Part I: From Trotsky to Balfour to Israel (1900–1948)

A Long History of Ideas, Oil, and Empire

Introduction: The Roots of a 20th-Century Earthquake

When we talk about neoliberalism, petrodollars, and the present disorder of the Middle East, it’s easy to start in the 1970s. But to understand why the oil shocks hit the world like a freight train, why Israel sits like a permanent fault line in the Arab world, and why Western finance today rules the planet, we have to rewind.

We need to go back — all the way to the turn of the 20th century. That’s where three threads begin to weave together:

The intellectual thread of revolutionary Trotskyism and its strange mutation into Western interventionism.
The imperial thread of Britain and later America’s obsession with Middle Eastern oil.
The political thread of Zionism, the Balfour Declaration, and the eventual creation of Israel.

Together, they set the stage for a world order where chaos in the Middle East became a permanent engine of global finance and Western power.

Trotskyism and the Spirit of Permanent Revolution (1900–1930s)

Leon Trotsky rose in the early 1900s as one of the sharpest minds of Marxism. His idea of permanent revolution was radical: socialism couldn’t succeed in one country alone — it had to spread internationally, relentlessly, until the entire globe was transformed.
Trotsky clashed with Stalin, who pushed for “socialism in one country.” Trotsky lost that battle, was exiled, and was eventually assassinated in Mexico in 1940 by a Stalinist agent.
But here’s the twist: Trotsky’s internationalist spirit didn’t die with him. It seeped into Western radical intellectuals, many of whom later turned their coats.
- Irving Kristol, James Burnham, and others began as Trotskyists in the 1930s–40s.
- By the 1960s–70s, they had become neoconservatives in the US: hawkish defenders of spreading “liberal democracy” worldwide, by force if necessary.
The DNA of Trotskyism — the obsession with world revolution, with remaking other societies — would later re-emerge not under a red flag, but under the stars and stripes.

Britain, Oil, and Empire’s New Lifeblood (1900–1918)

At the dawn of the 20th century, coal still powered empires. But Winston Churchill, then First Lord of the Admiralty, saw the future: oil.
Britain bought a controlling stake in the Anglo-Persian Oil Company (later BP) in 1914. The Royal Navy shifted from coal to oil, and Britain locked its sights on the Persian Gulf.
The Ottoman Empire, crumbling, still controlled Mesopotamia and Palestine — both vital for oil routes. Britain wanted them.
World War I gave Britain the opportunity. In 1916, the secret Sykes–Picot Agreement carved the Middle East into British and French zones of control.
And in 1917 came the Balfour Declaration: Britain promising “a national home for the Jewish people” in Palestine.
- This wasn’t just altruism after centuries of Jewish persecution.
- It was a strategic play: a loyal settler population implanted right in the corridor between the Suez Canal and the Mesopotamian oil fields.

The Interwar Years: Seeds of Conflict (1919–1939)

After WWI, the League of Nations gave Britain the Mandate over Palestine.
Jewish migration increased, supported by the Zionist movement and Western sponsors.
Palestinian Arabs saw their land and livelihoods increasingly threatened. Tensions grew, erupting into riots and insurgencies in the 1920s and 1930s.
Britain played a cynical balancing act: encouraging Zionist migration while promising Arabs vague independence.
Meanwhile, oil became the bloodline of modern warfare and industry. British firms dominated Iran and Iraq; American firms muscled into Saudi Arabia.
By the late 1930s, the Middle East was already a powder keg.

World War II and the Holocaust (1939–1945)

The Holocaust changed the global moral calculus. Six million Jews murdered gave the Zionist project an unassailable emotional legitimacy in Western eyes.
But geopolitics still drove decisions:
- The US replaced Britain as the global superpower.
- Washington understood that controlling Middle Eastern oil would be essential in the Cold War.
A Jewish state in Palestine now served both a humanitarian image and a strategic function. It gave the West a loyal ally in the region, one surrounded by Arab states that leaned toward independence or even Soviet friendship.

1948: The Birth of Israel and the Nakba

In 1948, Israel declared independence. The surrounding Arab states invaded but were defeated.
For Palestinians, this was the Nakba — the catastrophe. Over 700,000 were expelled or fled, never to return.
From its very beginning, Israel was armed, financed, and politically shielded by the West.
It functioned as more than just a nation-state. It was:
- A forward operating base for Western influence in the Middle East.
- A permanent source of tension and instability — ensuring the region could never unify against Western control.

The Three Threads Tie Together

By 1948, the stage was set.

Trotsky’s ghost lived on in Western intellectuals who would later drive interventionist policy, fusing ideology with empire.
Britain and America’s oil obsession had already reshaped the map of the Middle East.
Israel’s creation provided both the moral cover story and the geopolitical anchor for decades of Western meddling.

The world didn’t know it yet, but these moves were the opening act of a drama that would explode in the 1970s — when oil, dollars, and neoliberal ideology fused into one global system.

Closing Thought for Part I

If you zoom out, you can already see the long arc:

From Trotsky’s dream of endless revolution to neocons exporting “freedom” by cruise missiles.
From Balfour’s promise in 1917 to Israel as the keystone of Western strategy.
From Anglo-Persian oil to the petrodollar.

The pattern was set early: create fault lines, harvest the chaos, and build an empire on the back of it.

Part II will pick up from here — the 1950s through the oil embargo of 1973, the petrodollar deal, and the neoliberal world order.

***

Part II: Oil Shocks, Petrodollars, and Neoliberalism (1948–2000s)

How Crisis, Israel, and Finance Forged the Modern Order

Introduction: The Fuse is Lit

By 1948, Israel was born, the Arab world was enraged, and the Western powers had their garrison state planted in the oil heartland. But the true earthquake came decades later, when this geopolitical tinderbox collided with global economics.

The period from 1948 to the early 2000s is the story of:

Israel’s wars and the permanent Arab–Israeli conflict which kept the region unstable.
The 1973 oil embargo and petrodollar pact which reshaped the global financial order.
The rise of neoliberalism, which turned crisis into an opportunity for elites.
The mutation of Trotskyism into neoconservatism, exporting endless revolution — this time by Wall Street and the Pentagon.

This was not history happening at random. This was history shaped, steered, and weaponised.

The Early Cold War Middle East (1948–1967)

1948–49: Israel’s victory and the Nakba left deep scars. Arab states, humiliated, turned inward but also toward nationalism.
1950s:
- Suez Crisis (1956): Egypt nationalised the canal. Britain, France, and Israel invaded. The US forced them to withdraw, signaling America’s new dominance in the region.
- Arab nationalism surged under Gamal Abdel Nasser in Egypt. He became the symbol of independence, socialism, and anti-imperialism.
1960s:
- Oil-rich states like Iraq, Libya, and Saudi Arabia modernized, but Western oil companies kept the lion’s share of profits.
- The Palestinian issue became the rallying cry of Arab unity.
1967: Six-Day War
- Israel launched preemptive strikes and seized the West Bank, Gaza, East Jerusalem, Sinai, and Golan Heights.
- The humiliation of Arab armies cemented Israel’s role as a US-backed superpower in the region.
- It also set the stage for the next great rupture: 1973.

1973: Yom Kippur War and the Oil Embargo

The war: Egypt and Syria attacked Israel to regain lost lands. Early Arab gains evaporated as the US airlifted weapons and supplies to Israel.
The shock: In retaliation, Arab members of OPEC (led by Saudi Arabia) announced an oil embargo against nations supporting Israel.
The result:
- Oil prices quadrupled in months.
- Western economies plunged into recession.
- Inflation and unemployment soared simultaneously — a condition called stagflation, which Keynesian economics couldn’t explain or fix.

This was the moment neoliberals had been waiting for: a crisis so deep that the old system cracked.

1974: The Petrodollar Pact

The US saw an existential threat: if oil producers priced in multiple currencies, the dollar could collapse after Nixon ended the gold standard in 1971.
Henry Kissinger and the Saudis cut a deal:
- Saudi Arabia agreed to sell oil only in US dollars.
- Other OPEC states followed.
- In exchange, the US guaranteed Saudi security and sold them advanced weapons.
Recycling petrodollars:
- Saudi oil revenues were deposited in Western banks and invested in US Treasuries.
- Western banks then loaned this money to developing countries.
This created a new global financial system: the dollar anchored not to gold, but to oil.

Debt, IMF, and Structural Adjustment (1970s–1980s)

Developing countries borrowed heavily from Western banks, flush with petrodollars.
When interest rates spiked in the 1980s (thanks to the US Federal Reserve’s “Volcker Shock”), many nations couldn’t repay.
Enter the IMF and World Bank. Their solution:
- Bailouts conditional on “structural adjustment.”
- Deregulation, privatisation, removal of subsidies, open markets.
In other words: neoliberalism imposed on the Global South.
What started as an oil crisis became the lever for remaking entire economies under US financial control.

The Rise of Neoliberalism in the West (1979–1990s)

1979: Margaret Thatcher takes power in Britain.
- Crushes unions, sells off public industries, and deregulates finance.
1980: Ronald Reagan was elected in the US.
- Slashes taxes for the wealthy, deregulates, breaks unions, and deregulates Wall Street.
Both leaders used the 1970s crisis as proof that “government intervention doesn’t work.”
Boomers came of age here:
- Many had flirted with 1960s counterculture but now shifted to careers, mortgages, and consumerism.
- They became the foot soldiers of neoliberal expansion — managers, academics, politicians.

Trotskyism’s Ghost: From Left to Neocon (1960s–1980s)

The irony is rich: many early American neoconservatives were ex-Trotskyists.
- Irving Kristol, James Burnham, Norman Podhoretz.
- They abandoned socialism but kept the Trotskyist obsession with world revolution.
Instead of workers’ revolts, they championed American-led global “democracy promotion.”
This ideological mutation merged perfectly with neoliberal economics:
- Spread free markets.
- Spread “freedom.”
- Do it everywhere, by force if necessary.
By the 1980s, this blend of neoliberal economics and neocon foreign policy defined Washington’s playbook.

The 1990s: Globalisation and Consolidation

1991: Gulf War
- Saddam Hussein invaded Kuwait. The US-led coalition destroyed Iraqi forces.
- Officially about sovereignty, but really about oil and protecting Saudi Arabia.
1990s Globalisation:
- Clinton (a Boomer) embraced free trade (NAFTA, WTO).
- Financial deregulation deepened.
- Neoliberal orthodoxy became global law.
Israel–Palestine: Oslo Accords (1993) promised peace but collapsed. Conflict remained the permanent fuse, justifying Western presence in the region.

2000s: Neoliberalism and Endless War

2001: 9/11 attacks. US invades Afghanistan.
2003: Invasion of Iraq.
- Official reason: WMDs.
- Real reasons: control of oil, projection of power, and securing Israel’s strategic environment.
These wars were justified by neocon logic (world revolution, US dominance) and funded by a neoliberal financial system built on the petrodollar.

The Big Picture by the 2000s

By the turn of the millennium, the architecture was complete:

Israel as the permanent Middle Eastern flashpoint, justifying endless Western involvement.
Saudi Arabia is locked into the petrodollar pact, securing dollar supremacy.
Neoliberalism is entrenched as the global economic orthodoxy, both domestically and through IMF conditionality.
Neoconservatives (ex-Trotskyists) are pushing a foreign policy of endless intervention.

The chaos of the Middle East wasn’t random. It was the scaffolding of a new world order — one where crises were engineered, exploited, and recycled into power for Washington and London.

Closing Thought for Part II

The postwar Keynesian system promised stability and fairness. But through war, oil shocks, and calculated deals, it was dismantled and replaced by something very different: a neoliberal order, financed by petrodollars, enforced by military interventions, and rationalised by ideologues who once dreamed of permanent revolution.

***

Part III: The Counterfactual — What If None of This Had Happened?

A Thousand Words of Alternate Futures

Introduction: A Thought Experiment

History feels inevitable in hindsight. But what if the chain of decisions, manipulations, and crises we’ve traced had never happened? What if Israel had been created not in Palestine, but somewhere neutral — say, in Latin America or an autonomous European enclave? What if oil had remained a commodity, not a weapon of geopolitics? What if the 1970s crises were managed cooperatively instead of exploited for neoliberal restructuring?

The answers are sobering. They show just how much today’s world rests on contingency — and on conscious manipulation by those who saw crisis as opportunity.

Scenario One: A Middle East Without Israel in Palestine

If Israel had been founded elsewhere (an idea seriously floated by some Zionist thinkers before WWII), the Middle East might have evolved very differently.
The Arab world would not have been locked into perpetual war with a settler state. Instead:
- Pan-Arab nationalism under Nasser may have consolidated into a regional bloc.
- Oil wealth could have been harnessed for internal development instead of endless military spending.
- The “Palestinian question” would not exist as the open wound justifying US/UK presence in the region.
This does not mean the Middle East would be conflict-free — tribal rivalries, monarchies, and Cold War competition still existed — but the core fracture point would be absent.

Scenario Two: Oil Without the Petrodollar

Imagine the 1973 oil embargo unfolding in the same way, but without the US–Saudi deal to price oil exclusively in dollars.
Instead, OPEC could have chosen a basket of currencies or even gold.
The result:
- The US dollar would have lost its global dominance after Nixon severed gold backing in 1971.
- Europe and Japan might have risen as equal financial powers.
- Global finance would be multipolar instead of dollar-centric.
Developing countries would not have been trapped in the IMF/World Bank debt regime, because Western banks wouldn’t have been able to recycle petrodollars at scale.
In other words, neoliberalism might never have had the global enforcement mechanism it required.

Scenario Three: The 1970s Managed Differently

What if stagflation and oil shocks had been confronted with cooperative policies instead of neoliberal shock therapy?
- Governments could have invested in renewable energy earlier.
- Price controls, rationing, and Keynesian demand management might have stabilised economies.
- Inflation could have been tamed without gutting unions or dismantling the welfare state.
In such a world, the postwar Keynesian compromise (strong states, social safety nets, regulated markets) might have endured.
The result: a more equal West, without the vast inequality that neoliberalism created after 1980.

Scenario Four: No Trotskyist-to-Neocon Mutation

Without the intellectual migration of ex-Trotskyists into American neoconservatism, US foreign policy might have been far less interventionist.
The Cold War would still have pushed America into global conflicts, but the idea of a permanent world revolution under US leadership may not have taken root.
After 1991, without neocon ideology, the US might have downsized its military footprint instead of expanding it.
That means:
- No Iraq invasion in 2003.
- Possibly no endless “War on Terror.”
- A multipolar balance by the 2000s instead of US unipolar dominance.

Scenario Five: Globalisation Without Neoliberalism

Even if global trade expanded in the 1990s, without neoliberal orthodoxy, it could have looked very different:
- Trade rules that protected labour rights and national industries.
- Finance is more tightly regulated, avoiding the 2008 crash.
- Developing nations allowed to industrialise at their own pace instead of being forced open by IMF diktats.
The world might have looked closer to the social democratic dream: global exchange combined with domestic stability.

The Human Cost Avoided

If none of the above had happened, the tangible human suffering of the last 70 years might have been vastly reduced:

Millions of Palestinians were not displaced or killed.
Arab nations are not bankrupted by endless war.
Latin America and Africa were not forced into the IMF structural adjustment.
The West is not hollowed out by deindustrialisation and inequality.
Perhaps most poignantly: a world less consumed by engineered chaos.

But the Counterfactual Has Limits

Of course, we must be honest. Power abhors a vacuum. If not neoliberalism, then some other order would have risen. If not Israel in Palestine, then another flashpoint might have served Western interests. History is shaped by both material forces and deliberate choices.

Still, the counterfactual makes clear:

The exact system we live under — petrodollar neoliberalism enforced by endless wars — was not inevitable.
It was the product of specific strategies by specific elites, many in London and Washington, who saw in chaos a path to dominance.

Closing Reflection: The Road Not Taken

History could have been different. The 1970s could have been a moment of global solidarity instead of neoliberal rupture. The Middle East could have been a hub of cooperative development instead of a war zone. Finance could have remained subordinate to people instead of the other way around.

But the choices made by the architects of crisis — Kissinger, Thatcher, Reagan, the IMF, the neocons — sealed another fate. And here we are.

The “neoliberal monstrosity,” as many call it, was not born by accident. It was born by design, midwifed by war and oil, and sustained by myths of inevitability.

Yet by exploring what could have been, we remind ourselves of a crucial truth: if history was made once, it can be remade again.

***

Part IV: The Rise of the Global South and the Hollowed West

Introduction: The End of the West’s Monopoly

For decades, the West projected power through three levers: finance (the dollar), industry (weapons and technology), and narrative (the ideological supremacy of “freedom” and markets). That combination worked during the Cold War and peaked in the 1990s after the USSR collapsed.

But now, in the 2020s, the ground has shifted. The Global South — Asia, Africa, Latin America — has risen as both an economic force and a political bloc. Meanwhile, the West has hollowed itself out through deindustrialisation, financialisation, and overreliance on global supply chains. The result: a West that talks loudly but punches weakly, reliant on adversaries like China for the very minerals and products needed to sustain its military power.

Nixon’s Great Gamble: China as a Neoliberal Engine

In 1972, Richard Nixon and Henry Kissinger executed their famous opening to China.
Their immediate goal was to split China from the USSR, weakening the communist bloc. But the long-term consequence was more profound.
By granting China “Most Favored Nation” trade status in 1979 and eventually shepherding it into the WTO (2001), the US effectively exported its industrial base to China.
For neoliberalism, this was paradise:
- Cheap labor for Western corporations.
- Consumer goods at low prices for Western populations.
- Massive profits for Wall Street through offshoring.
For China, it was the greatest Trojan horse in history. It took Western capital, technology, and supply chains — and built itself into the world’s factory.

Deindustrialisation in the West

By the 1980s and 1990s:

The US and UK deliberately dismantled much of their manufacturing base in favor of finance-driven economies.
Globalization was sold as “inevitable progress,” but it hollowed out communities from Detroit to Sheffield.
Military-industrial capacity shrank too. Today, the US struggles to produce artillery shells at the rate Ukraine consumes them in weeks.
Europe is even worse off: reliant on imports for energy, semiconductors, and critical minerals.

This leaves the West in a paradox: the richest nations on paper, yet increasingly unable to produce the physical goods of power.

Rare Earths: The Chokepoint of Modern War

Modern weaponry is not just steel and gunpowder — it’s electronics, sensors, batteries, and advanced alloys. All of these require rare earth minerals.

China controls roughly 60–70% of global rare earth production and over 80% of processing capacity.
These include neodymium (for magnets in missiles and jets), lithium (for batteries), cobalt (for electronics), and tungsten (for armor-piercing munitions).
The US once mined and refined its own, but in the neoliberal era, it outsourced almost everything to China.

Result: the West cannot sustain a large-scale war without relying on its main strategic rival.

The Global South Awakens

While the West consumed and financialised, the Global South industrialised:

China became the world’s largest manufacturer, shipbuilder, and soon the largest economy in purchasing power parity (PPP).
India is rising as a technological and demographic giant, a hub for pharmaceuticals, software, and space.
Brazil, South Africa, Indonesia, Iran — these powers are asserting regional influence.
BRICS+ expansion (2023–24) brought in oil producers (Saudi Arabia, UAE, Iran), making it a bloc that now represents the majority of global GDP in PPP.

The West’s sanctions weapon (like against Russia) has backfired by accelerating trade in local currencies — bypassing the dollar.

Military Implications: The Arsenal of Democracy is Empty

In WWII, America was called the “Arsenal of Democracy.” It could outproduce Germany and Japan combined. Today:

US factories take two years to ramp up artillery shell production to levels Russia already sustains.
European militaries are running out of ammo simply supporting Ukraine.
Aircraft carriers, once symbols of dominance, are vulnerable to Chinese hypersonic missiles — built using Chinese rare earths.

Meanwhile, the Global South innovates:

Iran produces cheap, effective drones now exported to Russia.
Turkey builds drones and armored vehicles for dozens of buyers.
China leads in hypersonic missiles, naval shipbuilding, and electronic warfare.

The West no longer enjoys a technological monopoly, nor does it control the means of production.

Nixon’s Gambit Reversed

The irony is staggering:

Nixon split China and the USSR in the 1970s to weaken the communist bloc.
Today, Western pressure has pushed Russia and China together into the closest strategic partnership in history.
Add Iran, North Korea, and even a hedging India, and the very architecture meant to isolate adversaries has birthed a multipolar alliance.

The dream of perpetual neoliberal dominance has become its nightmare.

What Comes Next: The Global South Century

The Global South will not simply replace the West, but it is creating a parallel system:
- Alternative financial structures (BRICS Bank, yuan oil trade).
- Independent tech ecosystems (Huawei 5G, Russian Mir payments).
- Resource sovereignty (Africa demanding fairer deals for its minerals).
The West, in Freeport as you put it, still has power — but it is less the producer and more the gatekeeper of financial paper. That power erodes each year as nations bypass the dollar and build their own value chains.

Conclusion: From Monstrosity to Multipolarity

The neoliberal order, birthed in the 1970s crisis, weaponised Israel, oil, and finance to enforce dominance. It hollowed out its own base, betting everything on global integration under Western rules.

But history has flipped. The same integration empowered the Global South. The same neoliberal outsourcing left the West dependent. The same financial hubris alienated allies.

Now, the West faces a future where it cannot dictate terms, cannot outproduce, and cannot even wage war without importing materials from rivals. Meanwhile, the Global South — once dismissed as dependent — is becoming the driver of 21st-century power.

Nixon and Kissinger wanted to split the world. Instead, they may have midwifed its reunification — under terms the West no longer controls.

Tuesday, 23 September 2025

From Trotsky to Tech Wars: How Neoliberalism Hollowed the West and Forged the Global South’s Rise