From an E-mail I just received::
The threat to oil being linked to the Euro (that the Iraq war stymied) and the resulting total crash of the dollar is illustrated by this article. We went to war to prevent a global change in currency, which would have impoverished the USA in a matter of a couple of years if not just months.
MOSCOW, May 14 (RIA Novosti) - The share of the euro in the Russian gold and foreign currency reserves can be increased to 50%, said Pavel Teplukhin, president of the Troika Dialogue managing company.
"The country's international reserves must be maximally adjusted to the balance of payment structure," he thinks. "And the balance of payments consists of two parts, the trade balance and the capital account."
Russia's main trade partners are EU countries, with whom settlements are made in the euro, Teplukhin said.
On the other hand, debts (to the International Monetary Fund and the Paris Club) are assessed in the dollar, but their servicing will cost less owing to their early repayment. The company president views this as one more argument in favor of transition to the euro.
"The euro/dollar ratio in the country's international reserves should be close to 50:50," he thinks. "Until 2007, I would add to the reserves 10% of other currencies which are involved in the international currency relations, in one way or another." One of these currencies should be the Japanese yen, which is a global reserve currency.
"There are also special drawing rights (SDR), a synthetic currency used for IMF settlements that is a basket of currencies of IMF member states," Teplukhin said.
"Russia is becoming an active member of the IMF, not a borrower but a net creditor of the countries that are the recipients of the World Bank and IMF assistance. In this situation, the voice of the Central Bank in currency interventions should become louder," the company president thinks.
In his opinion, the Central Bank should not only tackle the domestic foreign policy but also influence the international dynamics of the exchange rate. To be able to do this, Russia should adopt "a creative attitude to the balance of the dollar, the euro and the yen in its international reserves."
"The Central Bank can play this part now because it is one of the world's largest holders of international reserves," argues Pavel Teplukhin.
The Russian gold and foreign currency reserves top $144 billion and may grow to $170-180 billion by the end of the year, according to the Central Bank's forecast.
The Central Bank can use this factor to influence the price of currencies on different markets, the expert thinks. "Russia has never had such a role" but can play it now. "We have the requisite specialists in Vneshekonombank and Vneshtorgbank. They can play the part of an active member of a group that determines the value of international currencies," he concluded.
The Iranian Threat: The Bomb or the Euro?
By Dr. Elias Akleh
03/24/05 "AMIN" - - Iran does not pose a threat to the United State because of its nuclear projects, its WMD, or its support to "terrorists organizations" as the American administration is claiming, but in its attempt to re-shape the global economical system by converting it from a petrodollar to a petroeuro system. Such conversion is looked upon as a flagrant declaration of economical war against the US that would flatten the revenues of the American corporations and eventually might cause an economic collapse.
In June of 2004 Iran declared its intention of setting up an international oil exchange (a bourse) denominated in the Euro currency. Many oil-producing as well as oil-consuming countries had expressed their welcome to such petroeuro bourse. The Iranian reports had stated that this bourse may start its trade with the beginning of 2006. Naturally such an oil bourse would compete against London’s International Petroleum Exchange (IPE), as well as against the New York Mercantile Exchange (NYMEX), both owned by American corporations.
Oil consuming countries have no choice but use the American Dollar to purchase their oil, since the Dollar has been so far the global standard monetary fund for oil exchange. This necessitates these countries to keep the Dollar in their central banks as their reserve fund, thus strengthening the American economy. But if Iran — followed by the other oil-producing countries — offered to accept the Euro as another choice for oil exchange the American economy would suffer a real crisis. We could witness this crisis at the end of 2005 and beginning of 2006 when oil investors would have the choice to pay $57 a barrel of oil at the American (NYMEX) and at London’s (IPE), or pay 37 Euros a barrel at the Iranian oil bourse. Such choice would reduce trade volumes at both the Dollar-dependent (NYMEX) and the (IPE).
Many countries had studied the conversion from the ever weakening petrodollar to the gradually strengthening petroeuro system. The de-valuation of the Dollar was caused by the American economy shying away from manufacturing local products — except those of the military -, by outsourcing the American jobs to the cheaper third world countries and depending only on the general service sector, and by the huge cost of two major wars that are still going on. Foreign investors started withdrawing their money from the shaky American market causing further devaluation of the Dollar.
The keen observer of the money market could have noticed that the devaluation of the American Dollar had started since November 2002, while the purchasing power of European Euro had crept upward to reach nowadays to $1.34. Compared to the Japanese Yen the Dollar had dropped from 104.45 to 103.90 yen. The British pound climbed another notch from $1.9122 to $1.9272.
http://www.informationclearinghouse.info/article8354.htm
Yet we sink deeper into debt, both as our government grows without limit and our trade deficit continues.