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Iran's new bourse may threaten the dollar
By Linda S. Heard
01/25/06 "ICH" -- -- In 2000, Saddam Hussein announced that
his country would begin pricing its oil in euros. Less than
three years later, Iraq was invaded under the pretext it had an
ongoing nuclear weapons programme and an arsenal of chemical and
biological materials.
In March 2006, Iran is scheduled to open its own oil bourse that
will trade in euros. But even before it can open its doors, Iran
is being accused of harbouring a clandestine nuclear weapons
programme and is being threatened with sanctions or worse.
Is the current US focus on Iran's nuclear facilities a genuine
concern or is this another pretext to stave off a potential
threat to the fiat dollar?
It should firstly be pointed out that Iran is not guilty of
reneging on its obligations as a signatory to the Nuclear
Non-Proliferation Treaty (NPT). Under the terms of that treaty
Iran has an "inalienable right" to "develop research, production
and use of nuclear energy for peaceful purposes without
discrimination".
Iran's detractors maintain the Iranian government has been
working on a covert weapons programme. They say Iran
deliberately hid the existence of its secret nuclear facility at
Natanz, 100 miles north of Isfahan but, strictly speaking, Iran
was only obliged to open the plant to IAEA inspections 180 days
prior to the introduction of uranium. This, Iran said, it
intended to do and the IAEA is unable to prove otherwise.
It should also be stressed that Iran's moratorium on uranium
enrichment negotiated with Britain, France and Germany, was
voluntary. It was designed to allay suspicions that Iran
intended developing nuclear weapons so that talks could proceed.
When those talks broke down, Iran broke IAEA seals and continued
with small-scale uranium enrichment, which it has the
"inalienable right" to do.
So given that Iran has not behaved illegally, what is happening
here? Does the West have the right to prevent a nation from
pursuing nuclear technology indefinitely just because they
happen not to like its government? In this case, the NPT is no
longer worth the paper on which it's written.
Israel, India and Pakistan are nuclear powers who have not
ratified the NPT and are, therefore, not subject to IAEA
inspections. More so, they are not in any danger of being hauled
before the UN Security Council or bombed.
On the contrary, Israel's nuclear status has been sanctified to
the extent it is considered heresy to challenge it within the
UN, while the US president has expressed his intention to work
with India to "achieve full civil nuclear energy cooperation", a
statement that contravenes the NPT.
Iran is, therefore, the victim of a US government value
judgment. It is the US, cheered on by Israel, which has been
pressuring Europe and the IAEA to put the Iranian file before
the Security Council. On the other hand, Russia and China,
beneficiaries of oil, gas and trade agreements with Iran, are
working to avoid a repeat performance of the Iraq debacle.
Anti-Israel Rhetoric
While it's easy to understand Israel's nervousness concerning a
possible Iranian bomb, especially after President Mahmoud
Ahmadinejad's inflammatory anti-Israel rhetoric, the US agenda
vis-à-vis Iran is less transparent.
On the surface, the US has much to lose by backing Iran into a
corner when, as most experts admit, an Iranian bomb if that is
indeed what is being pursued is more than four years off. Why
the urgency?
If the US forces Iran down the Security Council route, it is not
only likely to pull out from the NPT but may also put a plug on
its oil, thrusting international markets into turmoil and
forcing prices above the $100 per barrel mark. The Iranian
government has already shown its intention to retaliate by
shifting its assets out of British and European banks.
Iranian President Ahmadinejad has said he isn't interested in
confrontation and wants to resume talks with the Europeans. The
US Secretary of State Condoleezza Rice has rejected this
request. America is playing a dangerous game. It is choosing
aggression over dialogue, the isolation of Iran over its
inclusion.
If a military option is employed, this would likely cripple the
entire region. Iraq is particularly vulnerable since Shiite
cleric Muqtada Al Sadr has already said his militia would defend
Iran if Tehran was attacked. Members of the Iran-friendly Da'wa
and Sciri Parties might be similarly disposed. Syria and
Lebanon's Hezbollah are also expected to leap to Tehran's
defence.
Bearing these pitfalls in mind, why is the US being so single
minded?
A growing number of experts believe Iran's new oil bourse is
more of a threat to US interests than nuclear missiles.
Krassimir Petrov, who teaches international finance in
Bulgaria's American University, warns "should the Iranian Oil
Bourse gain momentum, it will be eagerly embraced by major
economic powers and will precipitate the demise of the dollar."
Editor and analyst Ryan McGreal points out that America's
greatest export is currently the dollar and when "the balance of
reserve holdings starts to shift from dollars to euros, that's
very bad news for America's system of dollar hegemony."
William R. Clark, author of
Petrodollar Warfare: Oil, Iraq and the Future of the Dollar
writes, "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 US debt
levels and the stated neoconservative project of US global
domination, Tehran's objective constitutes an obvious
encroachment on the dollar's supremacy in the crucial
international oil market."
Linda S. Heard is a British specialist writer on Middle East
affairs. She welcomes feedback and can be contacted by email at
heardonthegrapevines@yahoo.co.uk.
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