This will just take a combatant, which is hiding behind their sand castles, to be added to the list of "hands off" bombing areas.
Posted on 02/05/2006 4:52:53 AM PST by RaceBannon
Will Iran's 'petroeuro' threat lead to war?
-------------------------------------------------------------------------------- Posted: February 3, 2006 11:00 a.m. Eastern
© 2006 WorldNetDaily.com
Beginning in 2003, Iran began demanding oil payment in euros, not dollars, although the oil itself was still priced in U.S. currency. Now, Iran is seriously considering establishing an Iranian Oil Bourse, with the goal of competing with the New York Mercantile Exchange, NYMEX, and London's International Petroleum Exchange, IPE.
Right now, the NYMEX and IPE use three oil "markers" to establish price – West Texas Intermediate crude, Norway Brent crude and the UAE Dubai crude. With the establishment of an Iranian Oil Bourse, Tehran wants to create a fourth oil marker, this one priced in the euro.
Many administration critics argue today that the real reason for invading Iraq in 2003 was not to remove WMD from Iraq or to establish freedom but to preserve the dollar dominance of the world's oil market. These same critics argue today that the real reason for the ramp-up of concern over Iran has nothing to do with Iran's secret nuclear weapons program or with President Ahmadinejad's threats to destroy Israel but everything to do with oil.
If the Iranians persist in creating a market mechanism to settle world oil transactions in the euro, the United States will attack just to preserve the oil market for the dollar.
Today, about 70 percent of the world's international foreign currency reserves are held in dollars. If the petroeuro begins to challenge the petrodollar, this percentage could diminish drastically.
The United States depends on the dollar foreign-currency reserves in order to sell the Treasury debt that sustains budget deficits. What if foreign-exchange portfolios from oil sales fell to 60 percent being held in dollars – would that cause a crisis in the U.S. economy? Or would it take 55 percent? Most Americans are completely unaware of this threat Iran represents to the U.S. economy.
The Iranians, however, are fully aware of what they are threatening, and so are top economic experts within the administration.
The Islamic world also has realized that America is at risk because we no longer have a gold-backed currency. For years, former Malaysian Prime Minister Mahathir Mohamad has championed a move for the Muslim nations of the world to establish the gold dinar as the standard currency for settling international oil transactions. In November 2002, the West Malaysian Royal Mint reissued the gold dinar that was in common use in the Muslim world during the Ottoman Empire.
The idea would be to challenge the dollar by arguing that a fixed-value currency backed in gold is more resistant to devaluation than a floating dollar such as the U.S. has had since the administration of Richard Nixon.
In writing "Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil," Craig Smith and I argued that the United States should seriously consider establishing a gold-backed international-trade dollar to preserve stability and value in the international oil market. Clearly, any threat to petrodollar holdings could undermine social programs in the U.S., including Medicare and key welfare programs such as Temporary Assistance for Needy Families.
How close is Iran to opening the Iranian Oil Bourse? The Iranian Oil Bourse is scheduled to be opened in March. Curiously, that is the same month Israel has quietly set as a deadline for a diplomatic resolution of the Iranian nuclear crisis.
Last year, President Bush was ready to concede to his liberal Democratic Party critics, allowing the EU-3 and the IAEA to lead the negotiations with Iran. Our guess is that if Iran does open an oil bourse as planned in March, Bush will take the gloves off.
The Bush administration might play with a nuclear Iran, comfortable with intelligence estimates that Iran needs much more time to produce a bomb. Maybe Iran should look more closely at the lesson of Saddam Hussein. We didn't find the WMDs our faulty intelligence claimed were in Iraq, but Hussein was trading in pertoeuros, with the full blessing of the U.N.
If Iran does open an oil bourse next month, we should expect the warplanes will soon thereafter begin to fly.
--------------------------------------------------------------------------------
Jerome R. Corsi received a Ph.D. from Harvard University in political science in 1972 and has written many books and articles, including co-authoring with John O'Neill the No. 1 New York Times best-seller, "Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry." Dr. Corsi's most recent books include "Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil," which he co-authored with WND columnist Craig. R. Smith, and "Atomic Iran: How the Terrorist Regime Bought the Bomb and American Politicians."
Just another straw on the camel's back...
More competition leads to lower prices, not war.
I'm just going to take a shot in the dark and boldly state that the motives of the Iranians is not to lower the price of crude.
Will Iran's 'petroeuro' threat lead to war?
No, but its work on the a-bomb might.
This will just take a combatant, which is hiding behind their sand castles, to be added to the list of "hands off" bombing areas.
How are they going to raise it? Their actions won't change the supply or the demand.
Cortez said, "Of course, we're doing it for the go-o-o-o-ld! It's in our culture, man! Didn't you know that everything is about the go-o-o-o-ld?"
Oh...Corsi!
Corsi's full of it and a little to late with his "oil-for-war" rhetoric.
IAEA refers Iran to UN Security Council over nuclear activities
http://www.freerepublic.com/focus/f-news/1571601/posts
(passed 27-3)
...that, after Iran made all kinds of threats regarding its impending referral to the IAEA. And BTW, Iran's missiles will reach Rome as well as several other west European capitals, so the issue is also of interest to people in other countries.
Just more made up nonsense from the Tin Foil Hat crowd. It is IRRELEVENT to the US Economy if Oil is traded in Dollars or Euros. The people HOLDING the dollars have to be able to unload them on someone for something. That means either buying up American goods or assets. The Dollars will simply transfer from one holder to another. Gee do ANY of these wack jobs understand basic Econ?
My response to a similar article on a thread two weeks ago.
"This is gold bug nonsense. There are litterally hundreds of billion in foreign currency exchanged every day. Someone who wants to buy oil in euros swaps his euros for dollars the momemt of the trade. While this creates an artifical demand for dollars it is tiny in comparison to the American economy. For example if there are 100 million barrels of oil traded daily at $65.00 a barrel, that is a demand of only, $6.5 billion dollars for the oil trade every day. The American economy is over $10 trillion dollars in size. Which make $6.5 billion a mere 0.65% of the size of the economy.
I posit another theory. The American government is the most free has the strongest property rights and is the only country with the millitary might to protect its interests globally. That certainly makes it a better investment than, any other currency."
"More competition leads to lower prices, not war"
The idea here isn't to introduce competition, but to reduce the need of other nations to purchase and hold dollars in order to purchase oil. The problem with the theory (and this theory has been cited by all sorts of people, including AQ) is that the value of non-oil-exchange dollar exchanges each day absolutely dwarf oil-exchange dollar exchanges. For the theory to hold, oil would have to be one of the few and major reasons anyone anywhere holds dollars, and reality is vastly different. It's _an_ issue, certainly, and an important one, but far from the economy-making-or-breaking issue people like this (or AQ) try to get people to believe.
sounds like the 'war for oil' chants are starting already
you do math in a very interesting way. you mention the need for 6.5 billion daily, yet you contrast that with an annual number of 10 trillion for the gdp of the usa. i think its closer to 14 trillion by the way, but nonetheless, you need to use a number like 365 to make your argument possible. and yes, we would go to war to keep oil being traded in dollars, it is worth it.
We could have one shopping-mall a week blown up... and the MSM/DNC cabal would still deny we were at war.
My guess is they'd use a term out of one of John F'n Kerry's debate responses... “nuisance”.
Multiply .65% times 365 days and what do you get?
U.S. GDP is about 12.7 trillion USD right now. And the comparison isn't against US GDP, the comparison is against daily dollars exchanged globally, for example in the foreign exchange market (which measures around two trillion dollars traded daily).
The value of Iran's oil trading last year was around 55 billion. For the year.
Thanks for that explanation. I think it is possible that the Iranians are going to learn the law of unintended consequences. Markets are not just theoretical, they may find they have to lower prices to build their new market.
major bump.
I am not sure how to say it, but if a nation's economy is thteatened by economicsa, they have a right to survival.
Having oil used against us as an econoic weapon is an act of war through money: fight without firing a shot, so to speak.
While I do believe there are military/terrorist threats within Iran and Iraq, the use of oil against us is a legitimate threat
It is the swapping that is the concern
What happens when people no longer have to swap to dollars?
The dollar devalues.
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