The Real but Unspoken Reasons for the Iraq War

connexion

Although completely suppressed in the U.S. media, the answer to the Iraq enigma is simple yet shocking - it an an oil CURRENCY war. The Real Reason for this upcoming war is this administration's goal of preventing further OPEC momentum towards the euro as an oil transaction currency standard. However, in order to pre-empt OPEC, they need to gain geo-strategic control of Iraq along with its 2nd largest proven oil reserves.

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.

http://www.feasta.org/documents/papers/oil1.htm

connexion

more links on this :

http://www.rferl.org/nca/features/2...12000160846.asp


http://www.praesentia.us/archives/2003_01.html#000227

gandalf

Now that is a very interesting angle that strenghtens imho the arguement that this present difficulty is actually borne from the US's desire to control the oil out of that region.

Gandalf.

Meh

Intriguing article, thanks for the link. But if their analysis is true and the rise of the euro is the motivation behind US war plans, then why does Tony Blair (who is pro-Euro) support the war?

bonkey

OK, I havent read the links yet, so forgive me if I'm missing something which is properly explained in there.

How does taking control of Iraq's oil fields help the US in this situation? Does Iraq have a veto on OPEC which would allow it to prevent a change to Euro?

Unless that is the case, then were Iraq to remain within OPEC, it would not necessarily be able to prevent a move away from the dollar, and would itself be bound to follow it. Indeed, one could speculate that an American controlled-Iraq would present many OPEC nations with an insecurity they felt they needed to respond to, and this might help a move away from the dollar.

Of course, Iraq could acede from OPEC, and continue to sell in dollars. This would still only be of marginal help to the US, as the real damage would come from the loss of strength behind the dollar, the lack of foreign nations needing to buy dollars on a continuous basis, etc.

So, why is Iraq so significant? This is the one thing which is almost completely ignored in the article. Yes, it has large reserves, but that doesnt mean that a determined OPEC would allow itself to be dictated to by the very nation that they would effectively taking action against.

jc

connexion

If any ones intrested this article goes into much more detail
WARNING / complex economic analysis ahead

http://www.ratical.org/ratville/CAH/RRiraqWar.html

The Saint

Other countries were/are thinking about changing to the Euro also, Iran, Venezuela and a few more I think. Could the US change the oil trading currency back to Dollar if it wanted? Als, if the US invades it nullifies the French and Russian contracts that are in place.

daveirl

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mike65

Yippee oil in euros! And the russian mafia is switching from dollars as well....(true)

You cant keep a good currency down, but the Yanks might try to, so I'm now waiting for the US to declare war on the EU in a mad world dominating attempt to kill the € off before we
can buy the States wholesale.

Mike.

daveirl

This post has been deleted.

Victor

I'm not convinced of this. Not only has oil been bought with dollars, those dollars were also being spent. While indeed oil being priced in dollars, promotes the dollar, I don't think it matters that much. Remember back in the 1980s when the dollar was at about the equivalent of €1.30? Compared to about €0.90 now?

Oil and the dollar do have historical relationships, if I am right when the price of oil goes up, the dollar goes down and vice versa.

Éomer of Rohan

Very interesting theory - and actually it colludes with the geo-political side to the invasion as well. IF the US is trying to protect it's dollar currency then cheap oil as provided by a US protectorate is definitely the best way - consider further however; Europe and the US and drifting apart in terms of the aims they have for the world, naturally enough since the US imperialistic right wing does not have a view that would encompass the other members of NATO (mostly EU members!) enjoying the same freedom of global action as the 'first among equals' (by the way, if anyone has read Orwell's Animal Farm, that phrase provides an interesting reference to a Stalinist ideal). Furthermore, as was pointed out in a seperate thread, if the EU / Eastern part of NATO was to form a credible counterbalance to the economic and military dominance, what better way could they devise than shifting the balance of power by taking economic control of the Persian Gulf Oil wells by the strength of currency and by bringing the far east in to the fold, including Russia and China (to which more and more capitalistic investment is being dedicated by Europe).