The Iranian government has finally developed the ultimate “nuclear” weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006.
Krassimir Petrov, The Proposed Iranian Oil Bourse
The administration has been rattling its sabers over Iran and mongering fear about the WMD programs that Iran denies that it has. Is this going to be a rerun of the Iraq debacle? Perhaps.
A series of articles has been pointing to a different rationale for the administration's posturing on Iran as well as Iraq. In 2000 Saddam Hussein either converted or threatened to convert all of his oil trade from dollars to euros. It turns out that this is a very significant event, more significant than most conventional news analysis has previously indicated. As one put it:
To avoid economical collapse the Bush administration hastened to invade and to destroy Iraq under false excuses to make it an example to any country who may contemplate dropping the Dollar, and to manipulate OPEC’s decisions by controlling the second largest oil resource. Iraqi oil sale was reverted back to the petrodollar standard.
Suppose you wanted to buy a lot of oil. Not a few cans of 10W40 weight engine lubricant or even the heating oil for a whole condo complex -- a lot of oil, like the amount needed to fuel a nation -- where would you go? There are two markets where you can make purchases on that scale: New York's NYMEX and London's IPE. Both accept payments only in dollars. This means that if you are a major government you must keep a large reserve of dollars to pay for the oil that your industry and citizens burn every day. The end result is that the nations that buy up dollars to buy oil act as a massive valuation buffer. In effect, the U.S. exports its inflation. Other nations rev up their GDP to cover the devaluation of the dollar, and we sell houses to each other with the freshly minted money.
Being a bit ignorant on the subject of reserve currency and global economics I have to take the word of these sources on the matter, and perhaps they are wrong. Perhaps this is a big conspiracy theory, misdirecting us to think that dollars are unstable so we'll buy the gold that other paranoids bought at usurious prices. There are several reasons, however, why I take these articles seriously.
First, of all the explanations for the invasion of Iraq this is by far the most plausible. We know that the WMD claim was absolutely bogus, and those of us who were paying attention at the time knew it was bogus from the start. The game of revolving rationales that the administration has been playing since then has simply shown that they don't care to tell us the real reason because they couldn't sell it to the American people. We still don't really know why we're in Iraq (what's the reason this month?), despite what anyone boldly asserts on call in radio shows.
And why, of all nations, did the British join us as partners in this invasion? What reward could possibly have enticed Tony Blair to agree to what many of his own experts believed was an illegal invasion, and to submit to the kinds of grilling he gets every question time? London's International Petroleum Exchange (IPE) and the dollars it trades in, that's what. It also neatly explains why Brittan is alone among European nations in rejecting the euro as its national currency. Brittan is hitched to the petrodollar wagon and is coming along for the ride, like it or not.
Second, there's something fundamentally wrong with the American economy which hasn't been adequately explained. Historically nations bearing this level of debt load and this kind of trade deficit have had economic implosions long before now. Personally I have been bracing myself for something like that for a long time. It hasn't materialized. Not being a believer in American Exceptionalism, I have to think the debt is going somewhere else. This explanation makes sense there too.
Third, the experts agree that we cannot possibly use military force to disable Iran's nuclear program, so why consider it? Some of the reasons cited are that the atom labs are too dispersed and well protected, and that Iran and (the rest of the world, Islamic or not) could retaliate by devaluing the dollar. This article notes all these points and is practically giddy about how the neocons have painted themselves into a corner. I would not be so quick to gloat.
If in fact attacks on Iran would be for the purpose of disrupting the bourse rather than the (non-existent?) weapons program, neither of these objections matter. Who cares how well the nuclear sites are protected? Instead we should wonder about the safety of their computers, traders, and network infrastructure. Likewise if the administration thinks that allowing the bourse to open will be certain to cause a dollar panic, they can't be too concerned about hypothetical dollar panic blow back.
Fourth we have John Bolton, without a doubt the worst possible choice for U.N. ambassador the president could have made. In fact a man so bad that there's no way he could have been approved by the Republican-controlled Senate, and he'll be removed from his post in January. And yet this month, by simple rotation, he's the chairman of the security council and intends to push for resolutions on Iran's nuclear program, resolutions designed for Iran to violate. Bolton may be a bad diplomat, but he may be the right nut to provide a pretext for attack.
The basic facts are not in dispute. The IOB is real, and is planned to open for business in March of this year. Some analysis indicates that many countries in Europe and Asia would welcome a euro-denominated oil market for many different reasons, not the least of which is to get out from under the thumb of the unstable American dollar. As one Asia Times guest writer quipped:
And [the Iranian Oil Bourse] can strike barter deals with oil-hungry giants like China and India who have a lot of products and commodities to offer. One doubts whether American hamburgers and legal services will be considered adequate collateral for the world's most after-sought resource.
Ouch. One way or another, April will be an interesting month.
- jack*
UPDATE 2/08: As I'm finding more articles I'm just linking them into the text.
Recent Comments