Iran central bank to replace dollar with euro to limit problems in commercial transactions
Could the petroeuro replace the petrodollar?
If this measure is implemented it could have very grave consequences for the American economy. As early as September 2005 Aljazeera published an article on its website that Iran was about to begin pricing its oil in euros. According this article just about everyone would benefit, except the United States. For at least fifty years about 70 % of all currency reserves were in American dollars. This made the dollar the strongest currency on earth. Central banks need to have important reserves in dollars because up until now oil, the most important commodity of the world, is mostly priced in dollars. Since the irresponsible policies of the current American administration have allowed America's national debt to rise to crippling heights, its ailing economy became mostly dependent upon the high demand for its currency. Or, to put it simply, the dollar may no longer be exchangeable for gold but it can be exchanged for oil. Since the demand for oil increases steadily and the price of oil also increases, the dollar is a safe bet. Until now, that is.
The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the Europeans at the expense of the Americans Iran is the world's second largest producer of oil and a move away from the dollar of this nation is a serious threat to the stability of the currency. The reasons offered by Elham for this move are probably valid. However they are not the whole story. Bush has many times included Iran in his so-called axis of evil and, together with his severe criticism on Iran's nuclear program, this amounts to barely veiled threats of yet another war. Another reason is that Iran's biggest trading partner is not its arch-enemy America but the European Union. So, acquiring a substantial reserve in euros makes perfect business sense. For the Europeans the benefits are obvious because they will not have to buy and hold dollars in order to secure their payment for oil, but would instead pay with their own currency. The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the Europeans at the expense of the Americans. On September 2, 2005 the Global Politician quoted an expert stating "One of the Federal Reserve’s nightmares may begin to unfold when it appears that international buyers will have a choice of buying a barrel of oil for $60 on the NYMEX (New York Mercantile Exchange) and IPE (London’s International Petroleum Exchange) or purchase a barrel of oil for €45 to €50 via an alternative Iranian bourse." In this scenario an already-existent global trend of shifting foreign currency reserves from dollars to euros would accelerate, thus strengthening the euro and weakening the dollar on the international market. Imports would start to cost America so much more that its economy would not be able to cope anymore and the stock market bubble would burst.
Was the war against Iraq started to defend the dollar?
But is it likely to happen? Well, it has happened before it seems. In 2000 Saddam Houssein demanded euros for Iraq's oil. At first he wasn't taken all to seriously but when it became clear that he meant business, political pressure was exerted to change his mind. Other oil producing countries began to voice their intent to accept payments in euros or yen. So, when Bush and his cabal of neocons invaded Iraq, why exactly were they doing this? Because of Saddam's long defunct pipe-dream of weapons of mass destruction? Was it about spreading democracy? Indignation about an inhuman regime? Or was it about defending the American dollar and sending a clear message to other countries that a superpower would not tolerate its super-currency flouted. Some have argued that Bush started the war to seize Iraq's oilfields. But why would he want to? Strangely enough: as long as the dollar is backed by oil, America can print as many dollars as it wants and... buy oil with them. Defending the dollar as the unique oil-currency is infinitely more important than seizing the oil itself. And look what happened: barely two months after the United States invaded Iraq, the Oil for Food Program was terminated and the Iraqi euro accounts were switched back to dollars. Global dollar supremacy was once again restored. That was the real mission that was accomplished.
As far as the neocons are concerned the war in Iraq may drag on for another twenty years and cost tens of thousands of American lives as long as the supremacy of the dollar is maintained Is a war against Iran imminent?That is also the reason neocons aren't too worried about the way the war in Iraq is going. As far as they are concerned it may drag on for another twenty years and cost tens of thousands of American lives as long as the supremacy of the dollar is maintained. For the neocons and their conspiracy for a New American Century this is the basis of all that they are trying to accomplish. This is what Krassimir Petrov in the Energy Bulletin has to say about it: "A nation-state taxes its own citizens, while an empire taxes other nation-states. The history of empires, from Greek and Roman, to Ottoman and British, teaches that the economic foundation of every single empire is the taxation of other nations. (...) Historically, imperial taxation has always been direct: the subject state handed over the economic goods directly to the empire. For the first time in history, in the twentieth century, America was able to tax the world indirectly, through inflation. It did not enforce the direct payment of taxes like all of its predecessor empires did, but distributed instead its own fiat currency, the U.S. Dollar, to other nations in exchange for goods with the intended consequence of inflating and devaluing those dollars and paying back later each dollar with less economic goods—the difference capturing the U.S. imperial tax."
The immediate question is whether the neocons will attempt to intervene in Iran in an effort to prevent the formation of a crude oil pricing mechanism in euros. The answer to this question is not a simple one. Is it likely that they will be able to misguide the American public once more, given the disastrous evolution of the war in Iraq? Furthermore, Iran is no second Iraq. The military capabilities of Iran are far greater than Saddam's ever were. Iran seems to have sophisticated missiles in place so as to be able to block the Strait of Hormuz. This would effectively prevent oil tankers to pass and could cause a worldwide energy panic. One thing is certain: in the event of an American intervention in Iran the first to suffer will be the American people. A war against Iran would be far costlier than the war against Iraq. In fact it is a war America cannot pay for without further increasing the already towering national debt substantially. There will be no 'coalition of the willing' anymore and it is very doubtful that even America's staunchest ally, the UK, will take part. There's only so much even a well trained pet will submit to. Maybe the war could be started by redeployment of the available troops, but very soon a military draft would be required. Even then success is at best elusive.
The end of empire
If the Iranians succeed in implementing an alternative oil stock exchange this would be tantamount to the end of empire for America and a very bleak economic future for the erstwhile superpower. The stakes are extremely high and with a psychological liability like Bush at the helm it is anybody's guess what the outcome will be. |
