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NewsMine war-on-terror iraq Viewing Item
Iraq war against euro theory
|>Not Oil, But Dollars vs. Euros- By Geoffrey Heard|
>Why is George Bush so hell bent on war with Iraq? Why does his
>administration reject every positive Iraqi move? It all makes
>sense when you consider the economic implications for the USA
>of not going to war with Iraq. The war in Iraq is actually the
>US and Europe going head to head on economic leadership of the
>America's Bush administration has been caught in outright lies,
>gross exaggerations and incredible inaccuracies as it trotted
>out its litany of paper thin excuses for making war on Iraq.
>Along with its two supporters, Britain and Australia, it has
>shifted its ground and reversed its position with a barefaced
>contempt for its audience. It has manipulated information,
>deceived by commission and omission and frantically "bought" UN
>votes with billion dollar bribes.
>Faced with the failure of gaining UN Security Council support
>for invading Iraq, the USA has threatened to invade without
>authorization. It would act in breach of the UN's very
>constitution to allegedly enforced UN resolutions.
>It is plain bizarre. Where does this desperation for war
>There are many things driving President Bush and his
>administration to invade Iraq, unseat Saddam Hussein and take
>over the country. But the biggest one is hidden and very, very
>simple. It is about the currency used to trade oil and
>consequently, who will dominate the world economically, in the
>foreseeable future -- the USA or the European Union.
>Iraq is a European Union beachhead in that confrontation.
>America had a monopoly on the oil trade, with the US dollar
>being the fiat currency, but Iraq broke ranks in 1999, started
>to trade oil in the EU's euros, and profited. If America invades
>Iraq and takes over, it will hurl the EU and its euro back into
>the sea and make America's position as the dominant economic
>power in the world all but impregnable.
>It is the biggest grab for world power in modern times.
>America's allies in the invasion, Britain and Australia, are
>betting America will win and that they will get some trickle-
>down benefits for jumping on to the US bandwagon. France and
>Germany are the spearhead of the European force -- Russia would
>like to go European but possibly can still be bought off.
>Presumably, China would like to see the Europeans build a share
>of international trade currency ownership at this point while
>it continues to grow its international trading presence to the
>point where it, too, can share the leadership rewards.
>DEBATE BUILDING ON THE INTERNET
>Oddly, little or nothing is appearing in the general media
>about this issue, although key people are becoming aware of
>it -- note the recent slide in the value of the US dollar. Are
>traders afraid of war? They are more likely to be afraid there
>will not be war.
>But despite the silence in the general media, a major world
>discussion is developing around this issue, particularly on
>the internet. Among the many articles: Henry Liu, in the 'Asia
>Times' last June, it has been a hot topic on the Feasta forum,
>an Irish-based group exploring sustainable economics, and W.
>Clark's "The Real Reasons for the Upcoming War with Iraq: A
>Macroeconomic and Geostrategic Analysis of the Unspoken Truth"
>has been published by the 'Sierra Times', 'Indymedia.org', and
>This debate is not about whether America would suffer from
>losing the US dollar monopoly on oil trading -- that is a given
>-- rather it is about exactly how hard the USA would be hit.
>The smart money seems to be saying the impact would be in the
>range from severe to catastrophic. The USA could collapse
>The key to it all is the fiat currency for trading oil. Under
>an OPEC agreement, all oil has been traded in US dollars since
>1971 (after the dropping of the gold standard) which makes the
>US dollar the de facto major international trading currency.
>If other nations have to hoard dollars to buy oil, then they
>want to use that hoard for other trading too. This fact gives
>America a huge trading advantage and helps make it the dominant
>economy in the world.
>As an economic bloc, the European Union is the only challenger
>to the USA's economic position, and it created the euro to
>challenge the dollar in international markets. However, the EU
>is not yet united behind the euro -- there is a lot of
>jingoistic national politics involved, not least in Britain --
>and in any case, so long as nations throughout the world must
>hoard dollars to buy oil, the euro can make only very limited
>inroads into the dollar's dominance.
>In 1999, Iraq, with the world's second largest oil reserves,
>switched to trading its oil in euros. American analysts fell
>about laughing; Iraq had just made a mistake that was going to
>beggar the nation. But two years on, alarm bells were sounding;
>the euro was rising against the dollar, Iraq had given itself a
>huge economic free kick by switching.
>Iran started thinking about switching too; Venezuela, the 4th
>largest oil producer, began looking at it and has been cutting
>out the dollar by bartering oil with several nations including
>America's bete noir, Cuba. Russia is seeking to ramp up oil
>production with Europe (trading in euros) an obvious market.
>The greenback's grip on oil trading and consequently on world
>trade in general, was under serious threat. If America did not
>stamp on this immediately, this economic brushfire could
>rapidly be fanned into a wildfire capable of consuming the US's
>economy and its dominance of world trade.
>HOW DOES THE US GET ITS DOLLAR ADVANTAGE?
>Imagine this: you are deep in debt but every day you write
>checks for millions of dollars you don't have -- another luxury
>car, a holiday home at the beach, the world trip of a lifetime.
>Your checks should be worthless but they keep buying stuff
>because those checks you write never reach the bank! You have
>an agreement with the owners of one thing everyone wants, call
>it petrol/gas, that they will accept only your checks as payment.
>This means everyone must hoard your checks so they can buy
>petrol/gas. Since they have to keep a stock of your checks, they
>use them to buy other stuff too. You write a check to buy a TV,
>the TV shop owner swaps your check for petrol/gas, that seller
>buys some vegetables at the fruit shop, the fruiterer passes it
>on to buy bread, the baker buys some flour with it, and on it
>goes, round and round -- but never back to the bank.
>You have a debt on your books, but so long as your check never
>reaches the bank, you don't have to pay. In effect, you have
>received your TV free.
>This is the position the USA has enjoyed for 30 years -- it has
>been getting a free world trade ride for all that time. It has
>been receiving a huge subsidy from everyone else in the world.
>As it debt has been growing, it has printed more money (written
>more checks) to keep trading. No wonder it is an economic
>Then one day, one petrol seller says he is going to accept
>another person's checks, a couple of others think that might
>be a good idea. If this spreads, people are going to stop
>hoarding your checks and they will come flying home to the
>bank. Since you don't have enough in the bank to cover all
>the checks, very nasty stuff is going to hit the fan!
>But you are big, tough and very aggressive. You don't scare
>the other guy who can write checks, he's pretty big too, but
>given a 'legitimate' excuse, you can beat the tripes out of the
>lone gas seller and scare him and his mates into submission.
>And that, in a nutshell, is what the USA is doing right
>now with Iraq.
>Geoffrey Heard is an Australian who writes on economics & politics.
>Copyright 2003 by Pulse Direct, Inc. All rights reserved.
>Feel free to forward this, in its entirety, to others.
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