good article on the dollar vs the euro

I've seen a lot of commentaries on this issue on DU so apologies if it's passe to some. However, the rationale that underpins US military adventurism makes little sense given the political fallout worldwide. WTF go into Iraq at huge human and monetary cost and wreck relations with other nations as a consequence?

There are a number of answers to that question, many of which have validity, in varying degrees. But it's worth asking the question again and again. Some people cite oil supply per se but it's not quite that simple it seems.

For example, factor in the rhetoric directed at "rogue" nations which have a lot of oil such as Iran; Iran does not use dollars for oil as far as I am aware.

There is a mass of information floating around on this issue but how many times have you seen it discussed by the MSM?

<snip1>

According to research by Dr. David Spiro, in 1974 the Nixon administration negotiated assurances from Saudi Arabia to price oil in dollars only, and invest their surplus oil proceeds in U.S. Treasury Bills. In return the U.S. would protect the Saudi regime. According to his book, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets <18>, these purchases were done in relative secrecy. These agreements created the phenomenon known as "petrodollar recycling." In effect, global oil consumption via OPEC provides a healthy subsidy to the U.S. economy. Hence, the Europeans created the euro to compete with the dollar as an alternative international reserve currency. Obviously the E.U. would also like oil priced in euros as well, as this would reduce or eliminate their currency risk for oil purchases.

<snip>

<snip2>

It would appear that any attempt by OPEC member states in the Middle East or Latin America to transition to the euro as their oil transaction currency standard shall be met with either overt U.S. military actions or covert U.S. intelligence agency interventions. Under the guise of the perpetual `war on terror' the Bush administration is manipulating the American people about the unspoken but very real macroeconomic reasons for this upcoming war with Iraq. This war in Iraq will not be based on any threat from Saddam's old WMD program, or from terrorism. This war will be over the global currency of oil. A war intended to prevent oil from being priced in euros.

<snip>

http://www.ratical.org/ratville/CAH/RRiraqWar.html#p2

edit: some of my crappy analysis removed

Old news:

http://www.rupe-india.org/34/military.html (Dec 2002)

http://www.museletter.com/archive/132.html (Feb 2003)

... the dollar. What they have been doing, over several years, is converting dollars to Euros through their central bank, a little at a time. Estimates are now that Iran has, perhaps, several hundred billion dollars of liquid assets in Euros, and has been increasing that amount little by little.

What lends weight to the article's argument is what the US has been trying to do in Venezuela recently--Chaves has been threatening to change currency for several years.

the Iranian method for oil transactions. I'm sure there was discussion, quite recently, about Iran creating a currency specifically for oil transactions. I can't find the link unfortunately; maybe I picked it up the wrong way though.

Will have a shifty on the net.

The Real Reasons Why Iran is the Next Target:
Emerging Euro-denominated International Oil Marker

By William Clark

September 28, 2004

Link: http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=103&topic_id=78384

... and Clark's first article on the issue of petroeuros, but had forgotten his mention of an Iranian bourse. If such is Iran's intention, they would have to have a fairly large currency reserve in euros to make that petroleum exchange work, so it makes sense that they've been selling oil to the EU by contracts in euros, despite the fact that the oil price is still denominated in dollars.

Nevertheless, an Iranian oil exchange selling oil in euros would surely put Greenspin and his boys into a real tizzy--no way could they control such an external market force, especially since the Iranians also have something to say about oil production, as well.

I doubt Bush is doing it on purpose, but there are many advantages to *not* holding the world's reserve currency.

Just ask China.