Russia to price oil in euros in snub to US

Mods, I know this is in breaking news but it seems to be a BIG story with impact to the US. Please lock if I should not have posted this here.




http://www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2003/10/10/cnoil10.xml&menuId=242&sSheet=/money/2003/10/10/ixfrontcity.html

Russia is to start pricing its huge oil and gas exports in euros instead of dollars as part of a stragetic shift to forge closer ties with the European Union.

The Russian central bank has been amassing euros since early 2002, increasing the euro share of its $65 billion (£40 billion) foreign reserves from 10pc to more than 25pc, according to the finance ministry.

snip

German officials said Chancellor Gerhard Schroder secured agreement for the change-over on oil pricing from Vladimir Putin, the prime minister, while on a trip to Russia this week.


Moscow: Middle East may follow lead of Russia's changeover to oil pricing in Euro
The two leaders have forged a close personal bond and are both keen to check American economic and diplomatic power.

Yikes!!!

I wonder when Venezuela will do it? Then the others.

This is huge.

US could go to war with Iraq to prevent pricing in Euros, and as Venezuela threatens to do the same the US turns up the heat on them too...BUT THE US CANT FOLLOW THE SAME COURSE WITH RUSSIA!....This will have major ecomonic reprocussions

http://www.pubtheo.com/page.asp?PID=1181

SNIP

There are many things driving President Bush and his administration to invade Iraq, unseat Saddam Hussein and take over the country. But the biggest one is hidden and very, very simple. It is about the currency used to trade oil and consequently, who will dominate the world economically, in the foreseeable future -- the USA or the European Union.

Iraq is a European Union beachhead in that confrontation. America had a monopoly on the oil trade, with the US dollar being the fiat currency, but Iraq broke ranks in 1999, started to trade oil in the EU's euros, and profited. If America invades Iraq and takes over, it will hurl the EU and its euro back into the sea and make America's position as the dominant economic power in the world all but impregnable.

SNIP

on what makes this so big

This was written by The Foundation for the Economics of Sustainability (FEASTA) of Dublin, Ireland in January 2003.

<snip>

Since so many foreign-owned dollars are not spent on American goods and services, the US is able to run a huge trade deficit year after year without apparently any major economic consequences. The most recently published figures, for example, show that in November of last year US imports were worth 48% more than US exports. No other country can run such a large trade deficit with impunity. The financial media tell us the US is acting as the ‘consumer of last resort’ and the implication is that we should be thankful, but a more enlightening description of this state of affairs would be to say that it is getting a massive interest-free loan from the rest of the world.

<snip>

This (conversion from dollars to euros for oil currency) however would be a disaster for the US. Not only would they lose a large part of their annual subsidy of effectively free goods and services, but countries switching to euro reserves from dollar reserves would bring down the value of the US currency. Imports would start to cost Americans a lot more and as increasing numbers of those holding dollars began to spend them, the US would have to start paying its debts by supplying in goods and services to foreign countries, thus reducing American living standards. As countries and businesses converted their dollar assets into euro assets, the US property and stock market bubbles would, without doubt, burst. The Federal Reserve would no longer be able to print more money to reflate the bubble, as it is currently openly considering doing, because, without lots of eager foreigners prepared to mop them up, a serious inflation would result which, in turn, would make foreigners even more reluctant to hold the US currency and thus heighten the crisis.

There is though one major obstacle to this happening: oil. Oil is not just by far the most important commodity traded internationally, it is the lifeblood of all modern industrialised economies. If you don’t have oil, you have to buy it. And if you want to buy oil on the international markets, you usually have to have dollars. Until recently all OPEC countries agreed to sell their oil for dollars only. So long as this remained the case, the euro was unlikely to become the major reserve currency: there is not a lot of point in stockpiling euros if every time you need to buy oil you have to change them into dollars. This arrangement also meant that the US effectively part-controlled the entire world oil market: you could only buy oil if you had dollars, and only one country had the right to print dollars - the US.

If on the other hand OPEC were to decide to accept euros only for its oil (assuming for a moment it were allowed to make this decision), then American economic dominance would be over. Not only would Europe not need as many dollars anymore, but Japan which imports over 80% of its oil from the Middle East would think it wise to convert a large portion of its dollar assets to euro assets (Japan is the major subsidiser of the US because it holds so many dollar investments). The US on the other hand, being the world's largest oil importer would have, to run a trade surplus to acquire euros. The conversion from trade deficit to trade surplus would have to be achieved at a time when its property and stock market prices were collapsing and its domestic supplies of oil and gas were contracting. It would be a very painful conversion.

more: http://www.feasta.org/documents/papers/oil1.htm

Feasta’s Mission is to identify the economic characteristics that Irish society must have in order to be economically, environmentally and culturally sustainable and to share this analysis with the widest audience possible. We also endeavour to engage mainstream society by promoting our vision and by communicating with and educating others in relation to sustainable economics. (from the website: www.feasta.org)

The paper also talks about how Iraq went from the dollar to euro in November 2000. They say Iran and Venezuela (under Hugo Chavez’s rule) have talked about switching and that Venezuela established barter deals for oil with South and Central American countries, which eliminates the dollar from the deals.

In re-reading the FEASTA paper for this post I was struck by the last paragraph (emphasis is mine):

<snip>

All of this is bad news for the US economy and the dollar. The fear for Washington will be that not only will the future price of oil not be right, but the currency might not be right either. Which perhaps helps explain why the US is increasingly turning to its second major tool for dominating world affairs: military force.

<snip>

I wonder how much the fear of total economic collapse helped garner support for PNAC's push for total military dominance.

FWIW, here is an article from Radio Free Europe from November 2000 that discusses Baghdad's move from the dollar to the euro for oil currency. I find it interesting to look at the move from an earlier perspective.

Link: http://www.rferl.org/nca/features/2000/11/01112000160846.asp

Bush just met with Putin. Either this is a major blow to Bushco, both economically and personally, or Bushco is in on creating a banana republic of us.
What is in it for Bush to make our economy worse? Doesn't it have to get better before the 04's?

When I first came across the FEASTA paper in January I thought maybe Bush's non-PNAC administration members (and some in Congress) were going along with the march to war because they feared economic collapse if we didn't respond to the dollar/euro switch and let it spread. I still think that may have influenced some and as the paper suggests, some of the lemmings in DC may think military dominance might is better than no dominance.

But this administration is looting our economy like some perverted Robin Hood - taking from the poor and giving to the rich. What's more, they aren't doing a damn thing to correct the trade imbalance, which seems will eventually be necessary to recover if ANY scenario plays out except that the dollar maintains its (former) dominance.

Now I think what's happening is a just a massive power/money grab. The PNAC'ers want the power - and keeping the people afraid and hungry means they (people) won't have the courage and (frankly) time to stand up to them. The worse the economy gets the more people will sign up for the military too, either out of misplaced patriotism or to feed their families. At the same time PNAC'ers and their supporters are filling their own pockets so they will be best able to weather the inevitable crash.

I'm not sure if Russia's switch is in the PNAC'ers plan. I don't put it past them, but I don't think so, in part because they have been so arrogantly bragging about their plans and I haven't seen any sign of it. I think they may see it as an inevitablity and decided to make sure they and theirs are well set as the dollar takes a dive.

One more note. It seems the corporate structure is set to weather whatever global economic war breaks out. "American" companies are so diversified and global they are reasonably immune to the realities of American economics. And I think that is being reflected in the way our hands on economy is tanking (massive unemployment, trade deficits, huge personal debt, ect.) while the stock market steadily rises.

That is my take on this (and thank you for asking) but as I said, I am certainly no expert and may not understand all the nuances of what is going on.

This is huge--perhaps, ultimately, the real reason why all this is happening.

It seems to me that a person of vision running this country would make it his or her top priority to wean out economy away from oil and on to alternative fuel sources. The oil companies be damned, it's out nation that's at stake. But of course, the republicans, and these creeps in particular, have no such patriotic vision.

I knew that an economic war was about to be undertaken. The US may not be able to be taken down a peg or three militarily but it sure can be economically. The debt, much of which is owed to foreign holders; the need for the US to import much more than it exports leaves it in a VERY vulnerable position, economically.

Economic warfare with the rest of the world (Russia is the #2 oil producer and it's making overtures to Saudi). We have virtually NO domestic oil left thanks to very wasteful methods of overdrilling during the last half century. We're carrying massive debt and have stopped producing almost everything but agricultural products, which are hugely dependent on petroleum-based fertilizer and pesticide. Our economy is literally based on the premise of a global petrodollar -- with no other underpinning.

Which comes first, a depression which will make the 1930's look mild by comparison or World War III?

Germany, France and China have already signed mutual defense pacts with Russia, you know.

Shrub & co. CAN'T go nuke Russia...we don't have enough people in the whole country to fight all the battles, militarily, that would ensue if we start going after all the countries that will switch to the Euro.

We KNOW all the OPEC countries won't switch at once, because the financial chaos that would ensue world-wide. But they needed Pootie-poot to go first, which he did, to minimize repercussions to the other mideastern members of OPEC.

How do the chimp's oil buddies feel about him today? Can you say 'another martyred U.S. president'?

This is such a big story, it deserves to be kept on the front page, imo.

Watch for a coup de grace if Russia signs an agreement to supply Japan with Russian oil.

It's a natural fit, since they are so geographically close. But Japan is one of the largest holders of US currency, since they import all of their oil, and their switching to buying more Russian oil would mean that they'd start swapping their enormous dollar holdings for euros.

Haven't heard any rumors of this, but keep an eye out for it. If I were Putin, it would be on my short list of things to do right now.

their vision goes only to the bottom of their wallet pocket

I don't think we'll be able to keep Goliath from tipping over

All of these wars and revolutions have been over which currency OPEC would use.

Russia started dumping the dollar shortly before 9-11 at the advice of Tatyana Koryagina the dollar over a year ago and switched to gold.

Russian analysts are abuzz with talk of a coming U.S. economic crash. Some have stated that the collapse of the U.S. dollar is imminent. According to the recent testimony of Russian economist Tatyana Koryagina, the American dollar will soon be used as “wallpaper for toilet stalls.” In anticipation of a crash, Russia officially adopted the gold chervonet as legal tender on July 10.

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=24030

Russia and China started getting ready for the dollar to crash. Russia's Central Bank started put gold chervonets coin into circulation over 2 years ago... Koryagina was interviewed by Pravda on July 12 about her forecasts to the Russian DUMA of a mid-August blow-out of the entire world financial system, the U.S. economy and the dollar first and foremost. This US-centered financial breakdown was supposed to be caused by some dark cabal that needed to re-arrange the economic structures of the world. Strangely enough Larouche was present at that briefing to the DUMA.

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Sadaam's switch to the euro was the kiss of death. Same thing for Hugo Chavez in Venezuela.

Iran same thing...

Sadly this has less to do with George Bush than we Democrats are willing to admit.

Sigh .

:(

:kick:

Thanks for bringing this up, Spazito!

So, anybody got any ideas what everyday American folks should do to respond, if it's true?

:kick:

What can/should ordinary Americans do?

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Mr Putin was coy about German media reports on the deal yesterday but acknowledged that Russia was exploring the idea. "We do not rule out that it is possible. That would be interesting for our European partners," he said.

Might lead to Bush's downfall.

Reuters
US gross external debt more than $6 trillion-Trsy
Wednesday October 8, 7:40 pm ET
WASHINGTON, Oct 8 (Reuters) - U.S. debt owed to foreign governments, central banks, private banks and other investors topped $6 trillion in the quarter ended June 30, the Treasury Department said on Wednesday.

Of that, about $1.270 trillion in principal and another $53.73 billion in interest is due within the next 3 months, according to a new report on the U.S. external debt position issued by Treasury.

"The overall magnitude of U.S. indebtedness to foreigners and some of the major components are already well known. This presentation provides more detail," Treasury said in announcing it was publishing quarterly data on external debt, broken down by type of creditor, how the debt is denominated and the expected payment schedule.

The report shows the extent to which the United States remains dependent on foreign investment. Even for an economy totaling $10.803 trillion annually, the $6.357 trillion in external debt is a hefty 58.8 percent of gross domestic product.

snip

http://biz.yahoo.com/rf/031008/economy_treasury_debt_1.html