January 4, 2006 at 18:08:56

IRAN IS CHENEY'S NEXT TARGET

SAVE AS FAVORITE

VIEW FAVORITES

By Allen L Roland (about the author) Page 2 of 2 page(s)

opednews.com Permalink

One of the major unstated reasons the United States invaded Iraq was to stop Saddam Hussein from trading oil for euros, which he had begun in 2000. Hussein actually made more money selling oil for euros, as the euro appreciated 17 percent against the dollar between 2000 and 2003. Other countries in the region, particulary Iran and Syria, began public musing about switching from dollars to euros around the same time.

All three countries were subject to a barrage of threats from the United States government, but only Iraq went through with the switch, and it was summarily invaded. One of the US government's first acts in Iraq was to switch oil sales back to dollars.

Now, Iran plans not just to sell oil for euros, but to create an exchange market for parties to trade oil for euros. The oil bourse will provide a euro-based price standard, the way West Texas Intermediate crude (WTI) and North Sea Brent crude do today. To the extent that the balance of reserve holdings starts to shift from dollars to euros, that's very bad news for America's system of dollar hegemony.

Iran is taking a calculated risk that enough countries have an interest in a petro-euro market to contain American aggression. Many central banks are already quietly shedding their dollar reserves, nervous that America's economic fundamentals ($500 billion federal deficit, $700 billion current accounts deficit, $4.5 billion federal debt, record business and personal debts, zero savings) cannot be sustained for long, and hoping to insulate themselves from what they see as an inevitable recession. The US dollar has declined by a third against the euro since 2000, despite the petrodollar arrangement.

At the same time, Europe is eager to enjoy more of the "virtuous circle" that comes from supplying a major reserve currency: a ready market for its currency and guaranteed reinvestment as euro-holders plant their money in European markets. Vladimir Putin, Russia's president, has also expressed interest in switching from dollars to euros. Russia would benefit from getting paid in a stronger currency, and it would represent a political victory over America after fifteen years of watching its clients and assets in the oil-rich Caspian region co-opted by American expansion.

Nuclear Politics

Iran may, indeed, be attempting to acquire nuclear weapons. However, it also has a "legitimate" interest in developing nuclear power, since its own oil reserves are already post-peak and it aims to continue in its role as an energy exporter. Iran is a signatory in good standing to the Nuclear Non-Proliferation Treaty (NPT) and has openly informed the International Atomic Energy Agency of its intentions as requried by the Treaty.

However, Iran's presumed attempt to acquire nuclear weapons is only the politically acceptable excuse for America's threats. The real danger is that Iran will lay down the foundation for a post-hegemonic international energy industry in which America is merely one of many players. If Iran is, in fact, developing nuclear weapons, it is doing so to acquire a deterrent against exactly this kind of American encroachment.

Indeed, recent world events have only enforced the notion that a nation's successful efforts to acquire nuclear weapons confer respect and status, not the opprobrium it deserves. India, a growing economic power that possesses a nuclear arsenal and refuses to sign either the NPT or the Comprehensive Test Ban Treaty (CTBT), has just been rewarded for its efforts by US President Bush, who has agreed to "work to achieve full civil nuclear energy cooperation with India." This is a straightforward violation of the NPT, which forbids signatories from exchanging nuclear materials or support with non-signatories.

If Iran really is trying to acquire nuclear weapons, is it any wonder why? Look at the advantages that having nuclear arsenals have given to US allies India, Pakistan, and Israel, all of which have benefitted immensely from a playing field tilted in their favour by their ability to project devastating power. As official hysteria about Iran's intentions escalates in volume and intensity, remember the real force undermining the moral authority of the NPT: the big nuclear 'have' countries that still refuse either to apply the ban consistently or to take any meaningful steps of their own toward "general and complete disarmament" - ostensibly the NPT's ultimate goal.

Ironically, America originally invaded Iraq - a poor, defenseless country - partly to send a message to other oil producing countries not to rock the petrodollar system, but the real message for small countries is that they need to present a credible deterrent threat or risk being ignored and/or invaded.

Further Reading

From Petrodollars to Petroeuros: Are the Dollar's Days as an International Reserve Currency Drawing to an End? Strategic Insights, Volume II, Issue 11 (November 2003)

Iraq, the Dollar and the Euro, Hazel Henderson, The Globalise, June 02, 2003

The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth William Clark, January 2003 (Revised March 2003, with Post-war Commentary January 2004)

US Dollar Hegemony Has to Go Henry Liu, Asian Times, April 11, 2002

1 | 2

http://www.allenroland.com

Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his weblog and website more...)

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.