Male
Member Since May 31 2006
Behind the Curtains
Feb 18 2006 | Views 82 |
Comments (0)
Leave a Comment
Petrodollars : Is it the real reason for Iraq War?
It is more than two years since the first shots were fired in Iraq, by the coalition forces led by US in its war against terrorism. Not a single WMD has been found till date, which was the reason for which the war was fought in the first place. Was it the race to control the world’s dwindling oil resources that triggered this war? Or was it the way oil is being traded in the world economy? Strategic experts all over the world believe that there is more to this than what meets the eye. Many argue convincingly that this war is all about the fight between Dollar and Euro, and which currency the rest of the world uses to buy oil. For starters, there are some basic terms which I would like to bring to the attention for better assimilation. It is common knowledge that USA has trade deficit with each of its trading partners running to trillions of dollars. In simple terms, it means USA does not sell enough goods as much as it buys goods and services from other nations. It also means that the dollars it is paying for the goods and services it buys, are merely printed fiat dollars without any backing. This dollar is used by nations to buy oil and thus the value infused dollar called the petrodollaris reinvested in the American markets and US financial instruments by these oil exporters, mainly Saudi Arabia. This petrodollar cycle is made possible by two important factors. Firstly, the dollar is the reserve currency for most of the world nations. The 1944 Bretton woods agreementthat created the World Bank and IMF, it was made mandatory for all loans to be denominated in dollars. Hence, all repayments are also in dollars, making it necessary for nations to keep enough dollar reserves to service their debts. Secondly, dollar is the only currency accepted by OPEC and Non OPEC nations for oil trade as on date. This loyalty towards was ensured by several secret agreements between Saudi Arabia and Nixon regime in 1974 after walking out of gold standards, in exchange for protection of the kingdom by the US military might. Headed by Saudi Arabia, all other OPEC nations kindly obliged.This ensured that all nations (notably the industrial nations) needed dollars to buy oil to fuel their economy.
With this background, it is clear how US is having an economic free lunch where all it needs to do to be an economic superpower is to keep up this dollar hegemony by having friendly regimes in oil exporting states that continues to denominate oil trade in dollars. As long as oil could be bought using only dollars, all nations however big or small, would need dollars which only USA can print. Beyond all the façade of the strong economic credentials and higher GDP growth, US economy primarily depends upon how long and how well this petrodollar cycle is maintained. Any threat to this cycle would lead to devaluation of dollar and the collapse of the US economy and economies of countries like Japan, holding a huge reserve currency in dollars owing to its enormous trade surplus. All went well, until the sick man of world economy, Europe, woke up and created Euro. The Europeans lead by France and Germany, wanted a fair share of this economic free lunch which the US was enjoying solely all these years. With an ageing population and increasing labour costs that saw bulk of manufacturing and services shifting to China and India, Europe is finding increasingly difficult to service it welfare state economic model with high pension and social security obligations. Euro was floated primarily to rival dollar as the world’s reserve currency and efforts were on to make it possible for oil exporting countries to use petroeuros.
Amongst these developments, there was Mr Saddam Hussain, defeated militarily, crippled economically with a plethora of sanctions, waiting patiently for an opportunity to strike back at the empire where it would hurt them the most. And allowing Euros for trading oil was Saddam’s response to US’s unilateral foreign policies. In Nov 2000, Saddam’s Iraq became the first oil producing nation to denominate Euro as the currency standards for oil exports. Euro appreciated in value compared to dollars and as a result, Iraq’s kitty with the UN food for oil program swelled to more than 26 billion Euros from $ 10 billion. Things started taking more unpleasant turns for US with more oil exporting countries like Malaysia and Iran openly talking about a shift to Euro. North Korea, in a desperate attempt to increase its bargaining chip, restarted its nuclear program and also became the officially converted all its currency reserves to Euros. Thus it became a part of the Axis of Evil as termed by the US. Iran was to follow suit very soon, with open discussion to trade oil in Euros. From June 2003, all oil exports from Iran to Europeon and Asian countries were required to denominated in Euros, and experts believe that Iran also actually converted 40% of its currency reserves to Euros. And, no wonder it became the third nation to be a part of the Axis of Evil. Here is a chart as to how the major events in the oil trade, lead to the fluctuation of Euros.
Another country, which circumvented this oil trade in dollars in its own way, was Venezuela. Venezuelan President Chavez worked out a barter deal with 12 latin American countries and Cuba, cutting out this petrodollar cycle, directly buying goods and services in exchange for oil. Not surprisingly, CIA engineered a coup in April 2002, to throw away a democratically elected Govt to institute a friendly regime which would serve American interests. The coup failed and when the traitors were exposed, all hands pointed to US. Interestingly, the Bush administration did not deny the allegations. So much so, for the promotion of democracy rhetoric by the US.
There was a clear and present danger to US economic interests. Luckily for the US, Osama preempted a foolish move by carrying out the 9/11 WTC bombings giving the US a much needed façade to pursue their unilateral economic policies. This also created panic in the American tax payer, who would now think twice before questioning the Bush administration’s war against terrorism. It was after all his own security for which the US govt was fighting for, he would justify himself. I have read some conspiracy theories about this WTC bombings, which some believe were orchestrated by the US Govt itself, to convince the US public of the pervading security threat. Though I take these stories with a pinch of salt, it is still worth a read.
The US eventually attacked Iraq in response to the WTC bombings. Most of Europe, notably France and Germany, did not support the war, for in effect it would mean digging the grave for the petroeuro. But the message was loud and clear. The US will protect its economic interests, even if it means waging a war to instate friendly regimes. Invasion of Iraq and reconversion of its oil exports denomination to petrodollars from Euros was a warning to other OPEC nations thinking of making a shift to Euro.The whole nuclear imbroglio of Iran, seems to have an underlying economic reason as well. Beginning mid 2006, Iran has planned to start an oil bourse to compete with the London IPE or New York NYMEX, with Euros as denominated currency for trading oil. And I there are already news reports that US is planning to attack Iran for restarting its nuclear program apparently to prevent an Islamic nuclear bomb!! A strange coincidence once more?
Why is the world public and especially the American public least informed about these underlying economic reasons for this so called war against terrorism? For an interested reader like me, the facts are very much available in the internet. But why isn’t any kind of mainstream media, be it the print or the TV, has brought out these seemingly logical reasons for the said war? Petrodollars, oil trade and things like that are least talked about in the media. Yet , they seem to me as one of the most important factors for this war. Why is the common man kept in dark? Is the American media hand in glove with hegemonistic policies of the US Govt, which ofcourse are in the overall interest of the American tax payer, though in an utterly notorious way? Why is the Indian Govt supporting these policies of US, especially those relating to Iran? Is it because the irreversible process of globalization would hit a road block, if the dollar collapses? In this dirty world of politics and international relations, there are no friends and there are no enemies. There are only self interests. Each one of nations, strive to serve their own self interests, at all costs. Some are kingmakers, like the US. Some are mere pawns like most of the NATO, serving the US interests for protection against imaginary threats. Slowly but steadily, the whole world is getting sucked into a global conflict that it can ill afford. That’s the truth.
With this background, it is clear how US is having an economic free lunch where all it needs to do to be an economic superpower is to keep up this dollar hegemony by having friendly regimes in oil exporting states that continues to denominate oil trade in dollars. As long as oil could be bought using only dollars, all nations however big or small, would need dollars which only USA can print. Beyond all the façade of the strong economic credentials and higher GDP growth, US economy primarily depends upon how long and how well this petrodollar cycle is maintained. Any threat to this cycle would lead to devaluation of dollar and the collapse of the US economy and economies of countries like Japan, holding a huge reserve currency in dollars owing to its enormous trade surplus. All went well, until the sick man of world economy, Europe, woke up and created Euro. The Europeans lead by France and Germany, wanted a fair share of this economic free lunch which the US was enjoying solely all these years. With an ageing population and increasing labour costs that saw bulk of manufacturing and services shifting to China and India, Europe is finding increasingly difficult to service it welfare state economic model with high pension and social security obligations. Euro was floated primarily to rival dollar as the world’s reserve currency and efforts were on to make it possible for oil exporting countries to use petroeuros.
Amongst these developments, there was Mr Saddam Hussain, defeated militarily, crippled economically with a plethora of sanctions, waiting patiently for an opportunity to strike back at the empire where it would hurt them the most. And allowing Euros for trading oil was Saddam’s response to US’s unilateral foreign policies. In Nov 2000, Saddam’s Iraq became the first oil producing nation to denominate Euro as the currency standards for oil exports. Euro appreciated in value compared to dollars and as a result, Iraq’s kitty with the UN food for oil program swelled to more than 26 billion Euros from $ 10 billion. Things started taking more unpleasant turns for US with more oil exporting countries like Malaysia and Iran openly talking about a shift to Euro. North Korea, in a desperate attempt to increase its bargaining chip, restarted its nuclear program and also became the officially converted all its currency reserves to Euros. Thus it became a part of the Axis of Evil as termed by the US. Iran was to follow suit very soon, with open discussion to trade oil in Euros. From June 2003, all oil exports from Iran to Europeon and Asian countries were required to denominated in Euros, and experts believe that Iran also actually converted 40% of its currency reserves to Euros. And, no wonder it became the third nation to be a part of the Axis of Evil. Here is a chart as to how the major events in the oil trade, lead to the fluctuation of Euros.
Another country, which circumvented this oil trade in dollars in its own way, was Venezuela. Venezuelan President Chavez worked out a barter deal with 12 latin American countries and Cuba, cutting out this petrodollar cycle, directly buying goods and services in exchange for oil. Not surprisingly, CIA engineered a coup in April 2002, to throw away a democratically elected Govt to institute a friendly regime which would serve American interests. The coup failed and when the traitors were exposed, all hands pointed to US. Interestingly, the Bush administration did not deny the allegations. So much so, for the promotion of democracy rhetoric by the US.
There was a clear and present danger to US economic interests. Luckily for the US, Osama preempted a foolish move by carrying out the 9/11 WTC bombings giving the US a much needed façade to pursue their unilateral economic policies. This also created panic in the American tax payer, who would now think twice before questioning the Bush administration’s war against terrorism. It was after all his own security for which the US govt was fighting for, he would justify himself. I have read some conspiracy theories about this WTC bombings, which some believe were orchestrated by the US Govt itself, to convince the US public of the pervading security threat. Though I take these stories with a pinch of salt, it is still worth a read.
The US eventually attacked Iraq in response to the WTC bombings. Most of Europe, notably France and Germany, did not support the war, for in effect it would mean digging the grave for the petroeuro. But the message was loud and clear. The US will protect its economic interests, even if it means waging a war to instate friendly regimes. Invasion of Iraq and reconversion of its oil exports denomination to petrodollars from Euros was a warning to other OPEC nations thinking of making a shift to Euro.The whole nuclear imbroglio of Iran, seems to have an underlying economic reason as well. Beginning mid 2006, Iran has planned to start an oil bourse to compete with the London IPE or New York NYMEX, with Euros as denominated currency for trading oil. And I there are already news reports that US is planning to attack Iran for restarting its nuclear program apparently to prevent an Islamic nuclear bomb!! A strange coincidence once more?
Why is the world public and especially the American public least informed about these underlying economic reasons for this so called war against terrorism? For an interested reader like me, the facts are very much available in the internet. But why isn’t any kind of mainstream media, be it the print or the TV, has brought out these seemingly logical reasons for the said war? Petrodollars, oil trade and things like that are least talked about in the media. Yet , they seem to me as one of the most important factors for this war. Why is the common man kept in dark? Is the American media hand in glove with hegemonistic policies of the US Govt, which ofcourse are in the overall interest of the American tax payer, though in an utterly notorious way? Why is the Indian Govt supporting these policies of US, especially those relating to Iran? Is it because the irreversible process of globalization would hit a road block, if the dollar collapses? In this dirty world of politics and international relations, there are no friends and there are no enemies. There are only self interests. Each one of nations, strive to serve their own self interests, at all costs. Some are kingmakers, like the US. Some are mere pawns like most of the NATO, serving the US interests for protection against imaginary threats. Slowly but steadily, the whole world is getting sucked into a global conflict that it can ill afford. That’s the truth.
© yourkarthik., all rights reserved.
In case you missed...
Some other recent posts by yourkarthik
© 1998-2008 Copyright Sulekha.com Connecting Indians Worldwide, All Rights Reserved.
Recommend