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The Iranian government has finally developed the ultimate “nuclear” weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar than Saddam’s, because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether. If so, then it is likely that almost everyone will eagerly adopt this euro oil system.

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What happens if, for example, China backs the Euro and India decides to do what it has done since 1947 and plays down the middle. It is not the oil supply that is the problem. It is whether the Dollar will remain as the dominant factor in international trade.

As it stands the US gets to decide how much money is in circulation internationally and that ultimately is what keeps the value of the Dollar where it is. If the Euro becomes a real player then the Dollar is no longer controlled by US policy but by international markets, just like the Canadian dollar.

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So anybody who threatens to put large, CHEAP oil reserves on the market and who will take currency other than the US Dollar is materially threatening the US, because they could trigger runaway inflation and the eventual devaluing of the USD. Imagine if your house was suddenly worth $20,000 instead of $200,000, or if a loaf of bread cost $10.....

And Iraq has oil reserves estimated to be equal in size to Saudi Arabia, has crushing debts (mostly related to the Iraq/Iran war of 1980-1988) and no signifigant exports save oil and dates. A Saddamn willing to sell oil in Euros at prices that undercut OPEC literally threatens the ecomomy of the USA.

*click* And now the war on Iraq makes PERFECT sense.

And now we effectively have Iran saying/doing the same thing, and now all of a sudden Iran is the next great Satan.

And what is the background of the Bush family (and most of the people in power in the US right now?) Oil.

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note just how different the US of today is from the US of even 30 years ago. The amount of domestic manufacturing has gone way, way, way down.

Without demand for hard goods to back their currency, I think the US Dollar is becoming heavily overextended, and something has got to give somewhere, eventually.

Over the last few years, the value of the US Dollar has fallen from almost 1.5 to 1.1 versus the Canadian Dollar. Even more interesting is to compare the Euro against the USD. When it was first created, the Euro was intended to have a value of 1E == 1 USD. For the longest time, 1E was equal to about .88 USD. Today it is 1.22 USD, and it has been 1.20 - 1.25 USD for a little while. Put another way, the Euro is to the USD as the USD is to the Canadian dollar (although that isn't all that true anymore either, as the $ CAN is so strong - 1.15 CAD today!)

. . the stength of the Euro is actually indicative of weakness in the US economy - HUGE debts, and a shrinking manufacturing base, plus little exports in raw materials. If the whole "backed by oil" thing really is real, then the US could be in a lot of trouble.

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It's the massive structural imbalance of the global forex market that makes the possibility of Iran pricing its oil in euros so scary. The dollar is propped up by asian central banks, which effectively finance the massive US fiscal deficit. A move to petro-euros could easily set off an avalanche of dollar-selling -- or more properly, a correction. Not something i would look forward to, but at least in the long run we would wind up with more healthy forex markets, and be rid of a number of really dorky trade distortions (such as low domestic consumption in rich asian economies). Even the US would benefit from a (forced) return to fiscal sanity. All this will have to happen eventually, but the Iranians could probably force the situation if they are dumb (or desperate) enough.

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Has this been discussed on Babble? Did I miss it?

[ 12 March 2006: Message edited by: Wilf Day ]

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Originally posted by Wilf Day:
*click* And now the war on Iraq makes PERFECT sense.

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Wow, couldn't have said it better..!

[ 12 March 2006: Message edited by: Clog-boy ]

Or is there something I'm overlooking which wouldn't allow Chavez to hop on the bandwagon?

[ 12 March 2006: Message edited by: Clog-boy ]

There is this from Global Research, dated March 10 by F. William Engdahl.

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A number of writings have recently appeared with the thesis that the announced plans of the Teheran government to institute a Teheran Oil Bourse, perhaps as early as this month, is the real hidden reason behind the evident march to war on Iran from the Anglo-American powers. The thesis is in our opinion mistaken  for many reasons, not the least, that war on Iran has been in planning since the 1990’s, as an integral part of the US Greater Middle East strategy.

More significantly, the Oil Bourse argument is a Red Herring that diverts attention from the real geopolitical grounds behind the march towards war which have been detailed on this website, including  my piece, ‘Calculating the Risk of War in Iran’ which was posted on GlobalResearch.ca on January 29, 2006

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Well, it turns out that the net-fabled Iranian Oil Bourse won't open in March 2006, or possibly any time soon.

From The Globe & Mail (14 March 2006):

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As the nuclear standoff pitting Iran against the West continues, some conspiracy theorists are more focused on another plan that the Middle Eastern nation is pursuing.

But they are jumping the gun if they still figure Iran is within days of launching a new international oil exchange that would sell its own and other Middle Eastern oil producers' black gold in euros rather than U.S. dollars -- and which, the theory goes, could ultimately torpedo the greenback and the U.S. economy.

Despite repeated reports over the past 18 months or so that the planned bourse would finally open for business on March 20, 2006 -- and go head to head with the New York Mercantile Exchange and the ICE Futures Exchange in London -- the start date has been postponed by at least several months and maybe more than a year.

"In the middle of 2006, we are able to start the bourse," Mohammad Asemipur, special adviser on the project to Iran's Oil Minister, said when reached in Tehran. The plan is to trade petrochemical products first, with a crude oil contract coming last, a rollout that likely will take three years, he said.

"Oh, crikey, it's at a much earlier stage than people would think," said British consultant Chris Cook, who claims credit for coming up with the idea for the exchange in the first place and is a member of the consortium headed by the Tehran Stock Exchange that is charged with bringing the project to life.

"You can rest assured, there will not be a crude oil contract, Gulf-based, in my opinion, within a year -- and that would be really pushing it," Mr. Cook, a former director of ICE's predecessor, the International Petroleum Exchange, said when reached in Scotland.

The electronic exchange is to be located on Kish Island in the Persian Gulf, an Iranian duty- and tax-free zone.

There has been far less talk about the planned bourse in the mainstream media than on the Internet, particularly on websites aimed at gold bugs and other economic conspiracy theorists.

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I can't remember the details exactly, but I think they were saying that what Saddam Hussein did that REALLY pissed off the Americans was to start to sell oil for euros instead of dollars.

If I'm not mistaken, Chavez was making noises about doing the same thing, was he not?

I forget the simple explanation for how that hurts the US. Something to do with the US being in massive debt, and the only way they can pay for their oil and everything else is by having everyone else trade in US dollars. I can't wrap my mind around it right now. I understood it when I heard it, but it's been a while.

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HOW DOES THE US GET ITS DOLLAR ADVANTAGE?
Imagine this: you are deep in debt but every day you write cheques for millions of dollars you don't have — another luxury car, a holiday home at the beach, the world trip of a lifetime. Your cheques should be worthless but they keep buying stuff because those cheques you write never reach the bank! You have an agreement with the owners of one thing everyone wants, call it petrol/gas, that they will accept only your cheques as payment. This means everyone must hoard your cheques so they can buy petrol/gas. Since they have to keep a stock of your cheques, they use them to buy other stuff too. You write a cheque to buy a TV, the TV shop owner swaps your cheque for petrol/gas, that seller buys some vegetables at the fruit shop, the fruiterer passes it on to buy bread, the baker buys some flour with it, and on it goes, round and round — but never back to the bank.

You have a debt on your books, but so long as your cheque never reaches the bank, you don't have to pay. In effect, you have received your TV free. This is the position the USA has enjoyed for 30 years — it has been getting a free world trade ride for all that time. It has been receiving a huge subsidy from everyone else in the world. As it debt has been growing, it has printed more money (written more cheques) to keep trading. No wonder it is an economic powerhouse!

Then one day, one petrol seller says he is going to accept another person's cheques, a couple of others think that might be a good idea. If this spreads, people are going to stop hoarding your cheques and they will come flying home to the bank. Since you don't have enough in the bank to cover all the cheques, very nasty stuff is going to hit the fan!

But you are big, tough and very aggressive. You don't scare the other guy who can write cheques, he's pretty big too, but given a 'legitimate' excuse, you can beat the tripes out of the lone gas seller and scare him and his mates into submission.

And that, in a nutshell, is what the USA is doing right now with Iraq.

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[ 20 March 2006: Message edited by: Michelle ]