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Ellen Brown writes: "So is this new war all about oil or all about banking? Maybe both - and water as well. With energy, water, and ample credit to develop the infrastructure to access them, a nation can be free of the grip of foreign creditors. And that may be the real threat of Libya: it could show the world what is possible."

A Libyan rebel holds the Kingdom of Libya flag as he walks past a burning tank at a site bombed by the coalition air force in the town of Ajdabiya, 03/26/11. (photo: Patrick Baz/AFP/Getty)
A Libyan rebel holds the Kingdom of Libya flag as he walks past a burning tank at a site bombed by the coalition air force in the town of Ajdabiya, 03/26/11. (photo: Patrick Baz/AFP/Getty)

Libya: All About Oil, or All About Banking?

By Ellen Brown, Reader Supported News

15 April 11

Reader Supported News | Perspective


RSN Special Coverage: Egypt's Struggle for Democracy


everal writers have noted the odd fact that the Libyan rebels took time out from their rebellion in March to create their own central bank - this before they even had a government. Robert Wenzel wrote in the Economic Policy Journal:

I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising. This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.

Alex Newman wrote in the New American:

In a statement released last week, the rebels reported on the results of a meeting held on March 19. Among other things, the supposed rag-tag revolutionaries announced the "[d]esignation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi."

Newman quoted CNBC senior editor John Carney, who asked, "Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power? It certainly seems to indicate how extraordinarily powerful central bankers have become in our era."

Another anomaly involves the official justification for taking up arms against Libya. Supposedly it's about human rights violations, but the evidence is contradictory. According to an article on the Fox News website on February 28:

As the United Nations works feverishly to condemn Libyan leader Muammar al-Qaddafi for cracking down on protesters, the body's Human Rights Council is poised to adopt a report chock-full of praise for Libya's human rights record.

The review commends Libya for improving educational opportunities, for making human rights a "priority" and for bettering its "constitutional" framework. Several countries, including Iran, Venezuela, North Korea and Saudi Arabia, but also Canada, give Libya positive marks for the legal protections afforded to its citizens - who are now revolting against the regime and facing bloody reprisal.

Whatever might be said of Qaddafi 's personal crimes, the Libyan people seem to be thriving. A delegation of medical professionals from Russia, Ukraine and Belarus wrote in an appeal to Russian President Medvedev and Prime Minister Putin that after becoming acquainted with Libyan life, it was their view that in few nations did people live in such comfort:

[Libyans] are entitled to free treatment, and their hospitals provide the best in the world of medical equipment. Education in Libya is free, capable young people have the opportunity to study abroad at government expense. When marrying, young couples receive 60,000 Libyan dinars (about 50,000 US dollars) of financial assistance. Non-interest state loans, and as practice shows, undated. Due to government subsidies the price of cars is much lower than in Europe, and they are affordable for every family. Gasoline and bread cost a penny, no taxes for those who are engaged in agriculture. The Libyan people are quiet and peaceful, are not inclined to drink, and are very religious.

They maintained that the international community had been misinformed about the struggle against the regime. "Tell us," they said, "who would not like such a regime?"

Even if that is just propaganda, there is no denying at least one very popular achievement of the Libyan government: it brought water to the desert by building the largest and most expensive irrigation project in history, the $33 billion GMMR (Great Man-Made River) project. Even more than oil, water is crucial to life in Libya. The GMMR provides 70 percent of the population with water for drinking and irrigation, pumping it from Libya's vast underground Nubian Sandstone Aquifer System in the south to populated coastal areas 4,000 kilometers to the north. The Libyan government has done at least some things right.

Another explanation for the assault on Libya is that it is "all about oil," but that theory too is problematic. As noted in the National Journal, the country produces only about 2 percent of the world's oil. Saudi Arabia alone has enough spare capacity to make up for any lost production if Libyan oil were to disappear from the market. And if it's all about oil, why the rush to set up a new central bank?

Another provocative bit of data circulating on the Net is a 2007 "Democracy Now!" interview of US General Wesley Clark (Ret.). In it he says that about 10 days after September 11, 2001, he was told by a general that the decision had been made to go to war with Iraq. Clark was surprised and asked why. "I don't know!" was the response. "I guess they don't know what else to do!" Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan and Iran.

What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers' central bank in Switzerland.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr., writing on, noted that "[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept Euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar."

According to a Russian article titled "Bombing of Lybia - Punishment for Qaddafi for His Attempt to Refuse US Dollar," Qaddafi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Qaddafi suggested establishing a united African continent, with its 200 million people using this single currency. During the past year, the idea was approved by many Arab countries and most African countries. The only opponents were the Republic of South Africa and the head of the League of Arab States. The initiative was viewed negatively by the USA and the European Union, with French president Nicolas Sarkozy calling Libya a threat to the financial security of mankind; but Qaddafi was not swayed and continued his push for the creation of a united Africa.

And that brings us back to the puzzle of the Libyan central bank. In an article posted on the Market Oracle, Eric Encina observed:

One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned.... Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.

Libya not only has oil. According to the IMF, its central bank has nearly 144 tons of gold in its vaults. With that sort of asset base, who needs the BIS, the IMF and their rules?

All of which prompts a closer look at the BIS rules and their effect on local economies. An article on the BIS website states that central banks in the Central Bank Governance Network are supposed to have as their single or primary objective "to preserve price stability." They are to be kept independent from government to make sure that political considerations don't interfere with this mandate. "Price stability" means maintaining a stable money supply, even if that means burdening the people with heavy foreign debts. Central banks are discouraged from increasing the money supply by printing money and using it for the benefit of the state, either directly or as loans.

In a 2002 article in Asia Times titled "The BIS vs National Banks," Henry Liu maintained:

BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies. The BIS does to national banking systems what the IMF has done to national monetary regimes. National economies under financial globalization no longer serve national interests.

... FDI [foreign direct investment] denominated in foreign currencies, mostly dollars, has condemned many national economies into unbalanced development toward export, merely to make dollar-denominated interest payments to FDI, with little net benefit to the domestic economies.

He added, "Applying the State Theory of Money, any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation." The "state theory of money" refers to money created by governments rather than private banks.

The presumption of the rule against borrowing from the government's own central bank is that this will be inflationary, while borrowing existing money from foreign banks or the IMF will not. But all banks actually create the money they lend on their books, whether publicly-owned or privately-owned. Most new money today comes from bank loans. Borrowing it from the government's own central bank has the advantage that the loan is effectively interest-free. Eliminating interest has been shown to reduce the cost of public projects by an average of 50 percent.

And that appears to be how the Libyan system works. According to Wikipedia, the functions of the Central Bank of Libya include "issuing and regulating banknotes and coins in Libya" and "managing and issuing all state loans." Libya's wholly state-owned bank can and does issue the national currency and lend it for state purposes.

That would explain where Libya gets the money to provide free education and medical care, and to issue each young couple $50,000 in interest-free state loans. It would also explain where the country found the $33 billion to build the Great Man-Made River project. Libyans are worried that NATO-led air strikes are coming perilously close to this pipeline, threatening another humanitarian disaster.

So is this new war all about oil or all about banking? Maybe both - and water as well. With energy, water, and ample credit to develop the infrastructure to access them, a nation can be free of the grip of foreign creditors. And that may be the real threat of Libya: it could show the world what is possible. Most countries don't have oil, but new technologies are being developed that could make non-oil-producing nations energy-independent, particularly if infrastructure costs are halved by borrowing from the nation's own publicly-owned bank. Energy independence would free governments from the web of the international bankers, and of the need to shift production from domestic to foreign markets to service the loans.

If the Qaddafi government goes down, it will be interesting to watch whether the new central bank joins the BIS, whether the nationalized oil industry gets sold off to investors, and whether education and health care continue to be free.

Ellen Brown is an attorney and president of the Public Banking Institute, In "Web of Debt," her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are and

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-3 # Activista 2011-04-15 12:20
"the new central bank joins the BIS, whether the nationalized oil industry gets sold off to investors, and whether education and health care continue to be free" - this is Arab socialism ..
-Qatar said it arranged a shipment last week of 1 million barrels of crude oil from the eastern Libyan port of Tobruk, which is in territory controlled by the rebels. The shipment was worth about $120 million-to China ...
to buy arms to get all Libyan oil. Planned by NEOCONS - If Libya 2% of oil does NOT matter - why we are paying $4 at gas pumps?
-2 # Activista 2011-04-15 13:50
Tripoli is liberated - Libyan people celebrate - while NAZO is bombing.
0 # Activista 2011-04-15 14:34
Gaddafi's daughter sends defiant message
Apr 15, 2011 ... Aisha Gaddafi, daughter of Libyan leader Muammar Gaddafi, ... struck by US Reagan bombs exactly 25 years ago, Muammar Gaddafi's daughter sent a defiant message ... the badly damaged Bab Aziziyah compound, targeted by US warplanes in 1986. ... They killed dozens of children in Libya." "
Including Gaddafi adopted baby daughter ..
Now, after 25 years, NACO/USA do the same. Please GOOGLE more ...
0 # billy bob 2011-04-15 15:41
I questioned whether or not Libya was about oil a week or so ago. Talking to a few of you on these threads, especially DaveW pretty much convinced me.

I was questioning what the benefit was for "our" empire, and how we could be furthering colonial goals without ground troops. Well, it really isn't "our" empire at all, is it? It's not even an "American" empire. It's a global corporate empire, largely financed by American tax dollars and policed by the American military and private mercenaries working with for-profit companies.

It doesn't matter that the U.S. doesn't use this kind of oil. Europe does, and oil is profit. The oil industry has no national loyalties. It works for itself and is only interested in its own empire. The U.S. government is a subsidiary of that empire.

Taken in this light, I think it's perfectly plausible that Libya IS about oil. Too bad many repugs don't realize this. Otherwise, they might support it. They're so caught up in the tit-for-tat that our guy isn't much less evil than any of them, that they haven't bothered to notice that most of us agree with them.

0 # billy bob 2011-04-15 15:42

For the record, I STILL think it would be great to remove kadhafi (what's this "G"adafi stuff?) and replace him with a democracy. I was almost fooled into believing that was the goal. Who knows, maybe a democracy will happen by accident. I wonder how long it will last if it pisses off the oil industry, though.
+2 # Activista 2011-04-15 18:14
"maybe a democracy will happen by accident" - NOT after civil war - more revenge and killing - more of the Iraq style US "democracy" - the goal is to destroy country - competition. Russia and Saudis are winners here - with BP and EXXON - 25% more profits at $4/gallon -
+2 # billy bob 2011-04-15 20:59
You're right. I think a democracy would find a tougher opponent in the oil industry than it's found in kadhafi.

A better way to word it would have been that, for a true democracy to come out of this would be ironic.
0 # Activista 2011-04-15 18:09
Qaddafi is a dictator - more Stalin type - that destroyed monarchy - not loved by authoritarian Arab monarch.
Today it was 25 years anniversary when US president Reagan bombed his residence in Tripoli. And NATO planes were bombing/killing again TODAY - in Tripoli.

NONE of the our "democratic media" made the point - could not dream of better pro Qaddafi propaganda.
He will be shot (becomes a martyr) his children will take over - they are educated, will institute the reforms.

The article is right - Libya/resources /oil are NOT under NEOCON control. Another hint - people who pushed for Libya war - US neocons (Clinton is neocon) - are the same people who invaded Iraq - and who plan to invade Iran. This is a pattern - the same lies, the same propaganda.
Our - Iraqi government massacred anti-Iranian resistance - the people Saddam and Reagan used against Iran - we promised to protect. Search - do NOT trust authority.
+2 # ginger gee 2011-04-16 02:08
this article raises more questions than it answers. if Libyan life is so comfortable, why are they rebelling? and by creating a new central bank, that means they are not happy with the existing one. why? the existing government-owne d one allows for all the interest-free prosperity. do the rebels want less prosperity? who would benefit from a BIS-owned central bank in Libya? not the people, it would be the international bank cartel. the rebels sound like they must be paid agitators for the BIS. and the fact that this was all planned back in 2001 (according to the article) indicates that the freedom rebellions in the middle east were just smoke screens so that the world would assume that Libya was just another one. the Global Banking Elite was willing to sacrifice the dictators of Egypt and Tunisia so they could get their hands on Libya. i think Qaddafi's plans to create an African economic bloc, free from BIS control, is the real reason for all the rebellions and the UN invasion of Libya.
+2 # Activista 2011-04-16 09:49
Qaddafi's plans to create an African economic bloc, free from BIS control, is the real reason for all the rebellions and the UN invasion of Libya - AGREE

Libya war is tribal/civil war. Nothing to do with democracy or people. US/neocons wanted Libya for last 40 years. In 1986 Reagan bombed Libya - targeted Qaddafi family - killed some.25 year anniversary was yesterday - and NATO again bombed Tripoli.
Despite Obama assurances - his war is a draw - like Afghanistan. In Iraq - Iran has more influence than USA - so 40.000 occupiers will stay.
+2 # Activista 2011-04-16 11:46
Obama said. “And my expectation is, is that if we continue to apply that pressure and continue to protect civilians .. on all videos I see the "civilians" with arms attacking cities under NATO air cover ...
and cluster bombs ... how uncivilized ...
IDF commander: We fired more than a million cluster bombs in ...
Sep 12, 2006 ... Phosphorous and cluster bombs heavily used; unexploded munitions litter wide area of Lebanon.
IDF admits targeting civilian areas in Lebanon with cluster bombs ...
Nov 19, 2006 ... Halutz: My orders were explicit to fire cluster bombs with ...

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