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Dear Friends and
Colleagues,
Whatever your political
persuasion I urge you
to read the attached article
by Geoffrey Heard, a political
commentator in Australia.
Rarely has the economic
basis for any war been
outlined so clearly. This
is relatively common knowledge
in the rest of the world.
It is also obvious why
it is not being made apparent
here.
Anne Behan
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It's not about Iraq
or oil. It's about the
US and Europe going head-to-head
on world economic dominance.
Geoffrey Heard ©
2003.
Summary: Why is
George Bush so hell bent
on war with Iraq? Why
does his administration
reject every possible
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" UV
votes with billion dollar
bribes.
Faced with failure of
gaining UN Security Council
support for invading Iraq,
the USA has threatened
to invade without authorisation.
It would act in breach
of the UN's very constitution
to allegedly enforced
UN resolutions.
It is plain bizarre.
Where does this desperation
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
to the sea and make America's
position as the dominant
economic power in the
world all but unimaginable.
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
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.
Presumable, 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 -
not 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 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 cheques
for millions of dollars
you don't have - another
luxury car, a holiday
home at the beach, the
world trip of a lifetime.
Your cheques should be
worthless but they keep
buying stuff because those
cheques 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 cheques as payment.
This means everyone must
hoard your cheques so
they can buy petrol/gas.
Since they have to keep
a stock of your cheques,
they use them to buy other
stuff too. You write a
cheque to buy a TV, the
TV shop owner swaps your
cheque 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 as long as
your cheque 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
its debt has been growing,
it has printed more money
(written more cheques)
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
cheques, a couple of others
think that might be a
good idea. If this spreads,
people are going to stop
hoarding your cheques
and they will come flying
home to the bank. Since
you don't have enough
in the bank to cover all
the cheques, very nasty
stuff is going to hit
the fan!
But you are big, tough
and very aggressive. You
don't scare the other
guy, 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 in Iraq.
AMERICA'S PRECARIOUS
ECONOMIC POSITION
America is so eager to
attack Iraq now because
of the speed with which
the euro fore could spread.
If Iran, Venezuela and
Russia join Iraq and sell
large quantities of oil
for euros, the euro would
have the leverage it needs
to become a powerful force
in general international
trade. Other nations would
have to start swapping
some of their dollars
for euros.
The dollars the USA has
printed, the cheques it
has written, would start
to fly home, stripping
away the illusion of value
behind them. The USA's
real economic position
is about as bad as it
could be; it is the most
debt-ridden nation on
earth, owing about US$12,000
for every single one of
its 280 million men, women
and children. It is worse
than the position of Indonesia
when it imploded economically
a few years ago, or more
recently, that of Argentina.
Even if OPEC did not
switch to euros wholesale
(and that would make a
very nice non-oil profit
for the OPEC countries,
including minimising the
various contrived debts
America has forced on
some of them), the US's
difficulties would build.
Even if only a small part
of the oil trade went
euro, that would do two
things immediately:
- Increase the attractiveness
to EU members of joining
the 'eurozone', which
in turn would make the
euro stronger and make
it more attractive to
oil nations as a trading
currency and to other
as a general trading
currency.
- Start the US dollars
flying home demanding
value when there isn't
enough in the bank to
cover them.
- The markets would
over-react as usual
and in no time, the
US dollar's value would
be spiralling down.
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