AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Juan González.

We’re continuing our conversation with economist Michael Hudson. His most recent article for CounterPunch is headlined “The US/Israeli Attack Was to Prevent Peace Not Advance It.” Michael Hudson is a financial analyst and president of the Institute for the Study of Long-Term Economic Trends, distinguished research professor of economics at the University of Missouri-Kansas City.

Juan, why don’t you begin Part 2?

JUAN GONZÁLEZ: Yeah, I wanted to ask you — in our earlier conversation, you mentioned that this — that the United States’s attack on Iran is really about controlling world oil supplies, more than the internal dynamics or the threat of Iran against the U.S., and you mentioned the Arab oil boycott of the 1970s. But there’s been a major shift, obviously, since that period of time. Back then, the United States was highly dependent on the Middle East for its oil. Today, it’s essentially — this country is essentially self-sufficient in terms of its production of oil, so that there is really no direct need for the U.S. economy of oil. But as you mentioned, controlling the supply of the Middle East is a way, really, of controlling other countries. I mean, obviously, India, China depend largely on Mideast oil for their oil supply, and, of course, natural gas from Qatar flows to those countries, as well as to Europe. Could you elaborate a little more about how you believe this is actually a way to put the stranglehold on other countries in the world?

MICHAEL HUDSON: Well, you can see the result of what happened when the United States blocked Europe from buying Russian oil and gas after Russia’s special military operation in February 2022. The German chemical industry was greatly downsized. The glass industry, that runs on gas heating, ended. Germany moved into a recession, and essentially remains in recession. And with the war in Iran yesterday, the German price of oil jumped over 20%. And this is breaking the European budgets, basically, because if — unless the government gives special subsidies to consumers to heat their homes and light their homes, something has to give. The government has a choice: either cut back its social spending in order to support the military budget that’s supported by Starmer in England, Macron in France and Merz in Germany, or move into a recession.

So, getting back, you mentioned the U.S. being self-sufficient in oil. This is very important, because while oil prices are going up for the rest of the world and they’re in an economic squeeze, the United States isn’t. The rise in world oil prices is a windfall for the United States domestic oil companies and gas companies. They’re making a killing on the United States. So, the United States’ balance of payments is in very good terms, but this is creating a crisis that I think is unanticipated by the U.S. government.

As oil prices go up, especially for Global South countries, which you didn’t mention, how are the countries of Africa and South America going to be able to pay for the increase in oil prices that they have and pay the foreign debts that are falling due? They’re already in a squeeze of the debts falling due to U.S. dollar bondholders, stockholders, banks and the International Monetary Fund. Something has to give. So, these countries are now facing a choice. Who’s going to come first? Are they going to pay the bondholders at the cost of imposing domestic austerity, ending up looking like Germany is looking today, or are they going to say, 'Because of the U.S. attack on Iran that's caused the oil price increase, we can’t afford to pay the dollar debt, so we’re banding together and calling for a moratorium on debt payments’? This is going to completely disrupt financial markets if the blockage of the Hormuz Straits continues for more than a few months.

You may be surprised at how little the price of oil has gone up already. Well, it’s gone up 10%. That’s a lot. But it’s not really shocking. The United States and other countries are going to be releasing their oil reserves in order to keep down international prices, at least until the elections, and especially to keep down prices in the United States, in order for Trump to say, “Well, I’m not creating inflation and squeezing the budgets of homeowners and voters, because we’re making sure that we’re stabilizing things. The war will be over very quickly.”

And Trump continues to say it’s going to be over in four weeks, five — when he is scheduled, by no coincidence, to go to China. And I received note from China today saying that this is very important. It’s so important that China is — they were going to publish a third edition of my book Super Imperialism, which is basically the guide for the Defense Department’s move with OPEC way back in 1974. China wants to sort of keep everything very quiet so it can, essentially, give the ultimatum to Trump, saying, “If you try to block oil trade to us, if you block us, the Chinese, from buying Russian tankers, if you continue to seize Russian tankers, if you continue to block Venezuela’s oil to us and Iran’s oil to us, then we’re going to increase — just stop all the exports of essential materials to you. And if you continue to support the Taiwanese independence and sell them arms, we’re also going to stop them.” All of this showdown is going to be coming in one month.

And so, that puts a time constraint on what Trump has to plan militarily in Iran. Iran says, “This is not going to be over in one month. This is, for us, an existential fight. We are not going to stop attacking the Israel and American military — other American military bases, until these bases are removed from the Middle East and the United States leaves us alone.”

So, this is what it’s really all about. It was always about oil, but you’re not going to have Trump come out to the public and say, “Well, we’re bombing Iran in order to cause a regime change, to impose a regime very much like we did Boris Yeltsin in Russia, a regime loyal to the United States, not to Iran, a regime that will not insist on Iranian sovereignty, but will follow U.S. policy, just like so far we’ve been able to do so successfully in Venezuela.” So, it’s all about control —

JUAN GONZÁLEZ: Michael, I just wanted to ask you, because I highly recommend your article to our viewers and listeners. But you also raise the specter that this is actually the — potentially the beginning of World War III. Could you talk about that, as well?

MICHAEL HUDSON: Well, it’s World War III because it involves all other countries. So, in the fight in Syria, the fight in Gaza, it has been considered fairly localized, but because the oil trade can affect every country, it’s worldwide in its implications. And what is happening is that other countries are confronted by an economically aggressive United States.

And basically, the United States explained last December in its national security study that American security depends on the ability to deny other countries the sovereignty. We feel insecure if other countries have the sovereignty to act as they wish, which may be against U.S. interests. And now that the United States is no longer an industrial power, now that we’ve deindustrialized and moved our industry to Asia, we’ve offshored it, now that we no longer have the financial power that we had before, the whole world order that we created in 1945 under the United Nations, the IMF and the World Bank no longer serves American interests. Now we have only one way of influencing other countries, and that’s our ability to create chaos in other countries if they do not give special givebacks to the United States by joining our attack, our isolation of Russia, China, Iran, Venezuela and any other country that does not follow a U.S. policy. So, the effect of all of this is to, instead of isolating these designated enemies of the United States, Trump’s policy is isolating the United States from itself.

It’s forcing other countries to say, if — the basic principle of international law, ever since 1648, all the way to the United Nations Charter in 1945, was every country has national sovereignty. It’s against international law to interfere with other countries’ internal politics and their overall diplomacy, and it’s against the international laws of war to make an unprovoked attack on other countries. It’s against the international laws of war to focus on civilians.

But the U.S. military policy is where you’ve seen in Iran, and as we’ve seen in Gaza and we’ve seen in Syria and as we’ve seen in Ukraine, is to focus the military attack on civilians, not military bases, because the Americans think that if you hurt another country enough, they will be so upset, they will overthrow the existing regime, regime change, and they’ll say, “We don’t want to have our girls’ schools bombed anymore. We want — we’re willing to overthrow the government and put a pro-U.S. government there, so that then the United States won’t bomb us anymore.” Well, that’s a crazy idea. It didn’t work for England when it was bombing German cities. That just reinforced the German opposition. And when Germany bombed London, it didn’t just make London say, “Well, we’re going to just surrender to prevent the V-2s from landing here.” It galvanized British opposition.

Same thing in Iran, that instead of the attack on Iran leading to a regime change, especially now that Iran turned off the internet and the Starlink that the U.S. had been coordinating a kind of Iranian Maidan political demonstration, the Iranian people overwhelmingly supported the existing government. And that’s what any society under attack would do. When you’re under attack, you support the government, even if you don’t like many of the government’s policies, because you don’t want to lose national sovereignty.

So, this is World War III, because the choice is: What kind of a world are we going to have? Will it be the kind of world that was designed in 1945 that is multipolar, every country is a sovereign country? The United States claimed not to have any special power, but it was for free trade then, when no other country was able to compete with American industry, and no other country had the financial resources to be stronger than the United States. And they all needed U.S. financial support, U.S. military support at that time and U.S. economic support. That world is all over now. So, the question is whether the world is going to say, “We’re going to accept President Trump’s suggestion that his Board of Peace, under U.S. control and his personal control, is going to determine world economic policy,” or we’re going to insist that we, the global majority, create the kind of world that civilization’s been moving towards for the last four centuries. Are we going to surrender to the United States? Or are we going to say, “Well, I think it’s time to decouple from the United States and de-dollarize”?

Well, one of the reasons that America has found it so urgent to bomb Iran was that Iran was not pricing its oil in dollars. Because it was selling to China, it was dealing with Chinese currency. Same thing with Venezuela. Venezuela had announced that it was going to stop pricing its oil in dollars. It was going to price in foreign currencies, and specifically the Chinese currency. Same thing with Russia. Since the Europeans confiscated the $300 billion of Russian savings in Belgium, Russia said, “Well, obviously we can’t have any of our international transactions in dollars anymore. We’re having it in other currencies, other than dollars.” So, the United States was faced with a substantial portion of the world export oil trade not being in dollars anymore, and this means that all of the profits from the oil trade were going to move. Instead of being recycled to the United States, largely to fund America’s military spending abroad in the 800 military bases that it has, the United States will not have the balance of payments inflows from oil to enable it to finance its international military diplomacy and political diplomacy and all of the effects that it has. The private sector is much more in balance than the military spending. And my book Super Imperialism explained how military spending was entirely responsible for the whole U.S. balance of payments deficit, the drain of gold, from the 1950s to the 1960s into the 1970s. And it’s still a major drain on the U.S. balance of payments. So, [inaudible] —

AMY GOODMAN: Michael Hudson, we want to thank you for being with us, economist. We’ll link to your new article, “The US/Israeli Attack Was to Prevent Peace Not Advance It.” Michael Hudson is president of the Institute for the Study of Long-Term Economic Trends, distinguished research professor of economics at the University of Missouri-Kansas City. To see Part 1 of our discussion, go to democracynow.org. I’m Amy Goodman, with Juan González. Thanks so much for joining us.