The Voice (issue 264 - 11th May) ran an article beginning, 'Iran
has
really gone and done it now. No, they haven't sent their first
nuclear sub in to the Persian Gulf. They are about to
launch something much more deadly -- next week the Iran Bourse will
open to trade oil, not in dollars but in
Euros'
This apparently insignificant event has consequences far
greater for the US people, indeed all for us all, than is
imaginable.
Currently almost all oil buying and selling is in
US-dollars through
exchanges in London and New York. It is not accidental they are
both
US-owned.
The Wall Street crash in 1929 sparked off global depression and
World War II. During that war the US supplied provisions and
munitions to all its allies, refusing currency and
demanding
gold payments in
exchange.
By 1945, 80% of the world's gold was sitting in US vaults. The
dollar
became the one undisputed global reserve currency -- it was
treated world-wide as `safer than gold'. The Bretton Woods
agreement was
established.
The US took full advantage over the next decades and printed
dollars like there was no tomorrow. The US exported many
mountains of dollars, paying for ever-increasing amounts
of
commodities, tax cuts for the rich, many wars abroad, mercenaries,
spies and politicians the world over. You see,
this did not affect inflation at home! The US got it all
for free! Well, maybe for a forest or
two.
Over subsequent decades the world's vaults bulged at the seams and
more and more vaults were built, just for US dollars.
Each year, the US spends many more dollars abroad that at
home. Analysts pretty much agree that outside the US ,
of the savings, or reserves, of all other countries, in gold
and
all currencies -- that a massive 66% of this total wealth is
in US
dollars!
In 1971 several countries simultaneously tried to sell a
small
portion of their dollars to the US for
gold.
Krassimir Petrov, (Ph. D. in Economics at Ohio University)
recently
wrote,
'The US Government defaulted on its payment on August 15, 1971
. While popular spin told the story of
`severing the link between the dollar
and gold',
in reality the denial to pay back in gold was an act of bankruptcy
by
the US Government.' The 1945 Bretton Woods agreement was
unilaterally
smashed.
The dollar and US economy were on a precipice resembling Germany in
1929. The US now had to find a way for the rest of the world
to believe and have faith in the paper dollar. The
solution was in oil, in the petrodollar. The US viciously
bullied first Saudi Arabia and then OPEC to sell oil for dollars
only -- it worked, the dollar was
saved.
Now countries had to keep dollars to buy much needed oil. And the
US could buy oil all over the world, free of charge. What a
Houdini for the US! Oil replaced gold as the new foundation to
stop the paper dollar
sinking.
Since 1971, the US printed even more mountains of dollars to
spend
abroad. The trade deficit grew and grew. The US sucked-in much
of the world's products for next to nothing. More vaults were
built.
Expert, C?il?nn Nunan, wrote in 2003, 'The dollar is the de
facto
world reserve currency: the US currency accounts for
approximately two thirds of all official exchange reserves.
More
than four-fifths of all foreign exchange transactions and half
of all world exports are denominated in dollars.
In addition, all IMF loans are denominate
in dollars.'
Dr Bulent Gukay of Keele University recently wrote, 'This system
of
the US dollar acting as global reserve currency in oil
trade keeps the demand for the dollar `artificially' high.
This enables the US to carry out printing dollars at the price
of next to nothing to fund increased military spending
and
consumer spending on imports. There is no theoretical limit to the
amount of dollars that can be printed. As
long as the US has no serious challengers, and the other
states have confidence in the US dollar, the system
functions.'
Until recently, the US-dollar has been safe. However, since
1990
Western Europe has been busy growing, swallowing
up central and Eastern Europe . French and German bosses were
jealous of
the US ability to buy goods and people the world over
for nothing. They wanted a slice of the free cake too.
Further, they now had the power and
established the euro in late 1999 against massive US-inspired
opposition across
Europe , especially from Britain - paid for in dollars of
course. But the euro
succeeded.
Only months after the euro-launch, Saddam's Iraq announced it
was switching from selling oil in dollars only,
to euros only -- breaking the OPEC agreement. Iran , Russia ,
Venezuela
, Libya , all began talking openly of switching too --
were the floodgates about to be
opened?
Then aeroplanes flew into the twin-towers in September 2001. Was
this another Houdini chance to save the US (petro)dollar
and the biggest financial/economic crash in history?
War preparations began in the US. But first war-fever
had to be created -- and truth was the first casualty.
Other oil producing countries watched-on.
In 2000 Iraq began selling oil in euros. In
2002, Iraq changed all their petro-dollars in their vaults
into euros. A few months later, the US began their invasion of
Iraq
.
The whole world was watching: very few aware that the US was
engaging in the first oil currency, or petrodollar
war.
After the invasion of Iraq in March 2003, remember, the US
secured
oil areas first. Their first sales in August were, of course,
in dollars, again. The only government building in
Baghdad not bombed was the Oil Ministry! It does not
matter how many people are murdered -- for the US , the
petrodollar must be saved as the only way to buy and sell oil
-- otherwise the US economy will crash, and much more
besides.
In early 2003, Hugo Chavez, President of Venezuela talked openly
of
selling half of its oil in euros (the other half is bought by
the US). On 12 April 2003, the US-supported business
leaders and some generals in Venezuela kidnapped Chavez
and attempted a coup. The masses rose against this and the
Army followed suit. The coup failed. This was bad for the US
.
In November 2000 the euro/dollar was at $0.82 dollars, its
lowest
ever, and still diving, but when Iraq started selling oil in
euros, the euro dive was halted. In April 2002 senior
OPEC reps talked about trading in euros and the euro
shot up. In June 2003 the US occupiers of Iraq switched
trading
back to dollars and the euro fell against
the dollar again. In August 2003 Iran starts to sell oil
in some European countries and the euro rises
sharply.
In the winter of 2003-4 Russian and OPEC politicians talked
seriously of switching oil/gas sales to the euro the euro rose. In
February 2004 OPEC met and made no decision to turn
to the euro -- and yes, the euro fell against the dollar.
In June 2004 Iran announced it would build an oil bourse
to rival London and New York , and again, the euro rose. The
euro stands at $1.27 and has been climbing of
late.
But matters this month became far, far worse for the US dollar.
On
IOB. Not only are they now selling oil in euros from abroad --
they
have established an actual Oil Bourse, a global trading
centre for all countries to buy and sell their
oil!
In Chavez's recent visit to London ; he talked openly about
supporting the Iranian Oil Bourse, and selling oil in euros.
When asked in London about the new arms embargo imposed by
the
US against Venezuela, Chavez
prophetically
dismissed the US as 'a paper
tiger'.
Currently, almost all the world's oil is sold on either the
NYMEX,
New York Mercantile Exchange, or the IPE, London's
International Petroleum Exchange. Both are owned by US
citizens and both sell and buy only in US
dollars.
The success of the Iran Oil Bourse makes sense to Europe, which
buys 70% of Iran 's oil. It makes sense for Russia , which
sells 66% of its oil to Europe . But worse for the US , China
and India
have already stated they are very interested
in
the new Iranian Oil
Bourse.
If there is a tactical-nuclear strike on - deja-vu - `weapons of
mass
destruction' in Iran, who would bet against a certain Oil
Exchange and more, being bombed
too?
And worse for Bush. It makes sense for Europe , China , India
and
Japan-- as well as all the other countries
mentioned above -- to buy and sell oil in Euro's. They will
certainly have to stock-up on euros now, and they
will sell dollars to do so. The euro is far more stable
than the debt-ridden dollar.
The IMF has recently highlighted US economic difficulties
and the trade deficit strangling the US-- there is no way
out.
The problem for so many countries now is how to get rid of
their
vaults full of dollars, before it crashes? And the US has
bullied so many countries for so many decades around the
world, that many will see a chance to kick and bully
back. The US cannot accept even 5% of the world's dollars --
it would crash the US economy dragging much of
the world with it, especially Britain
.
To survive, as the Scottish Socialist Voice article stated, 'the
US,
needs to generate a trade surplus to get out of this one.
Problem is it can't.' This is spot on. To do that they
must force US workers into near slavery, to
get paid less than Chinese or Indian workers. We all
know that this will
nothappen.
What will happen in the US ? Chaos for sure. Maybe a workers
revolution, but looking at the situation as it is
now, it is more likely to be a re-run of Germany
post-1929, and some form
of extreme-right mass movement will
emerge.
Does Europe and China/Asia have the economic independence and
strength to stop the whole world's economies collapsing
with the US? Their vaults are full to the brim with
dollars.
The US has to find a way to pay for its
dollar-imperialist
exploitation of the world since 1945. Somehow, eventually, it
has to account for every dollar in every vault in the
world.
Bombing Iran could backfire tremendously. It would bring Iran openl
into the war in Iraq , behind the Shiite majority. The US
cannot cope even now with the much smaller Iraqi insurgency.
Perhaps the US will feed into the Sunni v Shiite
conflict and turn it into a wider
Middle-East civil-war.
However, this is so dangerous for global
oil supplies. Further, they know that this would be temporary,
as some country
somewhere else, will establish a euro-oil-exchange,
perhaps in Brussels
.
There is one `solution' -- scrap the dollar and print a whole
new
currency for the US . This will destroy 66% of the rest
of the world's savings/reserves in one swoop. Imagine the
implications? Such are the desperate things now swimming
around heads in the White House, Wall Street and
Pentagon.
Another is to do as Germany did, just before invading Poland
in 1938.
The Nazis filmed a mock Polish Army attack on Germany ,
to win hearts and minds at home. But again, this is a finger in the
dam. So, how is the US going to escape this time? The
only global arena of total superiority left is military. Who knows
what horrors lie ahead.
A new world war is one tool by which the US could
discipline its `allies' into keeping the dollar in their
vaults.
The task of socialists today is to explain to as may as
possible,
especially our class, that the coming crisis belongs purely to
capitalism and (dollar) imperialism. Not people of
other cultures, not Islam, not the axis of
evil
or their so-called WMDs. Their system alone is to
blame.
The new Iranian Oil Bourse, the IOB, is situated in a new
building on the free-trade-zone island of Kish, in
the Persian Gulf. It's computers and software are all
set to go. The IOB
was supposed to be up and running last
March,
but many pressures forced a postponement. Where the pressure came
from is obvious.
It was internationally registered on 5th May and
supposed to open mid-May, but its opening was put off,
some saying the oil-mafia was involved,
along
with much international pressure. Just google `pertroeuro', and
the
storylies before
you.
From now on, anyone in the know will wake up every morning and,
even before coffee, will check out the latest exchange rate
between the euro and
dollar.