It's the Euro, Stupid!

The build up to war in Iraq and the almost identical build up to the possible war in Iran has chilling similiarities, one of which I have only become very recently aware of.

I have always believed that one of the things the US must prevent at all costs, if it is to maintain it's global domination, is that all foreign currency must remain tied to the dollar as the world's reserve currency, a situation that has aided the U.S. since Nixon removed U.S. currency from the gold standard in 1971. And, indeed, with Bush managing some of the largest fiscal debt in the US's history this has never been more important than now.

I'm sure we all heard the rumours prior to Bush's invasion of Iraq that one of the reasons Iraq had to be hit was because Saddam had moved his currency to the Euro and had profited by 15%. The argument went that the US had to take action to prevent others from following this path.

I've never really been a conspiracy theorist, but now, I come across this:

On Monday, Davoud Danesh-Jafari, the Iranian finance minister, told a news conference:

"There have been symbolic acts of late and America has restricted Iran's dollar-based transactions with the outside world through seven or eight financial institutions."

"But this will not cause any trouble in the end because when dollar-based transactions get restricted, we can use other currencies and that would be against US interests," he said.

Iran's holdings in foreign countries are unclear but are considerably more than $25 billion. All earnings from crude exports above a budgeted level are held abroad.

It was not immediately clear to which institutions the minister was referring.

So Iran has announced such an intention. William R. Clark argues here:

Throughout 2004, information provided by former administration insiders revealed the Bush/Cheney administration entered into office with the intention of toppling Saddam. Candidly stated, 'Operation Iraqi Freedom' was a war designed to install a pro-US government in Iraq, establish multiple US military bases before the onset of global 'Peak Oil,' and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency ( i.e. "petroeuro").

However, subsequent geopolitical events have exposed neoconservative strategy as fundamentally flawed, with Iran moving towards a petroeuro system for international oil trades, while Russia evaluates this option with the European Union.

Beginning in March 2006, the Tehran government has plans to begin competing with New York's NYMEX and London's IPE with respect to international oil trades – using a euro-based international oil-trading mechanism. The proposed Iranian oil bourse signifies that without some sort of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given US debt levels and the stated neoconservative project of US global domination, Tehran's objective constitutes an obvious encroachment on dollar supremacy in the crucial international oil market.

If Iran pull this off it is only a matter of time before Japan and China follow suit.

Now there have been many fine posts of late, including one yesterday by Williams Rivers Pitt arguing that Bush may indeed be insane enough to invade Iraq. I have always thought this argument wrong, and as I argued here I think Bush's posturing is no more than his attempt to enact the Nixon Madman theory as I've always thought the cost of such an intervention would be ludicrously high.

However, when I came across the above, for the first time I'm starting to think I might be wrong. If this thesis is correct, maybe they can't afford not to.

Tags: Iran, Iraq, war, currency, Euro versus Dollar, Bush, US, iranian, oil bourse,