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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 >world. > >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 >come from? > > > * > >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 >'ratical.org'. > > > >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 >economically. > >OIL DOLLARS > >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 >powerhouse! > >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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