domingo, 31 de enero de 2010


By: Felipe Argote

The seventies of last century was a time of great events, changes and especially of political crisis. The defeat of the U.S. Army in Vietnam, the large amount of military government in Latin-America, the elimination of the gold dollar standard and the oil crisis. But it was also the decade of the so-called dance of the millions. How it started and which was the corollary of this situation is what we will try to convey.

In the early sixties there were seven oil companies that operated as a cartel that controlled the oil market by imposing the sales price as much as the price paid to the oil countries. In 1960 the cartel known as the "Seven Sisters" decided to reduce oil prices that were paid to producer countries. It was the U.S. Esso, the Shell of the Netherlands, the English British Petroleum, Exxon Mobil from U.S., Chevron from the U.S. Gulf and Texaco of the United States.

In order to have greater bargaining power and seek to raise the prices they received for their oil, a group of these countries form the Organization of Petroleum Exporting Countries (OPEC). The founders were Saudi Arabia, Iraq, Iran, Kuwait and Venezuela.

Thirteen years later, On October 6 1973, Syria, Egypt, Jordan and Iraq attacked Israel's positions. This conflict ended with the occupation by Israel of much of the territories of the attacking countries. This is called the Yum Kippur War.

As part of its strategy, the Arab countries declared an oil embargo on countries that collaborated with Israel in the war. Suspended the sale to the U.S. and Holland, South Africa and Rhodesia. Then decide to cut production to reduce supply and raise the price of crude. This rise the barrel from $ 3 to $ 3.65. This embargo as may be gathered includes six of the Seven Sisters oil cartel with the sole exception of the British Petroleum as England was impartial in the conflict. England and France and decided to stop selling weapons to both sides of the conflict.

It was a period of great tension. United States was losing the war in Vietnam but also faced the greatest mobilization of domestic sectors against the war and its economy was deteriorating rapidly. Richard Nixon had unilaterally suspended the Bretton Woods agreement that established the relationship since 1944 as an international standard gold dollar. U.S. refused to exchange dollars from European countries for gold. There was not the best time to put the country into a new armed conflict despite the weakness of the Arab army against the United States. After various negotiations, the embargo is lifted on 17 March 1974. Oil prices had quadrupled reaching $ 12 a barrel.

This high increase in oil prices led to an influx of cash into the oil countries, underdeveloped countries in general. These countries did not have the financial or economic structure capable of handling large flows they received. They did not have banks that may put these savings in loans to the productive sectors, so that the flow bounces largely to banks in developed countries. These banks were so full of petrodollars then at one point has no one to lend. The American CITIBANK saw the exit to the liquidity crisis on these lapidary words: states do not go bankrupt.

This begins the dance of the millions. Millions of dollars of credit to third world countries, without control, without discretion and without the hope of being paid the agreed deadline. Only one way to put the money that exceeded the possibilities of large banks. So that money helps to feed the corrupt civilian governments first and then a military dictatorships that saw the chance to manage these credits by their own. Thus nourished most Latin American dictatorships of the left-right and populist. He fell to the easy money green like a green field scrum vegetables. Vortex which then began soliciting loans and loans to pay interest, then pay the interest on loans for more capital. Billions of dollars squandered on:

• Weapons
• Consumption
• Corruption
• Adventures of private financial

Type financial institutions were created where the state COFINA a shareholding. So an investor sought and obtained funding from the state financial institution for a project. The state became a partner of the investor as if the business was good dividends earned status but was wrong and broke the state lost their investment because more was a shareholder in the project. Many failed and its failure led the state capital.

Part of investors and to the high volatility of dictatorships and countries plagued by both political and social instability but preferred funding request to divert more stable countries, ie developed countries, which bounced back petrodollars to countries the first world.

As the Ponzi pyramid, this dance of the millions ended when Mexico informed the financial institutions could not pay their overdue balances. This happened in 1982. From the moment you close the period of the dance of the millions and opens the debt crisis, the so-called lost decade.

Now, after nearly sixty years after the birth of OPEC, the Financial Times, the prestigious international business newspaper, has submitted the list of new seven sisters, these are the seven most powerful state oil companies from countries not members of the Organization for Economic Cooperation and Development (OECD), better known as the club of rich countries. These state companies are: Arampco Saudi Gazrom Russia, CNPC of China, NIOC of Iran, PDSA of Venezuela, Brazil's Petrobras and Petronas of Malaysia.

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