What is the basis of America’s emnity for Iraq, Iran and Syria? Is it that they might give WMD to The Terrorists™, are the enemies of the state of Israel, or live on top of “our oil”? Is it the threat of a Global Islamo–Fascist Caliphate, because they’re “evil doers,” or simply the subjects of an American social engineering project to liberate the world?
Some have concluded that Saddam Hussein’s real crime was denominating his oil sales in Euros in the fall of the year 2000, saying his switch challenged the preeminence of the US dollar.
There has been much debate lately on the matter of Iran’s plans to open their own mercantile exchange, an oil bourse, and perhaps not coincidentally, talk of imminent war.
As John Pilger wrote earlier this week,
“[Blair] knows the real reasons for an attack and the part Britain is likely to play. Next month, Iran is scheduled to shift its petrodollars into a euro-based bourse. The effect on the value of the dollar will be significant, if not, in the long term, disastrous. At present the dollar is, on paper, a worthless currency bearing the burden of a national debt exceeding $8 trillion and a trade deficit of more than $600 billion. The cost of the Iraq adventure alone, according to the Nobel Prizewinning economist Joseph Stiglitz, could be $2 trillion.”
The idea is that if Iran opens their own market and begins to denominate their oil sales in euros, it could cause the different governments of the world to divest some of their dollar holdings so that they can instead save euros for the large transactions, and that this could threaten the hegemony of the US dollar – which, of course, is just a lousy piece of paper backed up by police power.
If the world were to abandon the US dollar as the reserve currency, all those dollars would come floating home, causing massive inflation.
The government of Syria announced they were going to begin using euros for all their major international transactions on Monday.
There is disagreement among experts as to whether or not these moves by the last “rouge states” are really enough to disrupt the dollar’s supremacy. For example, Antiwar.com regular contributor and Assistant Secretary of the Treasury under Ronald Reagan, Paul Craig Roberts, wrote to AWC director Eric Garris last weekend that he thought it unlikely:
“Oil is billed in dollars because the dollar is the world reserve currency. The dollar is not the reserve currency because oil is billed in dollars. The US is abusing the dollar’s role as reserve currency. When a trusted alternative appears, the dollar is likely to lose its reserve currency role. Iran, however, cannot cause that transition.”
Perhaps the real question is not whether Iran can cause the transition, but whether American politicians will let a major oil producing country set a bad example in front of the others. The real trouble for our criminal politicians is that, as PCR notes, “Today, US war-making capability is dependent on the rest of the world to finance it.”
Ron Paul MD (R-TX), another Antiwar.com regular contributor and the only economist of the free market Austrian school in the US Congress, gave a speech [.wmv video file] on the house floor Wednesday, February 15, titled “The End of Dollar Hegemony,” in which he explains how the Bretton Woods aggreement established the dollar as the world reserve currency, while at the same time transferring much of America’s gold overseas, which resulted in the government under Richard Nixon defaulting in 1971, which ended forever the promise to pay gold to bearers of US dollars on demand, and switching our currency to government-monopoly money. At this point, Dr. Paul explains,
“Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.
This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo–gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.”
After describing the role likely played by Saddam’s switch to the Euro in 2000 in the decision for “regime change,” Paul reminds us,
“In 2001, Venezuela’s ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. Within a year there was a coup attempt against Chavez, reportedly with assistance from our CIA. After these attempts to nudge the Euro toward replacing the dollar as the world’s reserve currency were met with resistance, the sharp fall of the dollar against the Euro was reversed. These events may well have played a significant role in maintaining dollar dominance.
It’s become clear the U.S. administration was sympathetic to those who plotted the overthrow of Chavez, and was embarrassed by its failure. The fact that Chavez was democratically elected had little influence on which side we supported.”
And that,
“Though we don’t occupy foreign countries to directly plunder, we nevertheless have spread our troops across 130 nations of the world. Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don’t declare direct ownership of the natural resources – we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.
Once again Congress has bought into the war propaganda against Iran, just as it did against Iraq. Arguments are now made for attacking Iran economically, and militarily if necessary. These arguments are all based on the same false reasons given for the ill-fated and costly occupation of Iraq.”
Eight out of Ten Americans, according to UPI, believe that Iran is a nuclear threat to the United States. Apparently the only thing standing in the way of the war with Iran is the fact that it would be at least as destructive to the American and world economy as about anything else we could do. Which brings up the question, as the War Party drives this country into the ground, are they trying to save the dollar or destroy it?
Either way, it’s clear, Empire is a bad deal for America.
