With the U.S. economy “obviously going through a tough time,”America should welcome capital investments even from foreign sovereign wealth funds,” President George W. Bush asserted on March 14, 2008 at New York’s Economic Club. “It’s our money to begin with,” he added, referring to roughly $95 trillion in OPEC holdings of U.S. dollars and investments accumulated largely through oil sales. Contending that we can “protect our people against investments that jeopardize our national security,” Mr. Bush added, “Seems like we ought to let it come back.”
But President Bush is ignoring some basic principles of U.S. capitalism and democracy: personal and corporate ownership rights are nearly sacrosanct. Dollars may be “coming back,” but they do so with strings attached, giving foreigners huge leverage and control over the U.S. currency and economy. Of the world’s 86 million barrels in daily crude oil output, the Middle East produces only 25.6 percent. With escalating prices, crude oil now runs $111 per barrel, putting $2.4 billion daily in Middle East pockets.
Unlike President Bush, market observers don’t think we can burn the candle at both ends. Legendary investor and Vanguard Group founder John Bogle blasted the “orgy of speculation” that granted foreign investors excessive influence over the U.S. economy. “We should have never let ourselves get into this position where so many dollars are . . . held by foreign countries and bought by foreign countries that are enemies,” he stated also on March 14. “Friend or enemy, they have a lot of control over what happens here,” he said.
Indeed, major Middle East oil producers have a different understanding than Americans of economics and ownership. The October 2006 Organization of the Islamic Conference (OIC) “Mecca Declaration” is but one, albeit pointed example of this fundamental difference. Islam views all property owned by Muslims as held “in trust for Allah.” The Qur’an decrees, “The land belongs to Allah, He gives it as a heritage to those of His devotees whom He pleases” (15:128). Therefore, Muslim property “shall be subject to the terms and conditions established by their owners.”
While OPEC and the Saudis blame the Bush administration for high oil prices, by “mismanaging” the U.S. economy, in fact OPEC policies cause the escalation. In a significant indication of brazen Saudi determination to undermine the U.S. and Western economies with petrodollars, King Abdullah rebuffed President Bush’s recent appeal to boost production and lower prices. “I would hope, as OPEC considers different production levels, that they understand that if… one of their biggest consumers’ economy suffers, it will mean less purchases, less gas and oil sold,” the President pleaded. Without hesitating, however, Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi responded, “We will raise production when the market justifies it.”
Considering the effects on U.S. markets, the Saudi strategy should be recognized as economic warfare. Despite protracted violence against the United States, West and Israel since 1979, only the September 11 attacks forced America to recognize the Islamic holy war (jihad) waged by al Qaeda, Hamas, Islamic Jihad and Hezbollah. What will it take for the United States to recognize the far more dangerous and important part of that jihadeconomic warfare (financial jihad, or al-jihad bi-al-mal)-which the Saudis and Gulf States now aggressively also pursue? Shari’a mandates that Muslims fund jihad: Qur’an 61:10-11, “strive for the cause of Allah with your wealth and your lives. . . .” And Qur’an 49:15, “(true) believers are only those who”strive with their wealth and their lives for the cause of Allah.” “Financial Jihad [is] ‘more important’ than self-sacrificing,” says Saudi Islamic cleric and Muslim Brother Hamud bin Uqla al-Shuaibi.
This open economic warfare, however, has effected U.S. economic or foreign policies, much less media coverage or presidential election campaigns or debates. While the U.S. currency weakens and Saudi and Gulf interests continue their binge buying of strategic U.S. assets and financial institutions, their petrodollars lure more and more ignorant, and even desperate American bankers and investors into the purported glimmer of shari’a banking – a gold-plated Islamic money pit. The president and his economic advisors should heed Jack Bogle. Without emergency measures to redirect U.S. economic policy and market regulations, the petrodollar- and shari’a-driven takeover of America will indeed endanger national and global security.
Dr. Rachel Ehrenfeld is director of the American Center for Democracy and member of the Committee on the Present Danger. Alyssa A. Lappen, Senior Fellow at the ACD, is a former editor for Forbes, Corporate Finance, Working Woman and Institutional Investor.