PetroEuros & Invading Iran - Alan Simpson

[Bo]

Interesting read I got in an email. Comments?



PetroEuros & Invading Iran - Alan Simpson
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>PetroEuros & Invading Iran
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>Washington, August 8th, 2005 -- The announcement that Iran is to begin
>pricing its petroleum products in euros and create an "Iranian Oil
>Bourse" for trading oil, in direct competition with New York and London
>has sent the Oil Barons into a tail spin.
>
>Convinced that their grab of Iraqi oilfields after Saddam dared to
>announce that he was moving to the Euro should have taught the Iranians
>a lesson, the NeoCons under Cheney and Rumsfeld seek to up the stakes in
>their "Old Mans Poker Game". Any moron who still believes that Iraq was
>either invaded for the threatening Weapons of Mass Destruction and to
>create a democratic state in the Middle East should stop reading now,
>and take their medication. But now the stakes are much higher, and the
>odds are not in our favor. NeoCon military planners even go so far as to
>contemplate using first strike nuclear weapons.
>
>Others, outside of the carefully controlled mainstream media are warning
>against such folly. William Clark wrote:
>
>"In essence, Iran is about to commit a far greater "offense" than Saddam
>Hussein's conversion to the euro for Iraq's oil exports in the fall of
>2000. 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.[7] 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 U.S. debt levels and the
>stated neoconservative project of U.S. global domination, Tehran's
>objective constitutes an obvious encroachment on dollar supremacy in the
>crucial international oil market.
>
>From the autumn of 2004 through August 2005, numerous leaks by concerned
>Pentagon employees have revealed that the neoconservatives in Washington
>are quietly - but actively - planning for a possible attack against
>Iran. In September 2004 Newsweek reported:
>
>Deep in the Pentagon, admirals and generals are updating plans for
>possible U.S. military action in Syria and Iran. The Defense Department
>unit responsible for military planning for the two troublesome countries
>is "busier than ever," an administration official says. Some Bush
>advisers characterize the work as merely an effort to revise routine
>plans the Pentagon maintains for all contingencies in light of the Iraq
>war. More skittish bureaucrats say the updates are accompanied by a
>revived campaign by administration conservatives and neocons for more
>hard-line U.S. policies toward the countries...'"
>
>A PetroEuro would shatter the illusion, swallowed by the gullible
>voters, that all is just fine in the US Economy. At present the printing
>presses can churn out as many dollar bills as the President needs for
>his latest folly. It doesn't matter if all the US factories and
>workshops are closed down, and everyone is in paper debt up to their
>ears, just print more money and give them a tax break to keep them
>quiet. Then collect all the paper debt together and get another loan
>from China.
>
>What makes the scenario more frightening is that this week the Saudis
>announced they were withdrawing $360 Billion of their investments and a
>large chunk of that will affect the United States. What will be the
>excuse for invading and grabbing their oilfields?
>
>The need to maintain US Economic Supremacy is an essential goal of any
>Administration, but to destroy jobs and dismantle production at home,
>and conduct illegal and very risky military invasions of sovereign
>states is not the best policy. Sadly it is the only policy of the
>Bush/Cheney NeoCons.
>
>Their belief is that without jobs the masses, especially Blacks and
>Hispanics will gladly volunteer to serve the cause, and die in the far
>off Middle East. The ruling elite will continue ruling, and the Status
>Quo maintained. Sounds like another Conspiracy Theory. No, just look at
>the story of Iraq and judge for yourself.
>
>I firmly believe the United States could maintain it's economic
>superpower status by legal and beneficial means. Throwing the working
>population onto the scrap heap and threatening the rest of the world
>with "Shock and Awe" is not the answer. Too many essential young men and
>women will be sacrificed for this ill conceived ideological folly.
>
>Iran is 10 years away from nuclear weapons. If the world, or more
>important China, Russia, Pakistan and India sees that a belligerent
>bully is about to destroy Iran, and their own oil supplies, then Iran
>could have nuclear weapons within hours to strike back at US oil
>interests in Saudi Arabia, and US military facilities in the region, on
>land and at sea. Remember the amateur GovernorPaul Bremmer cancelled all
>contracts made with Russia, China and Europe after the US invaded Iraq.
>
>The military Hawks demanded that President Kennedy invade Cuba, for how
>could Fidel stand up to the mighty US war machine. Had they done that
>Disney World would probably still look like Hiroshima. The military had
>poor intelligence and hadn't counted on the nuclear weapons already in
>place.
>
>Tread carefully for unless the US military can guarantee 100% success in
>the first minutes of an invasion, or attack, then the slaughter of US
>and British forces that will ensue will make parents and loved ones
>across the country sick to their stomachs.
>
>(c)1996 - 2005 Alan Simpson

 

[I_am_John_Galt]

Well, that's 10 minutes of my life that I'll never get back ... only redeeming quality is that it reminded me of the "Tim Robbins" bit on the Corporations in Team America.

 

[Fraser.g]

http://www.gwynnedyer.net/articles/Gwynne%20Dyer%20article_%20%20Iran,%20Oil%20and%20Euros.txt

The last two paragraphs sums this up.
Interesting scenario though


17 February 2006

Iran, Oil and Euros: The War Scenario

By Gwynne Dyer

        Here's the scenario.  On 20 March Iran opens a new "bourse"
(exchange) on which countries all over the world can buy and sell oil and
gas not only for dollars but also for euros.  It also establishes a new oil
"marker" (oil pricing standard) based on Iranian crude and denominated in
euros, in open rivalry to the existing West Texas Intermediate, Norway
Brent and UAE Dubai markers, all of which are calculated in US dollars.

        The Iranian bourse is a instant success with countries and
companies that are unhappy about having to hold huge amounts of overvalued
US dollars to finance their oil transactions, all of which must presently
be conducted in that currency. Very large sums start to shift from the
dollar to the euro, although exactly how much is unknown because the US
Federal Reserve System (by pure coincidence, of course) has chosen late
March as the time to stop publishing the data that would make it easy to
know how fast the haemorrhage was.

        But the US government knows, and is deeply alarmed by the danger
that the dollar may be losing its status as the world's only reserve
currency. Given the huge deficits that plague the US economy, the US
dollar's value would collapse if other countries began to see it as just
another currency, so the euro must be prevented from emerging as an
alternative reserve currency.  In practice, that means the Iranian
experiment with a euro-denominated oil bourse must be stopped -- and the
only way to do that is to attack Iran.

        Some of the scenario-mongers would change the sequence of events
and have the US launch a "preventive" attack against Iran before it even
opens the bourse.  An alternative scenario has Washington persuading Israel
to do the dirty work of actually launching air strikes against Iran. But a
lot of people are genuinely worried that the whole crisis over Iran's
alleged nuclear weapons programme is being whipped up to give Washington
cover for a strike against Iran that is really meant to halt the bourse.

        In support of this thesis, they argue that a similar initiative by
Saddam Hussein, who began insisting that Iraq's oil exports be paid for in
euros in 2000, led directly to the US invasion of 2003. The Iranians are
going much further, and they will be punished too. How seriously should we
take this argument?

        Although final details on the way the Iranian oil bourse will
operate are still lacking, it's clear that a euro-denominated oil exchange
could catch on, and would indeed challenge the US dollar's unique
advantages as the world's sole reserve currency. However, it is less clear
that the Bush administration actually knows or cares about this.

        There is no real evidence linking Saddam Hussein's demand to be
paid in euros for Iraq's oil with the subsequent US invasion of Iraq. Those
two events occurred almost three years apart, and in any case Saddam merely
asked to have the cheques made out in euros, so to speak. Iraq's actual oil
sales continued to go through the New York or London exchanges and to be
conducted in dollars.

        Besides, those were the early years of the Bush administration, and
US dollar was much less vulnerable because the twin US deficits on the
federal budget and the foreign trade account had not yet had time to swell
to their present massive size.  The euros-for-oil story is just one of many
motives that people have proposed to explain the Bush administration's
attack on Iraq, given that Saddam had neither terrorist ties nor weapons of
mass destruction, but it fails to convince.

        The rapidly deteriorating financial position of the United States
probably does explain the Federal Reserve's announcement that on 24 March
it will stop publishing data on the M3 money supply, which tracks how many
US dollars are held by foreigners.  If you are worried about a panic flight
from the dollar, then you want to keep any downward trend in overseas
holdings of US dollars out of public sight.  But the Fed might well be
doing this around now even if no Iranian oil bourse were on the horizon,
and no dramatic conclusions need to be drawn from it.

        In order to believe that the US government is planning an attack on
Iran to head off the challenge to the dollar that a euro-based Iranian oil
bourse would represent, you must first believe that the Bush administration
actually worries about such things, and there is little proof that it does.
It certainly should, but if it truly did, would it have pushed through the
biggest tax cuts in American history?

        The Bush administration is reckless enough to contemplate an attack
on Iran, but it is too ignorant about fiscal and monetary matters to worry
about such esoteric matters as the potential connections between a shift to
euros in the oil market, foreign investor confidence in the US dollar, and
the sustainability of the massive US budget and trade deficits.  As
Vice-President Dick Cheney said to former Treasury Secretary Paul O'Neill
when the latter protested over the huge Bush tax cuts (an issue on which he
later resigned): "Ronald Reagan proved that budget deficits don't matter."

        If the US does attack Iran, it will be for other motives.

 

[Brad Sallows]

"The Bush administration is reckless enough to contemplate an attack
on Iran, but it is too ignorant..."

As Sun-Tzu wrote, the best strategy is formless.

If they're incompetent, then they've sure been having a run of good fortune going in the directions of their pleasing.

 

[a_majoor]

Just what percentage of the world's oil supply is controlled by Iran anyway? If they sell evey single drop of their oil for Euros, there will still be a huge oil supply spread across the entire world that is being sold in USD.

The other thing these "Neo Mecentilists" fail to note is the fact that Euros are only good in the EU, and Iran will be sitting on a pile of Euros. When China, Japan, India etc. collects American dollars in return for their goods and services, it uses them to purchase American goods and services. This works for the most part because China wishes to take advantage of open trade to build their economy. Extentions of the American tax cuts will allow the US economy to continue growing and the system contine to work.

Iran shows very little interest in participating in the global economy except through resource sales, and the Europeans might discover the often cited "dangers" of the American trade system become real when a single hostile nation is holding a large amount of their currency.

 

[squealiox]

The other thing these "Neo Mecentilists" fail to note is the fact that Euros are only good in the EU, and Iran will be sitting on a pile of Euros. When China, Japan, India etc. collects American dollars in return for their goods and services, it uses them to purchase American goods and services. This works for the most part because China wishes to take advantage of open trade to build their economy. Extentions of the American tax cuts will allow the US economy to continue growing and the system contine to work.

what "American goods and services" would those be? so far the asians have parked a net $700 billion plus in low-yield us govt debt, and counting, simply to keep forex rates where they want them. that's not a free market at work, and i don't see how it can go on forever.

 

[tomahawk6]

There will be no invasion of Iran in the classical sense. Operations against Iran will be in the form of air strikes. But right now attacking Iran is purely conjecture.