romance. You only think of dollar bills tied neatly in a stack; But when you kiss a dollar bill, it doesn't kiss you back. (Refrain)
Lyrics to 'Enjoy Yourself (It's Later Than You Think)' performed by Guy Lombardo in 1950
... When it came to the freedoms of Western occupiers (or liberators, if you will), including armed mercenaries, however, Bremer achieved a true medal-snatching feat. He essentially turned that Baghdad clock back to the nineteenth century and made that "time" stick to this very day. On the eve of his departure, he issued a remarkable document of freedom -- a declaration of foreign independence -- that went by the name of "Order 17" [PDF file] and that, in the U.S. mainstream media, is still often referred to as "the law" in Iraq.
Order 17 is a document well worth reading. It essentially granted to every foreigner in the country connected to the occupation enterprise the full freedom of the land, not to be interfered with in any way by Iraqis or any Iraqi political or legal institution. Foreigners—unless, of course, they were jihadis or Iranians—were to be "immune from any form of arrest or detention other than by persons acting on behalf of their Sending States," even though American and coalition forces were to be allowed the freedom to arrest and detain in prisons and detention camps of their own any Iraqis they designated worthy of that honor. (The present prison population of American Iraq is reputed to be at least 24,500 and rising.)
[ ... ]
The Iraqi looting began almost as soon as American troops entering Baghdad in April 2003—and those occupying troops, without orders to lift a finger, did just about nothing (except, tellingly, guard the Oil Ministry) as Baghdad burned. Then-Secretary of Defense Donald Rumsfeld signaled just what kind of an era of liberation was indeed dawning. At a press briefing, with the verbal equivalent of a wink and a nod, he responded to a question about the looting of the Iraqi capital by saying, "Freedom's untidy, and free people are free to make mistakes and commit crimes and do bad things. They're also free to live their lives and do wonderful things. And that's what's going to happen here." And he offered his infamous tag line for the ongoing disaster, "Stuff happens." ...
"...If you want to get some idea of what much of the Earth might look like in 50 years’ time then, says James Lovelock, get hold of a powerful telescope or log onto Nasa’s Mars website. That arid, empty, lifeless landscape is, he believes, how most of Earth’s equatorial lands will be looking by 2050. A few decades later and that same uninhabitable desert will have extended into Spain, Italy, Australia and much of the southern United States.
“We are on the edge of the greatest die-off humanity has ever seen,” said Lovelock. “We will be lucky if 20% of us survive what is coming. We should be scared stiff.”
“I have a dream,” Yvo de Boer, executive secretary of the United Nations Framework Convention on Climate Change, told the delegates. He set out his belief that carbon trading will help stabilise greenhouse gas emissions and aid developing countries by transferring £50 billion a year to these nations from the First World to support green development.
For Lovelock, however, such dreams are dangerous nonsense on a par with a drowning man clutching at straws. “It’s all ridiculous,” he sighed. “These new markets do some good in that they generate wealth and keep these people employed, but they and the IPCC are just raising false hopes. We have done too much damage to the world and now it is changing too fast for us to make much difference.”
Lovelock’s view is that the world has two stable states: the “icehouse”, when ice covers both poles, sometimes extending far into lower latitudes in the form of ice ages; and the “greenhouse”, when all the ice melts. Both have already happened many times in the Earth’s history.
“Human outpourings of greenhouse gases have flicked the switch that turns the world from its colder to its warm state – and it is probably too late to stop it,” he said. “The warming impact of the carbon we have already released is such that the Earth has taken over and our greenhouse gas emissions are being amplified by nature itself.”
Lovelock believes that the transformation is happening far too fast for humanity to tackle, especially in a world that remains committed to economic growth and whose 6.5 billion population is predicted to reach more than 9 billion by mid-century.
For evidence, he points to Siberia where the melting of the permafrost, already widely reported in scientific literature, will enable bacteria to decompose organic matter that has accumulated in the soil over tens of millions of years – potentially releasing billions more tons of CO2 “I have just come back from Norway where the temperatures are even further above normal than Britain’s. The climate is changing every year now. Everyone can see it – as in this very warm April. By mid-century the heatwave [in Europe] that killed 20,000 people in 2003 will be a cool summer by comparison.”
At first sight Lovelock’s predictions seem wildly at odds with the IPCC’s reports, but in many ways the only difference is in the vividness of the language. “The progressive acidification of oceans due to increasing atmospheric carbon dioxide is expected to have negative impacts on marine shell-forming organisms (ie corals) and their dependent species,” said the IPCC report detailing the impacts of climate change – its careful language draining the drama from a warning that vast tracts of the ocean may turn so acidic that little life will be left in them.
It added: “At lower latitudes, especially seasonally dry and tropical regions, crop productivity is projected to decrease for even small local temperature increases (1-2C), which would increase risk of hunger.” What these measured tones imply, warns Lovelock, is that millions – perhaps hundreds of millions – of people living in equatorial lands will be forced from their homes, with most of them heading northwards. “The world will face mass shortages of food and water. That will lead to wars and the effective clearance of vast areas of land as the deserts spread,” he said.
Lovelock’s reputation as a scientific seer was founded four decades ago when he published his Gaia hypothesis. His idea, that the Earth’s chemistry, climate and life were all closely linked into a kind of self-sustaining system, is now received wisdom..."
Repeated successful mitary forays by 4GW entities, perhaps in alliance with local ethnic and criminal organizations, can create a "TAZ" or temporary autonomous zone, outside the rule of law. "Temporary" is a useful descriptor because, frequently, police, paramilitary or Army units are able to "re-take" the TAZ from 4GW control because these decentralized forces melt away, go underground or shift to a less direct form of conflict such as system disruption or the use of IED type munitions.
However, there are now enough examples of recent vintage to tentatively answer the question of what happens when a TAZ under the domination of a 4GW group slides toward permanency? Al Qaida, is now doing so for the second time in it's history ... -- continues --
By Ambrose Evans-Pritchard, International Business Editor
Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.
"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.
"Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.
The Saudi central bank said today that it would take "appropriate measures" to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.
As a close ally of the US, Riyadh has so far tried to stick to the peg, but the link is now destabilising its own economy.
The Fed's dramatic half point cut to 4.75pc yesterday has already caused a plunge in the world dollar index to a fifteen year low, touching with weakest level ever against the mighty euro at just under $1.40.
There is now a growing danger that global investors will start to shun the US bond markets. The latest US government data on foreign holdings released this week show a collapse in purchases of US bonds from $97bn to just $19bn in July, with outright net sales of US Treasuries.
The danger is that this could now accelerate as the yield gap between the United States and the rest of the world narrows rapidly, leaving America starved of foreign capital flows needed to cover its current account deficit - expected to reach $850bn this year, or 6.5pc of GDP.
Mr Redeker said foreign investors have been gradually pulling out of the long-term US debt markets, leaving the dollar dependent on short-term funding. Foreigners have funded 25pc to 30pc of America's credit and short-term paper markets over the last two years.
"They were willing to provide the money when rates were paying nicely, but why bear the risk in these dramatically changed circumstances? We think that a fall in dollar to $1.50 against the euro is not out of the question at all by the first quarter of 2008," he said.
"This is nothing like the situation in 1998 when the crisis was in Asia, but the US was booming. This time the US itself is the problem," he said.
Mr Redeker said the biggest danger for the dollar is that falling US rates will at some point trigger a reversal yen "carry trade", causing massive flows from the US back to Japan.
Jim Rogers, the commodity king and former partner of George Soros, said the Federal Reserve was playing with fire by cutting rates so aggressively at a time when the dollar was already under pressure.
The risk is that flight from US bonds could push up the long-term yields that form the base price of credit for most mortgages, the driving the property market into even deeper crisis.
"If Ben Bernanke starts running those printing presses even faster than he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems," he said.
The Federal Reserve, however, clearly calculates the risk of a sudden downturn is now so great that the it outweighs dangers of a dollar slide.
Former Fed chief Alan Greenspan said this week that house prices may fall by "double digits" as the subprime crisis bites harder, prompting households to cut back sharply on spending.
For Saudi Arabia, the dollar peg has clearly become a liability. Inflation has risen to 4pc and the M3 broad money supply is surging at 22pc.
The pressures are even worse in other parts of the Gulf. The United Arab Emirates now faces inflation of 9.3pc, a 20-year high. In Qatar it has reached 13pc.
Kuwait became the first of the oil sheikhdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth.
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