THE PETRO-DOLLAR AND THE EURO
MONEY IS THE ROOT OF WAR

By: SARTRE

War is always about achieving a political end. Even holy wars seek 
to  impose a secular control over the vanquished. At the root of every 
political conflict, lies the MONEY component. On the scale of greed or 
fear, international discords can slide up or down. Depending on the 
circumstances or demands, governments rally domestic populations to 
accept their foreign interventionist goals. Claims of altruistic liberation 
are fictitious, when the rhetoric is stripped away and the real substance 
is exposed. Notwithstanding, variances of emphasis; the motive of 
money underpins the movements of all military confrontations.  

The case that the conquest of Iraq is about appropriating control over 
oil reserves is well known. The argument that removing Saddam Hussein 
for a friendly regime change will enhance the adherence of global 
community policies, secure and annex a "greater Israel" and project 
the power of the empire into the region, has been circulated widely. 
The excuses of a "War on Terrorism", elimination of WMD, combating 
radical Islamics, fulfilling prophecy and personal grudges between 
feuding criminal families and former business partners, have been 
known to all. But the one aspect that seems to allude the scrutiny of 
most observers is that of the precarious nature of the global economy, 
which teeters on the fragile requirement that the US Dollar must remain 
as the world reserve currency.  

OPEC always priced oil in US Dollars. In the perceptive essay, The 
Real Reasons for the Upcoming War With Iraq by W Clark, the thesis 
that a shift using the EURO as the settlement currency, drives the 
Bush/Cheney administration hydrocarbons geo-strategy.  

"The Federal Reserve's greatest nightmare is that OPEC will switch its 
international transactions from a dollar standard to a euro standard. 
Iraq actually made this switch in Nov. 2000 (when the euro was worth 
around 82 cents), and has actually made off like a bandit considering 
the dollar's steady depreciation against the euro. (Note: the dollar 
declined 17% against the euro in 2002.)  

"The real reason the Bush administration wants a puppet government 
in Iraq -- or more importantly, the reason why the corporate-military-
industrial network conglomerate wants a puppet government in Iraq -- 
is so that it will revert back to a dollar standard and stay that way." 
(While also hoping to veto any wider OPEC momentum towards the euro, 
especially from Iran -- the 2nd largest OPEC producer who is actively 
discussing a switch to euros for its oil exports)."  

The effect of an OPEC switch to the euro would be that oil-consuming 
nations would have to flush dollars out of their (central bank) reserve 
funds and replace these with euros. The dollar would crash anywhere 
from 20-40% in value and the consequences would be those one could 
expect from any currency collapse and massive inflation (think Argentina 
currency crisis, for example). You'd have foreign funds stream out of 
the U.S. stock markets and dollar denominated assets, there'd surely 
be a run on the banks much like the 1930s, the current account 
deficit would become unserviceable, the budget deficit would go into 
default, and so on. Your basic 3rd world economic crisis scenario.  

A U.K. article by Hazel Henderson, is cited that outlines the likely 
consequences of the displacement of the US Dollar (translate: federal 
reserve counterfeit species) as the reserve currency.  

1. US global over-reach in the `war on terrorism' already leading to 
deficits as far as the eye can see -- combined with historically-high US 
trade deficits -- lead to a further run on the dollar. This and the stock 
market doldrums make the US less attractive to the world's capital.  

2. More developing countries follow the lead of Venezuela and China in 
diversifying their currency reserves away from dollars and balanced with 
euros. Such a shift in dollar-euro holdings in Latin America and Asia 
could keep the dollar and euro close to parity.  

3. OPEC could act on some of its internal discussions and decide (after 
concerted buying of euros in the open market) to announce at a future 
meeting in Vienna that OPEC's oil will be re-denominated in euros, or 
even a new oil-backed currency of their own. A US attack on Iraq sends 
oil to 40 (euros) per barrel.  

4. The Bush Administration's efforts to control the domestic political 
agenda backfires. Damage over the intelligence failures prior to 9/ 11 
and warnings of imminent new terrorist attacks precipitate a further 
stock market slide.  

5. All efforts by Democrats and the 57% of the US public to shift energy 
policy toward renewables, efficiency, standards, higher gas taxes, etc. 
are blocked by the Bush Administration and its fossil fuel industry 
supporters. Thus, the USA remains vulnerable to energy supply and 
price shocks.  

6. The EU recognizes its own economic and political power as the euro 
rises further and becomes the world's other reserve currency. The G-8 
pegs the euro and dollar into a trading band -- removing these two 
powerful currencies from speculators trading screens (a "win-win" for 
everyone!). Tony Blair persuades Brits of this larger reason for the 
UK to join the euro.  

7. Developing countries lacking dollars or "hard" currencies follow 
Venezuela's lead and begin bartering their undervalued commodities 
directly with each other in computerized swaps and counter trade deals. 
President Chavez has inked 13 such country barter deals on its oil, 
e.g., with Cuba in exchange for Cuban health paramedics who are 
setting up clinics in rural Venezuelan villages.  

What is missing in this excellent analysis is that the nature of fractional 
reserve debt created money, requires ever growing liability and increasing 
deficits. There is a limit when higher taxes become unsustainable. However, 
the clock never stops on the interest payments needed to retire previous 
bond obligations and service ever higher levels of future obligations. 
And just wait when interest rates rise to reflect real market risks! 
Remember all those projections of imaginary surpluses? This is not a 
partisan issue between party factions. It is a systemic quandary, 
created by design.  

The box that the world economy has been placed into requires a 
repudiation of this sham cycle founded upon the viscous and unforgiving 
disposition of compound interest. The consequences for disciplining 
rogue countries who dare stray from the dictates of the IMF, World 
Bank and the WTO, are visible with each explosion of every JDAM 
bomb. Even in victory, the pyrrhic character of temporary relief, 
offers but a fleeting reprieve to acquire that villa in Tuscany.  

The Clark essay is significant and should not be ignored. Currency 
speculation and exchange rate conversions, carry with them such huge 
transactional volume. Entire economies rise or fall on pegging their 
relative value, against the surreal and contrived evaluations for the 
US Dollar. Oil paid in the EURO is more of a serious threat to the 
reign of the dollar than all those mythical WMD that Saddam will use. 
Nevertheless, don't be naive and conclude that it is in our own personal 
best interest to protect the reserve currency status of the dollar. 
Quite to the contrary, as more Western Hemisphere countries adopt 
the US Dollar, the adverse impact upon our own net worth, is magnified.  

The inevitable fall of the US Dollar is unavoidable, when the charade 
can no longer be cloaked with smoke and mirrors or tolerable foreign 
adventures. At that point the calls for a single world currency, 
administered through a solitary clearing house and autarchic central 
bank, will be offered as the answer for economic stability. Thus, the 
ultimate transfer and expropriation of individual wealth will be achieved. 
The world runs on money, not oil. Those who control it and require legal 
tender laws, rule the economic and political order. You will come to 
learn this lesson, no matter what currency you use . . .  


"Published originally at EtherZone.com : republication allowed with this 
notice and hyperlink intact."

Published in the April 4, 2003 issue of Ether Zone.
Copyright (c) 1997 - 2003 Ether Zone. 

                           -==-

Source: Ether Zone - http://etherzone.com/2003/sart040403.shtml

Cheers, Steve..

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