Bush is working for Big Oil and the Banks
He can't let the Euro replace the dollar for oil deals.
SADDAM'S UNFORGIVABLE SIN
Iraq has been accused of many crimes, but topping the list is the unforgivable sin of trading oil for Euros instead of American Dollars.
DOLLARS, THE EURO AND WAR IN IRAQ
This article is based on material sent by Richard Douthwaite's organisation FEASTA in Ireland.
It presents a devastating insight into President Bush's belligerent stance towards Iraq, one which would appear to be based totally on the economic self interest of the US.
The dollar is the world reserve currency. This gives a huge subsidy to the US economy because if a country wants to hold lots of dollars in reserve they must supply the US with goods and services in return for those dollars. In return the US creates a bit more credit. The more dollars there are circulating outside the US, the more goods and services the US has imported virtually for free. This is how the US manages to run a huge trade deficit year after year without apparently any major economic consequences. No other country can run such a large trade deficit with impunity. It is in effect getting a massive interest-free loan from the rest of the world.
One of Europe's primary objectives, if not the primary objective, of setting up the Euro was to try and get some of this free lunch for Europe. If the Euro became a major reserve currency, or better still replaced the dollar as the major reserve currency, then Europe too could get something for nothing.
This would be a disaster for the US. Not only would they lose their subsidy, which has been increasing in size and in importance to American economic well being as the years have gone by, but countries switching to Euro reserves from dollar reserves would start spending their dollars in the US. In other words the US would have to start paying its debts to other countries. As countries converted their dollar assets into Euro assets the US property and stock market bubbles would, without doubt, burst. The Federal Reserve would no longer be able to print more money to reflate the bubble as it is currently openly considering doing, There is, however, one major obstacle to this happening: OIL! Oil is of course by far the most important commodity traded internationally, and if you want to buy oil on the international markets you usually have to have dollars.
Until recently all OPEC countries agreed to sell their oil for dollars only. This meant that oil importing countries, like Japan, needed to hold dollar reserves in order to be able to buy oil. So long as this remained the case, the Euro was unlikely to become the major reserve currency. There is not a lot of point to stockpiling Euros if every time you need to buy oil you have to change them into dollars. But in November 2000 Iraq switched to the euro, with potentially perilous consequences for the US. Only one country has the right to print dollars: the US! If OPEC were to decide to accept euros only for its oil, then American economic dominance would be over. Not only would Europe not need dollars anymore, but Japan which imports over 80% of its oil from the Middle East would have to convert most of its dollar assets to Euro assets (Japan is of course the major subsidiser of the US). The US on the other hand, being the world's largest oil importer would have to acquire Euro reserves, i.e. it would have to run a trade surplus. The conversion from trade deficit to trade surplus would have to be done at a time when its property and stock market prices were collapsing and its own oil supplies were contracting. It would be a very painful conversion; potentially disastrous.
The purely economic argument for OPEC converting to the Euro, at least for a while, seem very strong. The Eurozone does not run a huge trade deficit like the US, nor is it heavily indebted to the rest of the world like the US. Nearly everything you can buy for dollars you can also buy for Euros. Furthermore, if OPEC were to convert their dollar assets to Euro assets and then require payment for oil in euros, their assets would immediately increase in value. Also, since oil importing countries would be forced to convert their reserves into euros, whose price would therefore be driven up. OPEC could then at some later date back some other currency, maybe the dollar again, and again make huge profits. This would offer a virtually inexhaustible source of profit for OPEC.
But of course it would not be a purely economic decision. The Eurozone countries do not threaten Middle Eastern countries militarily as the US does.
One article, written at the time the decision was made, claimed it made no financial sense and would cost Iraq millions. According to this "expert" the decision to convert was made by people who "are not experts, they are not central bankers, they are not even oil men". At the time the article was written, the euro was worth 82 US cents. It is now worth about $1.05. So on economic grounds alone, the Iraqi decision has been a huge success (the $10 billion Iraqi fund at the UN, mentioned in the article, has apparently also since been converted). There may however be military consequences to it. The economic threat to the US may be influencing it in its belligerent stance towards Iraq.
One other OPEC country has been talking publicly about possible conversion since 1999: Iran. And of course it has since been included in the "axis of evil".
Jerry Lobdill wrote:
Losses, Before Bullets Fly
By NICHOLAS D. KRISTOF
Last week a member of the Canadian Parliament for the ruling party, Carolyn Parrish, was caught on television declaring: "Damn Americans. I hate those bastards."
Then the Toronto Globe and Mail newspaper conducted a (hopelessly unscientific) poll on its Web site, asking Canadians whether they agreed that "Americans are behaving like `bastards.' " The returns aren't good: as of yesterday, 51 percent were saying yes.
When even the Canadians, normally drearily polite, get colorfully steamed at us, we know the rest of the world is apopleptic. After all, the latest invective comes on top of the prime minister's spokesman calling George Bush a "moron" last fall.
Canada's incivility is a reminder that the U.S. and its allies are slugging one another to death while Iraq watches from the sidelines. If, as Mr. Bush suggested in a press conference last night, the U.S. may lose a vote in the U.N. and then promptly go to war anyway, the internecine warfare within the West will grow far worse.
The U.S. debate on the antipathy toward us has been misleading, I think, in its focus on France. (There's now an American bumper sticker: "Iraq Now, France Next.") It's not just the prickly Gauls who are taking potshots at us — it's even our buddies, like the Canadians and the Irish.
In a survey, The Sunday Independent newspaper of Ireland polled Dublin residents about whom they feared most, Saddam Hussein or George Bush. The result: 39 percent picked Saddam; 60 percent, Mr. Bush. Even in Britain, a poll by The Sunday Times of London found that equal numbers called Saddam and Mr. Bush the "greatest threat to world peace."
So let's take stock of how our invasion of Iraq is going. The Western alliance is ferociously strained, NATO is paralyzed, America is resented by millions, the United Nations is in crisis, U.S. pals like Tony Blair are being skewered at home, North Korea has exploited our distraction to crank up plutonium production, oil prices have surged, and the world financial markets have sagged.
And the war hasn't even begun yet.
Of course, one school of thought holds it doesn't much matter that the United States is perceived as the world's newest Libya. If the Canadians don't like us, we can always exercise the military option and push our border up to 54-40.
But global attitudes do matter. Before the first gulf war, Secretary of State James Baker made three visits to Turkey. This time around, Secretary of State Colin Powell hasn't visited once. So it's not surprising that Turkey refused to accept U.S. troops, impairing our plans for a northern offensive.
President Bush is now making great progress in the war against Al Qaeda. And that's happening because Mr. Bush was willing to work with the Pakistani leaders; what made the difference was not just our military power, but also our diplomacy.
Of course, the U.S. may have a solid plan, as Jay Leno said: "President Bush may be the smartest military president in history. First he gets Iraq to destroy all of their own weapons. Then he declares war."
The worry is that we're already taking such losses, in terms of our alliances, that one wonders what will happen when the hard part begins — the day after Saddam has toppled, when we may see Shiites slaughtering Sunnis in southern Iraq; thousands of armed Iraqi exiles pouring in from Iran; Turks and Kurds fighting over the Kirkuk oil wells in northern Iraq; Iraqi military officers trying to peddle anthrax and VX gas; and radical Islamists trying to take control of nuclear-armed Pakistan.
As one savvy official observed, occupying Baghdad comes at an "unpardonable expense in terms of money, lives lost and ruined regional relationships." Another expert put it this way: "We should not march into Baghdad. . . . To occupy Iraq would instantly shatter our coalition, turning the whole Arab world against us, and make a broken tyrant into a latter-day Arab hero . . . assigning young soldiers to a fruitless hunt for a securely entrenched dictator and condemning them to fight in what would be an unwinnable urban guerrilla war. It could only plunge that part of the world into even greater instability."
Those comments may overemphasize the risks, but they are from top-notch analysts whose judgments I respect. The first comment was made by Colin Powell in a Foreign Affairs essay in 1992; the second is in "A World Transformed," a 1998 book by the first President Bush.