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Will Iran's 'petroeuro' threat lead to war?
By Jerome R. Corsi
02/05/06 "WND"
-- -- Beginning in 2003, Iran began demanding oil
payment in euros, not dollars, although the oil itself was still
priced in U.S. currency. Now, Iran is seriously considering
establishing an Iranian Oil Bourse, with the goal of competing
with the New York Mercantile Exchange, NYMEX, and London's
International Petroleum Exchange, IPE.
Right now, the NYMEX and IPE use three oil "markers" to
establish price – West Texas Intermediate crude, Norway Brent
crude and the UAE Dubai crude. With the establishment of an
Iranian Oil Bourse, Tehran wants to create a fourth oil marker,
this one priced in the euro.
In 2000, as Saddam Hussein continued to sell the United Nations
on what became the "oil for food" scandal, Iraq received U.N.
permission to sell Iraqi oil for euros, not dollars. Saddam even
received permission from the U.N. to convert the $10 billion
oil-for-food reserve fund from dollars to euros.
Many administration critics argue today that the real reason for
invading Iraq in 2003 was not to remove WMD from Iraq or to
establish freedom but to preserve the dollar dominance of the
world's oil market. These same critics argue today that the real
reason for the ramp-up of concern over Iran has nothing to do
with Iran's secret nuclear weapons program or with President
Ahmadinejad's threats to destroy Israel but everything to do
with oil.
If the Iranians persist in creating a market mechanism to settle
world oil transactions in the euro, the United States will
attack just to preserve the oil market for the dollar.
Today, about 70 percent of the world's international foreign
currency reserves are held in dollars. If the petroeuro begins
to challenge the petrodollar, this percentage could diminish
drastically.
The United States depends on the dollar foreign-currency
reserves in order to sell the Treasury debt that sustains budget
deficits. What if foreign-exchange portfolios from oil sales
fell to 60 percent being held in dollars – would that cause a
crisis in the U.S. economy? Or would it take 55 percent? Most
Americans are completely unaware of this threat Iran represents
to the U.S. economy.
The Iranians, however, are fully aware of what they are
threatening, and so are top economic experts within the
administration.
The Islamic world also has realized that America is at risk
because we no longer have a gold-backed currency. For years,
former Malaysian Prime Minister Mahathir Mohamad has championed
a move for the Muslim nations of the world to establish the gold
dinar as the standard currency for settling international oil
transactions. In November 2002, the West Malaysian Royal Mint
reissued the gold dinar that was in common use in the Muslim
world during the Ottoman Empire.
The idea would be to challenge the dollar by arguing that a
fixed-value currency backed in gold is more resistant to
devaluation than a floating dollar such as the U.S. has had
since the administration of Richard Nixon.
In writing "Black Gold Stranglehold: The Myth of Scarcity and
the Politics of Oil," Craig Smith and I argued that the United
States should seriously consider establishing a gold-backed
international-trade dollar to preserve stability and value in
the international oil market. Clearly, any threat to petrodollar
holdings could undermine social programs in the U.S., including
Medicare and key welfare programs such as Temporary Assistance
for Needy Families.
How close is Iran to opening the Iranian Oil Bourse? The Iranian
Oil Bourse is scheduled to be opened in March. Curiously, that
is the same month Israel has quietly set as a deadline for a
diplomatic resolution of the Iranian nuclear crisis.
Last year, President Bush was ready to concede to his liberal
Democratic Party critics, allowing the EU-3 and the IAEA to lead
the negotiations with Iran. Our guess is that if Iran does open
an oil bourse as planned in March, Bush will take the gloves
off.
The Bush administration might play with a nuclear Iran,
comfortable with intelligence estimates that Iran needs much
more time to produce a bomb. Maybe Iran should look more closely
at the lesson of Saddam Hussein. We didn't find the WMDs our
faulty intelligence claimed were in Iraq, but Hussein was
trading in pertoeuros, with the full blessing of the U.N.
If Iran does open an oil bourse next month, we should expect the
warplanes will soon thereafter begin to fly.
Jerome R. Corsi received a Ph.D. from Harvard University in
political science in 1972 and has written many books and
articles, including co-authoring with John O'Neill the No. 1 New
York Times best-seller, "Unfit for Command: Swift Boat Veterans
Speak Out Against John Kerry." Dr. Corsi's most recent books
include "Black Gold Stranglehold: The Myth of Scarcity and the
Politics of Oil," which he co-authored with WND columnist Craig.
R. Smith, and "Atomic Iran: How the Terrorist Regime Bought the
Bomb and American Politicians."
© 2006 WorldNetDaily.com
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