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[URL]https://worldnetdaily.com/news/article.asp?ARTICLE_ID=52977[/URL]

[B]Iran declaring 'economic warfare'[/B]
Posted: November 16, 2006
1:00 a.m. Eastern


© 2006 WorldNetDaily.com

Iran may have signed a virtual "death warrant" by openly declaring a governmental decision to move away from the dollar in the country's foreign-exchange transactions, says WND columnist Jerome Corsi.

"The Bush administration will see Iran's decision as economic warfare, a move calculated to weaken the dollar in retaliation for the U.S. seeking U.N. Security Council sanctions against Iran's continued uranium enrichment," Corsi told WND.

Speaking to reporters at an e-commerce conference in Tehran Tuesday, Iran's Minister of Economy and Finance Davood Danesh Jaafari presented the policy as a defensive move aimed at blocking Washington's ability to monitor and interfere with Iran's conduct of international business.

"Some U.S. banks have been disrupting our dollar transactions for a long time and Iran, in return, has been decreasing its dependence on the dollar," Jaafari explained.

The U.S. Treasury in September barred Iran's state-run Bank Saderat from having any links with U.S.-owned banks because of Iran's support of terrorism.

As a result of the increasing pressure from the Bush administration, Iranian banking authorities have complained European banks are increasingly reluctant to transact Iranian import and export sales in dollars and to extend open lines of credit for Iranians in dollars, fearing U.S. penalties. Iran also is concerned the U.S. government might soon be forced to devaluate the dollar.

Corsi previously has argued Saddam Hussein "signed his death warrant" by getting the U.N. to agree Iraq could hold foreign exchange currency in Euros resulting from "oil for food" transactions.

Iran's announcement this week will be seen by Washington as a follow-up to its intention to create an oil bourse pricing oil in Euros, Corsi believes.

"With our continuing budget and trade deficits, the Bush administration has to react strongly to any suggestion that world international markets might move away from dollar transactions or dollar holdings of foreign exchange currency," he said.

The risk also includes China, Corsi noted.

"With China now holding $1 trillion in their foreign exchange currency, the recent decision that China intends to diversify their holdings more into Euros threatens the ability of the U.S. Treasury to float our budget deficits by selling U.S. government debt into the foreign exchange currency holdings market," Corsi explained.

Corsi is concerned the Bush administration has been "de-industrializing the United States" by pursuing a free trade policy that allows China to replace U.S. manufacturers with what Corsi describes as "under-market slave labor or near slave labor."

"Now with Iran on the verge of announcing the capacity to produce highly enriched and possibly weapons-grade uranium," Corsi comments, "we are increasingly vulnerable to Iran spearheading an anti-American attack on the dollar."

Corsi points out China recently signed a multi-billion dollar deal "guaranteed to make Iran one of the major suppliers of oil and natural gas to China for decades to come."

"If China joins Iran in pressuring the dollar, we face dollar devaluation much faster that the Bush administration has allowed the U.S. public to know," Corsi said.

[URL]https://www.globalresearch.ca/articles/CLA410A.html[/URL]
[B]The Real Reasons Why Iran is the Next Target:[/B]
[B]The Emerging Euro-denominated International Oil Marker[/B]
by William Clark

[URL="https://www.globalresearch.ca/"]www.globalresearch.ca[/URL]      27 October 2004

The URL of this article is: [URL]https://globalresearch.ca/articles/CLA410A.html[/URL]

 The Iranians are about to commit an "offense" far greater than Saddam Hussein's conversion to the euro of Iraqʼs oil exports in the fall of 2000. Numerous articles have revealed Pentagon planning for operations against Iran as early as 2005. While the publicly stated reasons will be over Iran's nuclear ambitions, there are unspoken macroeconomic drivers explaining the Real Reasons regarding the 2nd stage of petrodollar warfare - Iran's upcoming euro-based oil Bourse.



 In 2005-2006, The Tehran government has a developed a plan to begin competing with New York's NYMEX and London's IPE with respect to international oil trades - using a euro-denominated international oil-trading mechanism. This means that without some form of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project for U.S. global domination, Tehran's objective constitutes an obvious encroachment on U.S. dollar supremacy in the international oil market

 "Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes...known instruments for bringing the many under the domination of the few. . . No nation could preserve its freedom in the midst of continual warfare."

            - James Madison, Political Observations, 1795

 Madisonʼs words of wisdom should be carefully considered by the American people and world community. The rapidly deteriorating situation on the ground in Iraq portends an even direr situation for American soldiers and the People of the world community - should the Bush administration pursue their strategy regarding Iran. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iranʼs nuclear intentions, and likely include a proposed Iranian "petroeuro system" for oil trade. Similar to the Iraq war, upcoming operations against Iran relate to the macroeconomics of the `petrodollar recyclingʼ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.

 It is now obvious the invasion of Iraq had less to do with any threat from Saddamʼs long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining control over Iraqʼs hydrocarbon reserves and in doing so maintaining the U.S. dollar as the monopoly currency for the critical international oil market. Throughout 2004 statements by former administration insiders revealed that the Bush/Cheney administration entered into office with the intention of toppling Saddam Hussein. Indeed, the neoconservative strategy of installing a pro-U.S. government in Baghdad along with multiple U.S. military bases was partly designed to thwart further momentum within OPEC towards a "petroeuro." However, subsequent events show this strategy to be fundamentally flawed, with Iran moving forward towards a petroeuro system for international oil trades, while Russia discusses this option.

 Candidly stated, ʽOperation Iraqi Freedomʼ was a war designed to install a pro-U.S. puppet in Iraq, establish multiple U.S military bases before the onset of Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency. [1] In 2003 the global community witnessed a combination of petrodollar warfare and oil depletion warfare. The majority of the worldʼs governments – especially the E.U., Russia and China - were not amused – and neither are the U.S. soldiers who are currently stationed in Iraq.

 Indeed, the authorʼs original pre-war hypothesis was validated shortly after the war in a Financial Times article dated June 5th, 2003, which confirmed Iraqi oil sales returning to the international markets were once again denominated in US dollars, not euros. Not surprisingly, this detail was never mentioned in the five US major media conglomerates who appear to censor this type of information, but confirmation of this vital fact provides insight into one of the crucial - yet overlooked - rationales for 2003 the Iraq war.

 "The tender, for which bids are due by June 10, switches the transaction back to dollars -- the international currency of oil sales - despite the greenback's recent fall in value. Saddam Hussein in 2000 insisted Iraq's oil be sold for euros, a political move, but one that improved Iraq's recent earnings thanks to the rise in the value of the euro against the dollar." [2]

 Unfortunately, it has become clear that yet another manufactured war, or some type of ill-advised covert operation is inevitable under President George W. Bush, should he win the 2004 Presidential Election. Numerous news reports over the past several months have revealed that the neoconservatives are quietly - but actively - planning for the second petrodollar war, this time against Iran.

 "Deep in the Pentagon, admirals and generals are updating plans for possible U.S. military action in Syria and Iran. The Defense Department unit responsible for military planning for the two troublesome countries is "busier than ever," an administration official says. Some Bush advisers characterize the work as merely an effort to revise routine plans the Pentagon maintains for all contingencies in light of the Iraq war. More skittish bureaucrats say the updates are accompanied by a revived campaign by administration conservatives and neocons for more hard-line U.S. policies toward the countries"…"Even hard-liners acknowledge that given the U.S. military commitment in Iraq, a U.S. attack on either country would be an unlikely last resort; covert action of some kind is the favored route for Washington hard-liners who want regime change in Damascus and Tehran."

 "…administration hawks are pinning their hopes on regime change in Tehran - by covert means, preferably, but by force of arms if necessary. Papers on the idea have circulated inside the administration, mostly labeled "draft" or "working draft" to evade congressional subpoena powers and the Freedom of Information Act. Informed sources say the memos echo the administration's abortive Iraq strategy: oust the existing regime, swiftly install a pro-U.S. government in its place (extracting the new regime's promise to renounce any nuclear ambitions) and get out. This daredevil scheme horrifies U.S. military leaders, and there's no evidence that it has won any backers at the cabinet level." [3]

 To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ʽmarkerʼ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the spring of 2003, Iran has required payments in the euro currency for its European and Asian/ACU exports - although the oil pricing for trades are still denominated in the dollar. [4]

 Therefore, a potentially significant news development was reported in June 2004 announcing Iranʼs intentions to create of an Iranian oil Bourse. (The word "bourse" refers to a stock exchange for securities trading, and is derived from the French stock exchange in Paris, the Federation Internationale des Bourses de Valeurs.) This announcement portended competition would arise between the Iranian oil bourse and Londonʼs International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). It should be noted that both the IPE and NYMEX are owned by U.S. corporations.

 The macroeconomic implications of a successful Iranian Bourse are noteworthy. Considering that Iran has switched to the euro for its oil payments from E.U. and ACU customers, it would be logical to assume the proposed Iranian Bourse will usher in a fourth crude oil marker – denominated in the euro currency. Such a development would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounts for 45% of imports into the Middle East (2002 data).

 Acknowledging that many of the oil contracts for Iran and Saudi Arabia are linked to the United Kingdomʼs Brent crude marker, the Iranian bourse could create a significant shift in the flow of international commerce into the Middle East. If Iranʼs bourse becomes a successful alternative for oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX), a factor not overlooked in the following article:

 "Iran is to launch an oil trading market for Middle East and OPEC producers that could threaten the supremacy of London's International Petroleum Exchange."

 "…He [Mr. Asemipour] played down the dangers that the new exchange could eventually pose for the IPE or Nymex, saying he hoped they might be able to cooperate in some way."

 "…Some industry experts have warned the Iranians and other OPEC producers that western exchanges are controlled by big financial and oil corporations, which have a vested interest in market volatility.

 The IPE, bought in 2001 by a consortium that includes BP, Goldman Sachs and Morgan Stanley, was unwilling to discuss the Iranian move yesterday. "We would not have any comment to make on it at this stage," said an IPE spokeswoman. "[5]

 It is unclear at the time of writing, if this project will be successful, or could it prompt overt or covert U.S. interventions - thereby signaling the second phase of petrodollar warfare in the Middle East. News articles in June 2004 revealed the discredited neoconservative sycophant Ahmed Chalabi may have revealed his knowledge to Iran regarding U.S. military planning for operations against that nation.

 "The reason for the US breakup with Ahmed Chalabi, the Shiite Iraqi politician, could be his leak of Pentagon plans to invade Iran before Christmas 2005, but the American government has not changed its objective, and the attack could happen earlier if president George W. Bush is re-elected, or later if John Kerry is sworn in."

 "….Diplomats said Chalabi was alerted to the Pentagon plans and in the process of trying to learn more to tell the Iranians, he invited suspicions of US officials, who subsequently got the Iraqi police to raid the compound of his Iraqi National Congress on 20 May 2004, leading to a final break up of relations."

 "While the US is uncertain how much of the attack plans were leaked to Iran, it could change some of the invasion tactics, but the broad parameters would be kept intact." [6]

 Regardless of the potential U.S. response to an Iranian petroeuro system, the emergence of an oil exchange market in the Middle East is not entirely surprising given the domestic peaking and decline of oil exports in the U.S. and U.K, in comparison to the remaining oil reserves in Iran, Iraq and Saudi Arabia. According to Mohammad Javad Asemipour, an advisor to Iranʼs oil ministry and the individual responsible for this project, this new oil exchange is scheduled to begin oil trading in March 2005.

 "Asemipour said the platform should be trading crude, natural gas and petrochemicals by the start of the new Iranian year, which falls on March 21, 2005.

 He said other members of the Organization of Petroleum Exporting Countries - Iran is the producer group's second-largest producer behind Saudi Arabia - as well as oil producers from the Caspian region would eventually participate in the exchange." [7]

 (Note: the most recent Iranian news report from October 5, 2004 stated: "Iran's oil bourse will start trading by early 2006" which suggests a delay from the original March 21, 2005 target date). [8] Additionally, according to the following report, Saudi investors may be interested in participating in the Iranian oil exchange market, further illustrating why petrodollar hegemony is becoming unsustainable.

 "Chris Cook, who previously worked for the IPE and now offers consultancy services to markets through Partnerships Consulting LLP in London, commented: "Post-9/11, there has also been an interest in the project from the Saudis, who weren't interested in participating before."

 "Others familiar with Iran's economy said since 9/11, Saudi Arabian investors are opting to invest in Iran rather than traditional western markets as the kingdom's relations with the U.S. have weakened Iran's oil ministry has made no secret of its eagerness to attract much needed foreign investment in its energy sector and broaden its choice of oil buyers."

 "…Along with several other members of OPEC, Iranian oil officials believe crude trading on the New York Mercantile Exchange and the IPE is controlled by the oil majors and big financial companies, who benefit from market volatility."[9]

 One of the Federal Reserveʼs nightmares may begin to unfold in 2005 or 2006, when it appears international buyers will have a choice of buying a barrel of oil for $50 dollars on the NYMEX and IPE - or purchase a barrel of oil for ?37 - ?40 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar - and assumes that some sort of "intervention" is not undertaken against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades

 During an important speech in April 2002, Mr. Javad Yarjani, an OPEC executive, described three pivotal events that would facilitate an OPEC transition to euros. [10] He stated this would be based on (1) if and when Norway's Brent crude is re-dominated in euros, (2) if and when the U.K. adopts the euro, and (3) whether or not the euro gains parity valuation relative to the dollar, and the EUʼs proposed expansion plans were successful. (Note: Both of the later two criteria have transpired: the euroʼs valuation has been above the dollar since late 2002, and the euro-based E.U. enlarged in May 2004 from 12 to 22 countries). In the meantime, the United Kingdom remains uncomfortably juxtaposed between the financial interests of the U.S. banking nexus (New York/Washington) and the E.U. financial centers (Paris/Frankfurt).

 The implementation of the proposed Iranian oil Bourse (exchange) in 2005/2006 – if successful in utilizing the euro as its oil transaction currency standard – essentially negates the necessity of the previous two criteria as described by Mr. Yarjani regarding the solidification of a "petroeuro" system for international oil trades. [10] It should also be noted that during 2003-2004 Russia and China have both increased their central bank holdings of the euro currency, which appears to be a coordinated move to facilitate the anticipated ascendance of the euro as a second World Reserve currency. [11] [12] In the meantime, the United Kingdom is uncomfortable juxtaposed between the financial interests of the U.S. (New York/Washington) banking nexus and that of the E.U. financial center (Paris/Frankfurt).

 The immediate question for Americans? Will the neoconservatives attempt to intervene covertly and/or overtly in Iran during 2005 in an effort to prevent the formation of a euro-denominated crude oil pricing mechanism? Commentators in India are quite correct in their assessment that a U.S. intervention in Iran is likely to prove disastrous for the United States, making matters much worse regarding international terrorism, not to the mention potential effects on the U.S. economy.

 "The giving up on the terror war while Iran invasion plans are drawn up makes no sense, especially since the previous invasion and current occupation of Iraq has further fuelled Al-Qaeda terrorism after 9/11."

 "…It is obvious that sucked into Iraq, the US has limited military manpower left to combat the Al-Qaeda elsewhere in the Middle East and South Central Asia,"…"and NATO is so seriously cross with America that it hesitates to provides troops in Iraq, and no other country is willing to bail out America outside its immediate allies like Britain, Italy, Australia and Japan."

 "….If it [U.S.] intervenes again, it is absolutely certain it will not be able to improve the situation – Iraq shows America has not the depth or patience to create a new civil society – and will only make matters worse."

 "There is a better way, as the constructive engagement of Libyaʼs Colonel Muammar Gaddafi has shown…."Iran is obviously a more complex case than Libya, because power resides in the clergy, and Iran has not been entirely transparent about its nuclear programme, but the sensible way is to take it gently, and nudge it to moderation. Regime change will only worsen global Islamist terror, and in any case, Saudi Arabia is a fitter case for democratic intervention, if at all." [13]

 It is abundantly clear that a 2nd Bush term will bring a confrontation and possible war with Iran during 2005. Colin Powell as the Secretary of the State, has moderated neoconservative military designs regarding Iran, but Powell has stated that he will be leaving at the end of Bushʼs first term. Of course if John Kerry wins in November, he might pursue a similar military strategy. However, it is my opinion that Kerry is more likely to pursue multilateral negotiations regarding the Iranian issues.

 Clearly, there are numerous risks regarding neoconservative strategy towards Iran. First, unlike Iraq, Iran has a robust military capability. Secondly, a repeat of any "Shock and Awe" tactics is not advisable given that Iran has installed sophisticated anti-ship missiles on the Island of Abu Musa, and therefore controls the critical Strait of Hormuz. [14] In the case of a U.S. attack, a shut down of the Strait of Hormuz – where all of the Persian Gulf bound oil tankers must pass – could easily trigger a market panic with oil prices skyrocketing to $100 per barrel or more. World oil production is now flat out, and a major interruption would escalate oil prices to a level that would set off a global Depression. Why are the neoconservatives willing to takes such risks? Simply stated - their goal is U.S. global domination.

 A successful Iranian bourse would solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar's hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations. Multilateral compromise with the EU and OPEC regarding oil currency is certainly preferable to an ʽOperation Iranian Freedom,ʼ or perhaps an attempted CIA-sponsored repeat of the 1953 Iranian coup – operation "Ajax" part II. [15] Indeed, there are very good reasons for U.S. military leaders to be "horrified" at the thought of a second Bush term in which Cheney and the neoconservatives would be unrestrained in their tragic pursuit of U.S. global domination.

 "NEWSWEEK has learned that the CIA and DIA have war-gamed the likely consequences of a U.S. pre-emptive strike on Iran's nuclear facilities. No one liked the outcome. As an Air Force source tells it, "The war games were unsuccessful at preventing the conflict from escalating." [16]

 Despite the impressive power of the U.S. military and the ability of our intelligence agencies to facilitate "interventions," it would be perilous and possibly ruinous for the U.S to intervene in Iran given the dire situation in Iraq. The Monterey Institute of International Studies provided an extensive analysis of the possible consequences of a preemptive attack on Iranʼs nuclear facilities and warned of the following:

 "Considering the extensive financial and national policy investment Iran has committed to its nuclear projects, it is almost certain that an attack by Israel or the United States would result in immediate retaliation. A likely scenario includes an immediate Iranian missile counterattack on Israel and U.S. bases in the Gulf, followed by a very serious effort to destabilize Iraq and foment all-out confrontation between the United States and Iraq's Shi'i majority. Iran could also opt to destabilize Saudi Arabia and other Gulf states with a significant Shi'i population, and induce Lebanese Hizbullah to launch a series of rocket attacks on Northern Israel."

 "…An attack on Iranian nuclear facilities…could have various adverse effects on U.S. interests in the Middle East and the world. Most important, in the absence of evidence of an Iranian illegal nuclear program, an attack on Iran's nuclear facilities by the U.S. or Israel would be likely to strengthen Iran's international stature and reduce the threat of international sanctions against Iran. Such an event is more likely to embolden and expand Iran's nuclear aspirations and capabilities in the long term"…"one thing is for certain, it would not be just another Osirak. " [17]

    Synopsis

 Regardless of whatever choice the U.S. electorate makes in the upcoming Presidential Election a military expedition may still go ahead.

 This essay was written out of my own patriotic duty in an effort to inform Americans of the challenges that lie ahead. On November 25, 2004, the issues involving Iran's nuclear program will be addressed by the International Atomic Energy Agency (IAEA), and possibly referred to the U.N. Security Council if the results are unsatisfactory. Regardless of the IAEA findings, it appears increasingly likely the U.S. will use the specter of nuclear weapon proliferation as a pretext for an intervention, similar to the fears invoked in the previous WMD campaign regarding Iraq.

 Pentagon sources confirm the Bush administration could undertake a desperate military strategy to thwart Iranʼs nuclear ambitions while simultaneously attempting to prevent the Iranian oil Bourse from initiating a euro-based system for oil trades. The later would require forced "regime change" and the U.S. occupation of Iran. Obviously this would require a military draft. Objectively speaking, the post-war debacle in Iraq has clearly shown that such Imperial policies will be a catastrophic failure. Alternatively, perhaps a more enlightened U.S. administration could undertake multilateral negotiations with the EU and OPEC regarding a dual oil-currency system, in conjunction with global monetary reform. Either way, U.S. policy makers will soon face two difficult choices: monetary compromise or continued petrodollar warfare.

 "I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts."

            - Abraham Lincoln

 "Whenever the people are well-informed, they can be trusted with their own government. Whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights."

            - Thomas Jefferson



References:

[1] "Revisited - The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth," January 2003 (updated January 2004) [URL]https://www.ratical.org/ratville/CAH/RRiraqWar.html[/URL]

[2] Hoyos, Carol & Morrison, Kevin, "Iraq returns to the international oil market," Financial Times, June 5, 2003 [URL]https://www.thedossier.ukonline.co.uk/Web%20Pages/FINANCIAL%20TIMES_Iraq%20returns%20to%20international%20oil%20market.htm[/URL]

[3] "War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike," Newsweek, September 27 issue, 2004. [URL]https://www.msnbc.msn.com/id/6039135/site/newsweek/[/URL]

[4] Shivkumar, C., "Iran offers oil to Asian union on easier terms," The Hindu Business Line (June 16, 2003). [URL]https://www.thehindubusinessline.com/bline/2003/06/17/stories/2003061702380500.htm[/URL]

[5] Macalister, Terry, "Iran takes on west's control of oil trading," The [UK] Guardian, June 16, 2004 [URL]https://www.guardian.co.uk/business/story/0[/URL],3604,1239644,00.html

[6] "US to invade Iran before 2005 Christmas," News Insight: Public Affairs Magazine, June 9, 2004 [URL]https://www.newsinsight.net/nati2.asp?recno=2789[/URL]

[7] "Iran Eyes Deal on Oil Bourse; IPE Chairman Visits Tehran," Rigzone.com (July 8, 2004) [URL]https://www.rigzone.com/news/article.asp?a_id=14588[/URL]

[8] "Iran's oil bourse expects to start by early 2006," Reuters, October 5, 2004 [URL="https://www.iranoilgas.com/"]https://www.iranoilgas.com[/URL]

[9] "Iran Eyes Deal on Oil Bourse, IPE Chairman Visits Tehran," ibid.

[10] "The Choice of Currency for the Denomination of the Oil Bill," Speech given by Javad Yarjani, Head of OPEC's Petroleum Market Analysis Dept, on The International Role of the Euro (Invited by the Spanish Minister of Economic Affairs during Spain's Presidency of the EU) (April 14, 2002, Oviedo, Spain)
[URL]https://www.opec.org/NewsInfo/Speeches/sp2002/spAraqueSpainApr14.htm[/URL]

[11] Russia shifts to euro as foreign currency reserves soar," AFP, June 9, 2003
[URL]https://www.cdi.org/russia/johnson/7214-3.cfm[/URL]

[12] "China to diversify foreign exchange reserves," China Business Weekly, May 8, 2004 [URL]https://www.chinadaily.com.cn/english/doc/2004-05/08/content_328744.htm[/URL]

[13] "Terror & regime change: Any US invasion of Iran will have terrible consequences," News Insight: Public Affairs Magazine, June 11, 2004 [URL]https://www.indiareacts.com/archivedebates/nat2.asp?recno=908&ctg=World[/URL]

[14] Analysis of Abu Musa Island, [URL="https://www.globalsecurity.org/"]www.globalsecurity.org[/URL][URL]https://www.globalsecurity.org/wmd/world/iran/abu-musa.htm[/URL]

[15] J.W. Smith, "Destabilizing a Newly-Free Iran," The Institute for Economic Democracy, 2003 [URL]https://www.ied.info/books/why/control.html[/URL]

[16] "War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike," ibid.

[17] Salama, Sammy and Ruster, Karen,"A Preemptive Attack on Iran's Nuclear Facilities: Possible Consequences," Monterry Institute of International Studies, August 12, 2004 (updated September 9, 2004) [URL]https://cns.miis.edu/pubs/week/040812.htm[/URL]

[18] Philips, Peter, "Censored 2004," Project Censored, Seven Stories Press, (2003) [URL]https://www.projectcensored.org/[/URL]

Story #19: U.S. Dollar vs. the Euro: Another Reason for the Invasion of Iraq [URL]https://www.projectcensored.org/publications/2004/19.html[/URL]



William Clark is the author of an award-winning essay published online in early 2003 entitled: 'The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth.ʼ

[URL]https://www.ratical.org/ratville/CAH/RRiraqWar.html[/URL] , also published by Global Research at [URL]https://www.globalresearch.ca/articles/CLA302A.html[/URL] This essay received a 2003 ʽProject Censoredʼ award, and was published in the book, Censored 2004) [18] This pre-war essay hypothesized that Saddam sealed his fate when he announced in September 2000 that Iraq was no longer going to accept dollars for oil being sold under the UNʼs oil-for-food program, and switch to the euro as Iraqʼs oil export transaction currency.

Note: Below is a description of this authorʼs upcoming book: (Available spring 2005.)

Petrodollar Warfare
Oil, Iraq and the Future of the Dollar
William Clark

The invasion of Iraq may well be remembered as the first oil currency war. Far from being a response to 9-11 terrorism or Iraq's alleged weapons of mass destruction, Petrodollar Warfare argues that the invasion was precipitated by two converging phenomena: the imminent peak in global oil production, and the ascendance of the euro currency.

Energy analysts agree that world oil supplies are about to peak, after which there will be a steady decline in supplies of oil. Iraq, possessing the world's second largest oil reserves, was therefore already a target of U.S. geostrategic interests. Together with the fact that Iraq had switched its oil transaction currency to euros -- rather than U.S. dollars -- the Bush administration's unreported aim was to prevent further OPEC momentum in favor of the euro as an alternative oil transaction currency standard.

Meticulously researched, Petrodollar Warfare examines U.S. dollar hegemony and the unsustainable macroeconomics of 'petrodollar recycling,' pointing out that the issues underlying the Iraq war also apply to geopolitical tensions between the U.S. and other countries including the European Union (E.U.), Iran, Venezuela, and Russia. The author warns that without changing course, the American Experiment will end the way all empires end - with military over-extension and subsequent economic decline. He recommends the multilateral pursuit of both energy and monetary reforms within a United Nations framework to create a more balanced global energy and monetary system thereby reducing the possibility of future oil-depletion and oil currency-related warfare.

A sober call for an end to aggressive U.S. unilateralism, Petrodollar Warfare is a unique contribution to the debate about the future global political economy.

[URL]https://globalresearch.ca/articles/CHO303B.html[/URL]
[B]Europe versus the Anglo-American Alliance. New Political [/B][B]Alignments and the "Big Game".[/B]
What lies behind the diplomatic rift at the UN Security Council? 
The Anglo-American Military Axis
by Michel Chossudovsky

[URL="https://www.globalresearch.ca/"]www.globalresearch.ca[/URL]   10 March 2003

The URL of this article is: [URL]https://globalresearch.ca/articles/CHO303B.html[/URL]

    The second text is an excerpt from War and Globalisation, the Truth behind September 11 by Michel Chossudovsky 

    The first text is a brief update which examines the broader significance of the rift in the UN Security Council.
    The Rift in the UN Security Council

 The "disagreements" within the US Security Council pertaining to Iraq are casually presented by the media as a mere diplomatic rift.

 In fact we are dealing with something far more complex. The Bush Administration's war plans have nothing to do with "Saddam's weapons of mass destruction" or his alleged links to Osama bin Laden.

 The proposed invasion of Iraq is intended to exclude rival European, Russian and Chinese interests from the Middle-East and Central Asian oil fields. While in the Balkans, the US "shared the spoils" with Germany and France, in the context of military operations under NATO and UN auspices, the invasion of Iraq is intended to establish US hegemony, while weakening Franco-German and Russian influence in the region.

    The clash between Great Powers ("Old Europe" versus  and the Anglo-American military axis) broadly pertains to:

        1 Defense and the military-industrial complex,

        2. Control over Oil and Gas Reserves,

        3. Money and currency systems: clash between the Euro and the Dollar.

    1. Defense and the military-Industrial complex

 Beneath the gilded surface of international diplomacy, fundamental changes in the structure of military alliance have occurred. Since 1999, France and Germany have established military cooperation agreements with Russia.

 NATO is divided. While Britain and the US have joined hands through the so-called "Atlantic Bridge" in defense production, coupled with close cooperation in military and intelligence operations, significant divisions have developed between the US and several of its "European partners". The Anglo-American axis in weapons production is clashing with its powerful Franco-German rival, the European Aerospace and Defence Corporation (EADS). The Western defense industry is split down the middle with British Aerospace systems now firmly aligned with the big five US weapons producers against the competing Franco-German conglomerate EADS.

    2. Control over Oil and Gas Reserves

 The broader Middle East-Central Asian region encompasses more than 70% of the World's reserves of oil and natural gas. According to U.S. Central Command: "The purpose of U.S. engagement... is to protect U.S. vital interest in the region - uninterrupted, secure U.S./Allied access to Gulf oil." In other words, this is a war of conquest, which also targets rival oil conglomerates including those of Russia and France which have sizeable oil interests in Iraq and Iran.

 In turn, the Anglo-American oil giants (BP-Amoco, Chevron-Texaco, Exxon-Mobil, Shell) – supported by the Anglo-American military axis are clashing with Europe's oil giant Total-Fina-Elf and Italy's ENI, which have sizeable interests in Iraq, Iran, and Central Asia. Washington has in recent years attempted to break France's deal with Teheran on the grounds that it openly contravened the Iran-Libya Sanctions Act. What this suggests is that Europe's largest oil conglomerate dominated by French, Belgian and Italian oil interests – in association with their Iranian and Russian partners – are potentially on a collision course with the dominant Anglo-American oil consortia, which in turn are backed by the Anglo-American military axis: 

 "Iraq currently possesses 11% of the world's oil and ranks only second to Saudi Arabia in the size of its reserves (112 billion barrels). Exploitation costs are less than half those of deep sea drilling. Direct access to the Persian Gulf and the Indian Ocean ensures strategically secure oil supply routes. The Anglo-american oil giants (BP, Chevron-Texaco, Shell, Exxon) are all absent from Iran and Iraq, which have signed oil contracts and production sharing agreements with French, Russian and Chinese oil companies. Because of the UN sanctions on Iraq, the agreements signed by Baghdad are not ("officially") operational." (Eric Waddell, The Battle for Oil, Global Outlook, Issue. No. 3, Winter 2003).

 According to the Washington Post (15 September 2002): "A U.S.-led ouster of Iraqi President Saddam Hussein could open a bonanza for American oil companies long banished from Iraq, scuttling oil deals between Baghdad and Russia, France and other countries, and reshuffling world petroleum markets… A proposed $40 billion Iraqi-Russian economic agreement also reportedly includes opportunities for Russian companies to explore for oil in Iraq's western desert. The French company Total Fina Elf has negotiated for rights to develop the huge Majnoon field, near the Iranian border, which may contain up to 30 billion barrels of oil."

 The war is not only being carried out with a view to taking over Iraq's oil reserves, it is intended to cancel the contracts of rival Russian and European oil companies as well as exclude France, Russia and China from the region.

    3. Money and currency systems: clash between the Euro and the Dollar.

 What is at stake is the rivalry between two competing global currencies: the Euro and the U.S. dollar, The process of European monetary integration has encroached upon the hegemony of the US dollar.

        The process of dollarisation, which is ultimately an instrument of economic conquest is undermined by the Euro.

 Wall Street is clashing with competing Franco-German financial interests. The war in Iraq pertains not only to control over reserves of petroleum, the control over money creation and credit is an integral part of the process of economic conquest. .

    The Anglo-American Military Axis

 The 1999 war in Yugoslavia contributed to reinforcing strategic, military and intelligence ties between Washington and London. After the war in Yugoslavia, U.S. Defence Secretary William Cohen and his British counterpart, Geoff Hoon, signed a "Declaration of Principles for Defence Equipment and Industrial Cooperation" so as to "improve cooperation in procuring arms and protecting technology secrets" while at the same time "easing the way for more joint military ventures and possible defence industry mergers." 25

 Washingtonʼs objective was to encourage the formation of a "trans-Atlantic bridge across which DoD [U.S. Department of Defence] can take its globalisation policy to Europe. …Our aim is to improve interoperability and war fighting effectiveness via closer industrial linkages between U.S. and allied companies." 26

    In the words of President Clintonʼs Defence Secretary William Cohen:

 [The agreement] will facilitate interaction between our [British and American] respective industries so that we can have a harmonized approach to sharing technology, working cooperatively in partnership arrangements and, potentially, mergers as well.27

 The agreement was signed in 1999 shortly after the creation of British Aerospace Systems (BAES) resulting from the merger of British Aerospace (BAe) with GEC Marconi. British Aerospace Systems was already firmly allied to Americaʼs largest defence contractors Lockheed Martin and Boeing. 28

 The hidden agenda behind the Anglo-American "trans-Atlantic bridge" is to eventually displace the Franco-German military conglomerates and ensure the dominance of the U.S. military industrial complex (in alliance with Britainʼs major defence contractors).

 Moreover, this integration in the area of defence production has also been matched by increased cooperation between the CIA and Britainʼs MI5 in the sphere of intelligence and covert operations, not to mention the joint operations of British and U.S. Special Forces.

    The United States and Germany

 The British military-industrial complex has become increasingly integrated into that of the U.S. In turn, significant rifts had emerged between Washington and Berlin. Franco-German integration in aerospace and defence production is ultimately directed against U.S. dominance in the weapons market. The latter hinges upon the partnership between Americaʼs Big Five and Britainʼs defence industry under the trans-Atlantic bridge agreement.

 Since the early ʽ90s, the Bonn government had encouraged the consolidation of Germanyʼs military industrial complex dominated by Daimler, Siemens, Krupp. Several important mergers in Germanyʼs defence industry took place in response to the mega-mergers between Americaʼs aerospace and weapons producers.29

 Already in 1996, Paris and Bonn had set up a joint armaments agency with the mandate "to manage common programs [and] award contracts on behalf of both governments." 30 Both countries had stated that they "did not want Britain to join the agency."

 In turn, France and Germany now control Airbus industries which is competing against Americaʼs Lockheed-Martin. (Britainʼs BAES owns the remaining 20 per cent). The Germans are also collaborating in the Ariane Space satellite-launching program in which Deutsche Aerospace (DASA) is a major shareholder.

 In late 1999, in response to the ʽallianceʼ of British Aerospace with Lockheed Martin, Franceʼs Aerospace-Matra merged with Daimlerʼs DASA forming the largest European defence conglomerate. And the following year, the European Aeronautic Defence and Space Co. (EADS) was formed integrating DASA, Matra and Spainʼs Construcciones Aeronauticas, SA. EADS and its Anglo-American rivals are competing for the procurement of weapons to NATOʼs new Eastern European members. (Europeʼs third largest defence contractor is Thomson, which in recent years has several projects with U.S. weapons producer Raytheon.)

 While EADS still cooperates with Britainʼs BAES in missile production, and has business ties with the U.S. "Big Five", including Northrop Grumman, the Western defence and aerospace industry tends to be split into two distinct groups: EADS dominated by France and Germany on the one hand, the Anglo-US "Big Six", which includes the U.S. Big Five contractors (Lockheed Martin, Raytheon, General Dynamics, Boeing and Northrop Grumman), plus Britainʼs powerful BAES.

 Integrated into U.S. Department of Defence procurement under the Atlantic bridge arrangement, BAES was in 2001, the Pentagonʼs fifth largest defence contractor. Under the Anglo-American "transatlantic bridge", BAES operates freely in the U.S. market through its subsidiary BAE Systems North America.31

    Franco-German Integration in Nuclear Weapons

 The Franco-German alliance in military production under EADS opens the door for the integration of Germany (which does not officially possess nuclear weapons) into Franceʼs nuclear weapons program. In this regard, EADS already produces a wide range of ballistic missiles, including the M51 nuclear-tipped ballistic submarine-launched ICBMs for the French Navy.32

    Euro versus Dollar: Rivalry Between Competing Financial Conglomerates

 The European common currency system has a direct bearing on strategic and political divisions. Londonʼs decision not to adopt the common European currency is consistent with the integration of British financial and banking interests with those of Wall Street, not to mention the Anglo-American alliance in the oil industry (as in BP-Amoco) and weapons production ("Big Five" plus BAES). In other words, this shaky relationship between the British pound and the US dollar is an integral part of the new Anglo-American axis.

 What is at stake is the rivalry between two competing global currencies: the Euro and the U.S. dollar, with Britainʼs pound being torn between the European and the U.S.-dominated currency systems. In other words, two rival financial and monetary systems are competing worldwide for the control over money creation and credit. The geopolitical and strategic implications are far-reaching because they are also marked by splits in the Western defence industry and the oil business.

 In both Europe and America, monetary policy, although formally under State jurisdiction, is largely controlled by the private banking sector. The European Central Bank based in Frankfurt — although officially under the jurisdiction of the European Union — is, in practice, overseen by a handful of private European banks including Germanyʼs largest banks and business conglomerates.

 The U.S. Federal Reserve Board is formally under State supervision — marked by a close relationship to the U.S. Treasury. Distinct from the European Central Bank, the 12 Federal Reserve banks (of which the Federal Reserve Bank of New York is the most important) are controlled by their shareholders, which are private banking institutions. In other words, "the Fed" as it is known in the U.S., which is responsible for monetary policy and hence money creation for the nation, is actually controlled by private interests on Wall Street.

    Currency Systems and ʽEconomic Conquestʼ

 In Eastern Europe, the former Soviet Union the Balkans extending into Central Asia, the dollar and the Euro are competing with one another. Ultimately, control over national currency systems is the basis upon which countries are colonized. While the U.S. dollar prevails throughout the Western Hemisphere, the Euro and the U.S. dollar are clashing in the former Soviet Union, Central Asia, Sub-Saharan Africa and the Middle East.

 In the Balkans and the Baltic States, central banks largely operate as colonial style "currency boards" invariably using the Euro as a proxy currency. What this means is: German and European financial interests are in control of money creation and credit. That is, the pegging of the national currency to the Euro — rather than to the U.S. dollar — means that both the currency and the monetary system will be in the hands of German-EU banking interests.

 More generally, the Euro dominates in Germanyʼs hinterland: Eastern Europe, the Baltic States and the Balkans, whereas the U.S. dollar tends to prevail in the Caucasus and Central Asia. In GUUAM countries (which have military cooperation agreements with Washington) the dollar tends (with the exception of the Ukraine) to overshadow the Euro.

 The ʽDollarisationʼ of national currencies is an integral part of Americaʼs Silk Road Strategy (SRS). The latter consists in first destabilizing and then replacing national currencies with the American greenback over an area extending from the Mediterranean to Chinaʼs Western border. The underlying objective is to extend the dominion of the Federal Reserve System — namely, Wall Street — over a vast territory.

 What we are dealing with is an ʽimperialʼ scramble for control over national currencies. Control over money creation and credit is an integral part of the process of economic conquest, which is in turn supported by the militarisation of Eurasian corridor.

 While American and German-EU banking interests are clashing over the control of national economies and currency systems, they seem to have also agreed on "sharing the spoils" — i.e. establishing their respective "spheres of influence." Reminiscent of the policies of ʽpartitionʼ in the late 19th Century, the U.S. and Germany have agreed upon the division of the Balkans: Germany has gained control over national currencies in Croatia, Bosnia and Kosovo where the Euro is legal tender. In return, the U.S. has established a permanent military presence in the region (i.e. the Bondsteel military base in Kosovo).

    Cross-cutting Military Alliances

 The rift between Anglo-American and Franco-German weapons producers — including the rifts within the Western military alliance — seem to have favoured increased military cooperation between Russia on the one hand, and France and Germany on the other.

 In recent years, both France and Germany had entered into bilateral discussions with Russia in the areas of defence production, aerospace research and military cooperation. In late 1998, Paris and Moscow agreed to undertake joint infantry exercises and bilateral military consultations. In turn, Moscow has been seeking German and French partners to participate in the development of its military industrial complex.

 In early 2000, Germanyʼs Defence Minister Rudolph Sharping visited Moscow for bilateral consultations with his Russian counterpart. A bilateral agreement was signed pertaining to 33 military cooperation projects including the training of Russian military specialists in Germany. 33 This agreement was reached outside the framework of NATO, and without prior consultation with Washington.

 Russia also signed a "long term military cooperation agreement" with India in late 1998 which was followed a few months later by a defence agreement between India and France. The agreement between Delhi and Paris included the transfer of French military technology, as well as investment of French multinationals in Indiaʼs defence industry. The latter includes facilities for the production of ballistic missiles and nuclear warheads in which the French companies have an expertise.

 This Franco-Indian agreement has a direct bearing on Indo-Pakistani relations. It also impinges upon U.S. strategic interests in Central and South Asia. While Washington has been pumping military aid into Pakistan, India is being supported by France and Russia.

    Visibly, France and the U.S. are on opposite sides of the India-Pakistan conflict.

 With Pakistan and India at the brink of war, in the wake of September 11, the U.S. Air Force had virtually taken control of Pakistanʼs air space, as well as several of its military facilities. Meanwhile, barely a few weeks into the 2001 bombing of Afghanistan, France and India conducted joint military exercises in the Arabian Sea. Also in the immediate wake of September 11, India took delivery of large quantities of Russian weapons under the Indo-Russian military cooperation agreement.

    Moscowʼs New National Security Doctrine

 U.S. post-Cold War era foreign policy has designated Central Asia and the Caucasus as a "strategic area." Yet this policy no longer consists of containing the "spread of communism", but rather in preventing Russia and China from becoming competing capitalist powers . In this regard, the U.S. has increased its military presence along the entire 40th parallel, extending from Bosnia and Kosovo to the former Soviet republics of Georgia, Azerbaijan, Turkmenistan and Uzbekistan, all of which have entered into bilateral military agreements with Washington.

 The 1999 war in Yugoslavia and the subsequent outbreak of war in Chechnya in September 1999 was a crucial turning point in Russian-American relations. It also marked a rapprochement between Moscow and Beijing, and the signing of several military cooperation agreements between Russia and China.

 U.S. covert support to the two main Chechen rebel groups (through Pakistanʼs ISI) was known to the Russian government and military. (For further details, see Chapter II.) However, it had previously never been made public or raised at the diplomatic level. In November 1999, the Russian Defence Minister, Igor Sergueyev, formally accused Washington of supporting the Chechen rebels. Following a meeting held behind closed doors with Russiaʼs military high command, Sergueyev declared that:

 The national interests of the United States require that the military conflict in the Caucasus [Chechnya] be a fire, provoked as a result of outside forces", while adding that "the Westʼs policy constitutes a challenge launched to Russia with the ultimate aim of weakening her international position and of excluding her from geo-strategic areas.34

In the wake of the 1999 Chechen war, a new "National Security Doctrine" was formulated and signed into law by Acting President Vladimir Putin, in early 2000. Barely acknowledged by the international media, a critical shift in East-West relations had occurred. The document reasserted the building of a strong Russian State, the concurrent growth of the Military, as well as the reintroduction of State controls over foreign capital.

The document carefully spelled out what it described as " fundamental threats" to Russiaʼs national security and sovereignty. More specifically, it referred to "the strengthening of military-political blocs and alliances" [namely GUUAM], as well as to "NATOʼs eastward expansion" while underscoring "the possible emergence of foreign military bases and major military presences in the immediate proximity of Russian borders." 35

The document confirms that "international terrorism is waging an open campaign to destabilize Russia." While not referring explicitly to CIA covert activities in support of armed terrorist groups, such as the Chechen rebels, it nonetheless calls for appropriate "actions to avert and intercept intelligence and subversive activities by foreign states against the Russian Federation." 36

Undeclared War Between Russia and America

The cornerstone of U.S. foreign policy has been to encourage — under the disguise of "peace-keeping" and so-called "conflict resolution" — the formation of small pro-U.S. States which lie strategically at the hub of the Caspian Sea basin, which contains vast oil and gas reserves:

The U.S. must play an increasingly active role in conflict resolution in the region. The boundaries of the Soviet republics were intentionally drawn to prevent secession by the various national communities of the former USSR and not with an eye towards possible independence. … Neither Europe, nor our allies in East Asia, can defend our [U.S.] mutual interests in these regions. If we [the U.S.], fail to take the lead in heading off the kinds of conflicts and crises that are already looming there, that will eventually exacerbate our relations with Europe and possibly Northeast Asia. And it will encourage the worst kind of political developments in Russia. This linkage, or interconnectedness, gives the Transcaucasus and Central Asia a strategic importance to the United States and its allies that we overlook at huge risk. To put it another way, the fruits accruing from ending the Cold War are far from fully harvested. To ignore the Transcaucasus and Central Asia could mean that a large part of that harvest will never be gathered.37

Russiaʼs Military Industrial Complex

Alongside the articulation of Moscowʼs National Security doctrine, the Russian State was planning to regain economic and financial control over key areas of Russiaʼs military industrial complex. For instance, the formation of "a single corporation of designers and manufacturers of all anti-aircraft complexes" was envisaged in cooperation with Russiaʼs defence contractors.38

This proposed ʽre-centralizationʼ of Russiaʼs defence industry in response to national security considerations, was also motivated by the merger of major Western competitors in the areas of military procurement. The development of new production and scientific capabilities was also contemplated, based on enhancing Russiaʼs military potential as well as its ability to compete with its Western rivals in the global weapons market.

The National Security Doctrine also "eases the criteria by which Russia could use nuclear weapons … which would be permissible if the countryʼs existence were threatened." 39

Russia reserves the right to use all forces and means at its disposal, including nuclear weapons, in case an armed aggression creates a threat to the very existence of the Russian Federation as an independent sovereign state. 40

In response to Washingtonʼs "Star Wars" initiative, Moscow had developed "Russiaʼs Missile and Nuclear Shield". The Russian government announced in 1998, the development of a new generation of intercontinental ballistic missiles, known as Topol-M (SS-27). These new single-warhead missiles (based in the Saratov region) are currently in "full combat readiness", against a "pre-emptive first strike" from the U.S., which, (in the wake of September 11), constitutes the Pentagonʼs main assumption in an eventual nuclear war. "The Topol M is lightweight and mobile, designed to be fired from a vehicle. Its mobility means it is better protected than a silo-based missile from a pre-emptive first strike."41

Following the adoption of the National Security Document (NSD), in 2000, the Kremlin confirmed that it would not exclude "a first-strike use" of nuclear warheads "if attacked even by purely conventional means." 42

Political ʽTurnaroundʼ under President Vladimir Putin

Since the very outset of his term in office, President Vladimir Putin — following in the footsteps of his predecessor Boris Yeltsin in the Kremlin — has contributed to reversing the National Security Doctrine. Its implementation at a policy level has also been stalled.

At the moment, the foreign policy directions of the Putin Administration are confused and unclear. There are significant divisions within both the political establishment and the Military. On the diplomatic front, the new President has sought [to establish] a ʽrapprochementʼ with Washington and the Western Military Alliance in the so-called "war on terrorism." Yet, it would be premature to conclude that Putinʼs diplomatic openings imply a permanent reversal of Russiaʼs 2000 National Security Doctrine.

In the wake of September 11, a significant turnaround in Russian foreign policy, largely orchestrated by President Putin, has nonetheless occurred. The Putin Administration, acting against the Russian Duma, has accepted the process of "NATO Enlargement" into the Baltic states (Latvia, Lithuania and Estonia) implying the establishment of NATO military bases on Russiaʼs Western border. Meanwhile, Moscowʼs military cooperation agreement signed with Beijing after the 1999 war in Yugoslavia is virtually on hold:

China is obviously watching with deep concern Russia surrendering these positions. China is also concerned by the presence of the U.S. Air Force close to its borders in Uzbekistan, Tajikistan and the Kyrghyz Republic. … Everything that Mr. Putin has earned through the spectacular improvement of Russiaʼs relations with China, India, Vietnam, Cuba and some other countries, collapsed nearly overnight. What has surfaced is a primitive Gorbachev concept of ʽcommon human valuesʼ — i.e. the subordination of Russiaʼs interests to those of the West.43

Ironically, the Russian President was supporting Americaʼs "war on terrorism", which is ultimately directed against Moscow. Washingtonʼs hidden agenda is to dismantle Russiaʼs strategic and economic interests in the Eurasian corridor, close down or take over its military facilities, while transforming the former Soviet republics (and eventually the Russian Federation) into American protectorates:

It becomes clear that the intention to join NATO expressed by Mr. Putin in an offhand manner last year [2000], reflected a long matured idea of a far deeper (i.e. in relation to the positions previously taken by Gorbachev or Yeltsin) integration of the Russian Federation into the so-called "international community." In fact, the intention is to squeeze Russia into the Western economic, political and military system. Even as a junior partner. Even at the price of sacrificing an independent foreign policy.44

The above text is an excerpt from the later part of Chapter 5 of War and Globalisation . The numbering of the notes indicated below is the same as in the original chapter 5 from which the excerpt was taken.

Notes 

25. Reuters, 5 February 2000

26. For further details see Vago Muradian, "Pentagon Sees Bridge to Europe", Defence Daily, Vol. 204, No. 40, Dec. 01, 1999

27. Ibid.

28. Vago Muradian, "Pentagon Sees Bridge to Europe", Defence Daily, Vol. 204, No. 40, Dec. (See also Michel Collonʼs analysis in Poker Menteur, Editions EPO, Brussels, 1998, p. 156

29. See also Michel Collonʼs analysis in Poker Menteur, Editions EPO, Brussels, 1998, p. 156

30. American Monsters, European Minnows: Defence Companies. The Economist, 13 January 1996

31. British Aerospace Systemsʼ home page at: [URL]https://www.baesystems.com/globalfootprint/northamerica/northamerica.htm[/URL]

32. BAES, EADS Hopeful That Bush Will Broaden Transatlantic Cooperation, Defence Daily International, 29, 2001

33. Interfax, 1 March 2000

34. See The New York Times, 15 November 1999; see also the article of Steve Levine, The New York Times, 20 November 1999

35. To consult the document see Federation of American Scientists (FAS), [URL]https://www.fas.org/nuke/guide/russia/doctrine/gazeta012400.htm[/URL]

36. Ibid.

37. Joseph Jofi, Pipeline Diplomacy: The Clinton Administrationʼs Fight for Baku- Ceyhan, Woodrow Wilson Case Study, No. 1. Princeton University, 1999

38. Mikhail Kozyrev, the White House Calls for the Fire Vedomosti, Nov. 1, 1999, p.1

39. See Andrew Jack, Russia Turns Back Clock, Financial Times, London , 15 January 2000, p.1

40. Quoted in Nicolai Sokov, Russiaʼs New National Security Concept: The Nuclear Angle, Centre for Non Proliferation Studies, Monterrey, [URL]https://cns.miis.edu/pubs/reports/sokov2.htm[/URL], January 2000

41. BBC, Russia Deploys New Nuclear Missiles, London, 27 December 1998.

42. Stephen J. Blank, Nuclear Strategy and Nuclear Proliferation in Russian Commission to Assess the Ballistic Missile Threat to the United States, Appendix III: Unclassified Working Papers, Federation of American Scientists (FAS), [URL]https://www.fas.org/irp/threat/missile/rumsfeld/toc-3.htm.[/URL]

43. V. Tetekin, Putinʼs Ten Blows, Centre for Research on Globalisation (CRG) [URL]https://globalresearch.ca/articles/TET112A.html[/URL], 27 December 2001.

44. Ibid.

[URL]https://globalresearch.ca/articles/HEA306B.html[/URL]

[B]Dollar against Euro[/B]
[B]The War on Iraq:[/B]
[B]US and Europe clash for World Economic Dominance[/B]
by Geoffrey Heard

Green Party Review, Issue 1, No. 1, 2003
[URL="https://www.globalresearch.ca/"]www.globalresearch.ca[/URL]   25 June 2003

The URL of this article is: [URL]https://globalresearch.ca/articles/HEA306B.html[/URL]

    Summary:

 Why is George Bush so hell bent on war with Iraq? Why does his administration reject every positive Iraqi move? It all makes sense when you consider the economic implications for the USA of not going to war with Iraq. The war on Iraq is actually the US and Europe going head-to-head on economic leadership of the world.

 America's Bush administration has been caught in outright lies, gross exaggerations and incredible inaccuracies as it has trotted out its litany of paper thin excuses for making war on Iraq. Along with its two supporters, Britain and Australia, it has shifted its ground and reversed its position with a barefaced contempt for its audience. It has manipulated information, deceived by commission and omission and frantically "bought" UN votes with billion dollar bribes.

 Faced with failing to gain UN Security Council support for invading Iraq, the USA has threatened to invade without authorisation (and Britain and Australia say they will go with it). They would act in breach of the UN's very constitution to allegedly enforce UN resolutions.

    It is plain bizarre. Where does this desperation for war come from?

 There are many forces driving President Bush and his administration to invade Iraq, unseat Saddam Hussein and take over the country. One of the biggest is hidden and very, very simple. It is about the currency used to trade oil and consequently, who will dominate the world economically, in the foreseeable future — the USA or the European Union.

 Alongside that is physical control of oil — Iraq's and Venezuela's in the first instance (the world's second and fourth largest reserves), but once America has a massive military force based in the Middle East in territory over which it has control, where will it end? Iran is already on the agenda, named by Bush as part of the "axis of evil", and Saudi Arabia, with the world's largest oil reserves and the home of Al Qaeda, would be the obvious step after that.

 Iraq is a European Union beachhead in the economic confrontation. America had a monopoly on the oil trade, with the US dollar as the fiat currency, until Iraq broke ranks in 2000, started to trade oil in the EU's euros, and profited mightily. If America invades Iraq and takes over, it will hurl the EU and its euro back into the economic sea.

 Besides ensuring the dollar remains the premier world trading currency, physical control of oil reserves is vital to the US to ensure supply at affordable prices. The USA's own oil reserves are very limited — it has capped wells to retain a viable on-shore reserve, but it would not last long — and because real world oil reserves are being rapidly depleted.

 The invasion and take over of Iraq would make America's position as the dominant economic power in the world all but impregnable. It is the biggest grab for world power in modern times. America's allies in the invasion, Britain and Australia, are betting America will win and that they will get some trickle-down benefits for jumping on to the US bandwagon.

 France and Germany are the spearhead of the European force — Russia would like to go European but possibly can still be bought off because of its current economic problems.

 Presumably, China would like to see the Europeans build a share of international trade currency ownership at this point at this point to blunt the US's power while it continues to grow its international trading presence to the point where it, too, can vie for and share the leadership rewards.
    DEBATE BUILDING ON THE INTERNET

 Oddly, while there has been no question from the outset that the United Staters is after control of oil, little or nothing is appearing in the general media about the oil trading currency issue. Are key people becoming aware of it? What does the recent slide in the value of the US dollar mean — are traders afraid of war or are they afraid there will not be war, in which case, the US$ will not be a great currency to have in hand. Despite the silence in the general media, a major world discussion is developing around this issue, particularly on the internet.

 Among the many articles: Henry Liu, in the Asia Times last June, it has been a hot topic on the Feasta forum, an Irish-based group exploring sustainable economics, and W. Clark's The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth has been published by the 'Sierra Times', 'Indymedia.org', and 'ratical.org'. Dr Colin Campbell's Peak Oil, a presentation at the Technical University of Clausthal in December 2000, is a clear exposition of the world's declining oil reserves. This debate is not about whether America would suffer from losing the US dollar monopoly on oil trading or from not gaining control of oil — that is a given — rather it is about exactly how hard the USA would be hit. The smart money seems to be saying the impact would be in the range from severe to catastrophic. For example, Charles A. Kupchan makes no bones about the parlous state of the US economy versus the strength of the European economies in his The Atlantic Monthly article, The End of the West.
    OIL DOLLARS

    The key to it all is the fiat currency for trading oil.

 Under an OPEC agreement, all oil has been traded in US dollars since 1971 (after the dropping of the gold standard) which makes the US dollar the de facto major international trading currency. If other nations have to hoard dollars to buy oil, then they want to use that hoard for other trading too. This fact gives America a huge trading advantage and helps make it the dominant economy in the world. As an economic bloc, the European Union is the only challenger to the USA's economic position, and it created the euro to challenge the dollar in international markets. However, the EU is not yet united behind the euro — there is a lot of jingoistic national politics involved, not least in Britain — and in any case, so long as nations throughout the world must hoard dollars to buy oil, the euro can make only very limited inroads into the dollar's dominance.

 In 2000, Iraq, with the world's second largest oil reserves, switched to trading its oil in euros. American analysts fell about laughing; Iraq had just made a mistake that was going to beggar the nation. But two years on, alarm bells were sounding; the euro was rising against the dollar, Iraq had given itself a huge economic free kick by switching.

 Iran started thinking about switching too; Venezuela, the 4th largest oil producer, began looking at it and has been cutting out the dollar by bartering oil with several nations including America's bête noire, Cuba. Russia is seeking to ramp up oil production with Europe (trading in euros) an obvious market. The greenback's grip on oil trading and consequently on world trade in general, was under serious threat. If America did not stamp on this immediately, this economic brushfire could rapidly be fanned into a wildfire capable of consuming the US's economy and its dominance of world trade.
    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.
    THE WORLD'S DECLINING OIL RESERVES

 At various times in recent years, the world has been pleasantly surprised to be told that oil reserves are higher than previously thought. The message — the energy driven party can go on forever. But world oil expert, Dr Colin Campbell, is firmly raining on that parade. The announcements were not about new finds or even reserves that were significantly bigger than previously known. Rather, they were about the public announcement of reserves that actually were known, technological developments which will allow a little more extraction from known reserves (but at extra expense) and some small finds.

 In fact, he points out that the biggest oil finds date back to the 1930s and 1940s and that there have been no big new finds since 1965. Technological developments and new knowledge which it was supposed would aid the uncovering of massive new oil deposits have done the opposite -- they have helped confirm the limitations of oil reserves. They have helped measure the reserves of existing fields and uncover some very small new deposits, but they have also made it clear that the conditions for oil simply do not exist in vast areas previously thought of as possibly harbouring oil.

 And while more and more technological expertise has found less and less oil, consumption has been rising steadily so today it is far in excess of the amount of new oil found. Peak discovery of oil was in 1965; production, checked in the 1970s by the oil crisis, will peak just 40 years later, in 2005, Dr Campbell predicts, then it will start to decline.

 America has limited reserves, the North Sea has more, but not much, and both, but particularly America, have to contend with huge consumption that far outstrips their supplies. Africa, Latin America, Eurasia and most of all, the Gulf, are where the oil is. Whoever owns that oil is set to profit as they hold the energy-hungry industrialised world to ransom.
    AMERICA'S PRECARIOUS ECONOMIC POSITION

 America is so eager to attack Iraq right now because of the speed with which the euro fire could spread. If Iran, Venezuela and Russia join Iraq and sell large quantities of oil for euros, the euro would have the leverage it needs to become a much more powerful force in general international trade very quickly. Other nations would have to start swapping some of their dollars for euros.

 The dollars the USA has printed, the 'cheques' it has written, would start to fly home, stripping away the illusion of value behind them. The USA's real economic condition is about as bad as it could be; it is the most debt-ridden nation on earth, owing about US$12,000 for every single one of it's 280 million men, women and children. It is worse than the position of Indonesia when it imploded economically a few years ago, or more recently, that of Argentina.

 Even if OPEC did not switch to euros wholesale (and that would make a very nice non-oil profit for the OPEC countries, including minimising the various contrived debts America has forced on some of them), the US's difficulties would build. If only a small part of the oil trade went euro, that would do three things immediately:

 * Increase the attractiveness to EU members of joining the 'eurozone', which in turn would make the euro stronger and make it more attractive to oil nations as a trading currency and to other nations as a general trading currency.

    * Start the US dollars flying home demanding value when there isn't enough in the bank to cover them.

    * Cause the usual panic attack in the world financial markets and in no time, the US dollar's value would be spiraling down.

 The question of oil ownership or control is longer term — but only in terms of as handful of years. If the USA does not make its grab now while it still has control of the oil trading currency and is still the world's biggest economic power, the opportunity would be lost.

 In a few years time, America will still be far and away the world's largest military power — its current stocks of weapons will see to that -- but if it is on the economic slide because it failed to contain the euro's growth as an international trading currency, the rest of the world would be in a much stronger position to stare it down and contain it.

 For America, with an economy and life style wholly dependent on cheap oil energy, that would be a disaster. President Bush promised Americans they could continue driving their petrol guzzling SUVs. An America lacking control of oil stocks in an era of declining oil production would have to park its SUVs and walk.
    THE US SOLUTION

    America's response to the euro and oil shortage threat was predictable. It has come out fighting.

    It aims to achieve six primary things by going to war with Iraq:

 * Safeguard the American economy by returning Iraq to trading oil in US dollars, so the greenback is once again the exclusive oil currency and is reaffirmed as the reserve currency for world trade.

 * Send a very clear message to any other oil producers just what will happen to them if they do not stay in the dollar circle. Iran has already received one message — remember how puzzled you were that in the midst of moderation and secularization, Iran was named as a member of the axis of evil? Venezuela is on the receiving end of another nasty message.

 * Safeguard the USA's supply of oil by placing the second largest reserves of oil in the world under direct American control and putting the itself in a position to control through threat or actual invasion the rest of the Gulf oil. The US needs a secular, subject state where it can maintain a huge force (perhaps with nominal elements from allies such as Britain and Australia) to dominate the Middle East and its vital oil.

 * Severely setback the expansion of the influence of the European Union and its euro, the only trading bloc and currency strong enough to attack the USA's dominance of world trade through the dollar.

 * Provide cover for the US to run a covert operation to overturn the democratically elected government of Venezuela and replace it with an America-friendly military supported junta which would put Venezuela's oil into US hands and ensure oil trading in US dollars.

 * Secure Israel's position — the aim of an unlikely coalition of Christian and Jewish fundamentalists within the Bush administration which fits in handily with the power and economic ambitions of the hard-headed old conservatives in the back room.

 Locking the world back into dollar oil trading would consolidate America's current position and make it all but impregnable as the dominant world power — economically and militarily. A splintered Europe (the US is working hard to split Europe; Britain was easy, but other Europeans have offered support in terms of UN votes) and its euro would suffer a serious setback and might take decades to recover. Physical control of oil would secure the supplies which underpin the high energy consumption US economy and place the US in a position to profit directly from higher world oil prices resulting from the growing shortage of oil, a further boost to its economy, while disadvantaging economic challengers by forcing them to pay more for energy.

 Establishing a strong military presence in Iraq would enable the US to avoid or reduce its military presence in what it sees as the unreliable Turkey, the politically impossible Israel and surely the next state in its sights after Iran, Saudi Arabia, the birthplace of al Qaeda and a hotbed of anti-American sentiment. The USA, with a stable military base in Iraq no longer constrained by treaties and agreements such as it has had to negotiate with host nations to date or by the host's links with the EU, would also independent of Europe and able to give the faint whiff of military threat to Europe itself. America is making the boldest grab for absolute power the world has seen in modern times. It is hardly likely to allow the possible slaughter of a few tens of thousand Iraqis stand between it and world domination.

    President Bush promised to protect the American way of life. This is what he meant.
    JUSTIFYING WAR

 Obviously, the US had to have some sort of cover story, a "legitimate" excuse to invade Iraq, so it began casting around for a reason to attack. That search has been one of increasing desperation as each rationalization has crumbled. First Iraq was a threat because of alleged links to al Qaeda; then it was proposed Iraq might supply al Qaeda with weapons; then Iraq's military threat to its neighbours was raised; then the need to deliver Iraqis from Saddam Hussein's horrendously inhumane rule; finally there is the question of compliance with UN weapons inspection.

 We are now told that war must be prosecuted forthwith because Iraq has chemical and biological weapons the UN inspectors have not been able to find and that it may develop nuclear weapons in a few years, and if it does, it may supply nuclear weapons to terrorist groups.

 Further, failure to lay waste to Iraq now will encourage the proliferation of nuclear weapons and increased the likelihood of "rogue states" passing them on to unnamed terrorists. The USA's justifications for invading Iraq, supported by Britain and Australia, have been looking less impressive by the day. The US's statements that it would invade Iraq unilaterally without UN support and in breach of the UN constitution make a total nonsense of any claim that it is concerned about the world body's strength and standing.

 The UN weapons inspectors have come up with minimal infringements of the UN weapons limitations — the final one being low tech rockets which exceed the range allowed by about 20 percent. But there is no sign of the so-called weapons of mass destruction (WMD) the US has so confidently asserted are to be found. Colin Powell named a certain north Iraqi village as a threat. It was not. He later admitted it was the wrong village.

 Newsweek (24/2) has reported that while Bush officials have been trumpeting the fact that key Iraqi defector, Lt. Gen. Hussein Kamel, told the US in 1995 that Iraq had manufactured tonnes of nerve gas and anthrax (Colin Powell's 5 February presentation to the UN was just one example) they neglected to mention that Kamel had also told the US that these weapons had been destroyed. Parts of the US and particularly the British secret 'evidence' have been shown to come from a student's masters thesis — now outdated. America's expressed concern about the Iraqi people's human rights and the country's lack of democracy are simply not supported by the USA's history of intervention in other states nor by its current actions.

 Think Guatemala, the Congo, Chile and Nicaragua as examples of a much larger pool of US actions to tear down legitimate, democratically-elected governments and replace them with war, disruption, starvation, poverty, corruption, dictatorships, torture, rape and murder for its own economic ends. The most recent, Afghanistan, is not looking good; in fact that war reinstalled a murderous group of warlords which America had earlier installed, then deposed, in favour of the now hated and deposed Taliban. Saddam Hussein was just as repressive, corrupt and murderous 15 years ago when he used chemical weapons, supplied by the US, against the Kurds. The current US Secretary for Defence, Donald Rumsfeld, so vehement against Iraq now, was on hand personally to turn aside condemnation of Iraq and blame Iran for the gassing. At that time, of course, the US thought Saddam Hussein was their man — they were using him against the perceived threat of Iran's Islamic fundamentalism.

 Right now, as The Independent writer, Robert Fisk, has noted, the US's efforts to buy Algeria's UN vote includes promises of re-arming the military which has a decade long history of repression, torture, rape and murder Saddam Hussein himself would envy. It is estimated 200,000 people have died, and countless others been left maimed by the activities of these monsters. What price the US's humanitarian concerns for Iraqis? (Of course, the French are also wooing Algeria, their former north African territory, for all they are worth, but at least they are not pretending to be driven by humanitarian concerns.) Indonesia is another nation with a vote and influence as the largest Muslim nation in the world. Its repressive, murderous military is regaining strength on the back of the US's so-called anti-terror campaign and is receiving promises of open and covert support — including intelligence sharing.
    AND VENEZUELA

 While the world's attention is focused on Iraq, America is both openly and covertly supporting the "coup of the rich" in Venezuela, which grabbed power briefly in April last year before being intimidated by massive public displays of support by the poor for democratically-elected President Chavez Frias. The coup leaders continue to use their control of the private media, much of industry and the ear of the American Government and its oily intimates to cause disruption and disturbance.

 Venezuela's state-owned oil resources would make rich pickings for American oil companies and provide the US with an important oil source in its own backyard.

 Many writers have noted the contradiction between America's alleged desire to establish democracy in Iraq while at the same time, actively undermining the democratically-elected government in Venezuela. Above the line, America rushed to recognise the coup last April; more recently, President Bush has called for "early elections", ignoring the fact that President Chavez Frias has won three elections and two referendums and, in any case, early elections would be unconstitutional.

 One element of the USA's covert action against Venezuela is the behaviour of American transnational businesses which have locked out employees in support of "national strike" action. Imagine them doing that in the USA! There is no question that a covert operation is in process to overturn the legitimate Venezuelan government. Uruguayan congressman, Jose Nayardi, made it public when he revealed that the Bush administration had asked for Uruguay's support for Venezuelan white collar executives and trade union activists "to break down levels of intransigence within the Chavez Frias administration". The process, he noted, was a shocking reminder of the CIA's 1973 intervention in Chile which saw General Pinochet lead his military coup to take over President Allende's democratically elected government in a bloodbath.

 President Chavez Frias is desperately clinging to government, but with the might of the USA aligned with his opponents, how long can he last?
    THE COST OF WAR

 Some have claimed that an American invasion of Iraq would cost so many billions of dollars that oil returns would never justify such an action. But when the invasion is placed in the context of the protection of the entire US economy and of ensuring US dominance of the world now and into the future, the balance of the argument changes.

    Further, there are three other vital factors:

 First, America will be asking others to help pay for the war because it is protecting their interests. Japan and Saudi Arabia made serious contributions to the cost of the 1991 Gulf war.

 Second — in reality, war will cost the USA very little — or at least, very little over and above normal expenditure. This war is already paid for! All the munitions and equipment have been bought and paid for. The USA would have to spend hardly a cent on new hardware to prosecute this war — the expenditure would come later when munitions and equipment have to be replaced after the war which certainly will be short. But munitions, hardware and so on are being replaced all the time — contracts are out. Some contracts would simply be brought forward and some others would be ramped up a bit, but spread over a few years the cost would not be great. And what is the real extra cost of an army at war compared with maintaining the standing army around the world, running exercises and so on? It is there, but it is a relatively small sum.

 Third — lots of the extra costs involved in the war are dollars spent outside America, not least in the purchase of fuel. Guess how America will pay for these? By printing more of the dollars it is going to war to protect just as it does for other trade. The same happens when production begins to replace hardware. Components, minerals, etc. are bought in with dollars that go overseas and exploit America's trading advantage.

 The cost of war is not nearly as big as it is made out to be. The cost of not going to war would be horrendous for the USA — unless there were another way of protecting the greenback's world trade dominance.
    AMERICA'S TWO ACTIVE ALLIES

    Why are Australia and Britain supporting America in its transparent Iraqi war ploy?

 Australia, of course, has significant US dollar reserves and trades widely in dollars and extensively with America. A fall in the US dollar would reduce Australia's debt, perhaps, but would do nothing for the Australian dollar's value against other currencies. John Howard, the Prime Minister, has long cherished the dream of a free trade agreement with the USA in the hope that Australia can jump on the back of the free ride America gets in trade through the dollar's position as the major trading medium. That would look much less attractive if the euro took over a significant part of the oil trade. Britain has yet to adopt the euro. If the US takes over Iraq and blocks the euro's incursion into oil trading, Tony Blair will have given his French and German counterparts a bloody nose, and gained more room to manouevre on the issue — perhaps years more room. Britain would be in a position to demand a better deal from its EU partners for entering the "eurozone" if the new currency could not make the huge value gains guaranteed by a significant role in world oil trading. It might even be in a position to withdraw from Europe and link with America against continental Europe.

 On the other hand, if the US cannot maintain the oil trade dollar monopoly, the euro will rapidly go from strength to strength, and Britain could be left begging to be allowed into the club.
    THE OPPOSITION

 Some of the reasons for opposition to the American plan are obvious — America is already the strongest nation on earth and dominates world trade through its dollar. If it had control of the Iraqi oil and a base for its forces in the Middle East, it would not add to, but rather would multiply its power. The oil-producing nations, particularly the Arab ones, can see the writing on the wall and are quaking in their boots.

 France and Germany are the EU leaders with the vision of a resurgent, united Europe taking its rightful place in the world and using its euro currency as a world trading reserve currency and thus gaining some of the free ride the United States enjoys now. They are the ones who initiated the euro oil trade with Iraq.

 Russia is in deep economic trouble and knows it will get worse the day America starts exploiting its take-over of Afghanistan by running a pipeline southwards via Afghanistan from the giant southern Caspian oil fields. Currently, that oil is piped northwards — where Russia has control.

 Russia is in the process of ramping up oil production with the possibility of trading some of it for euros and selling some to the US itself. Russia already has enough problems with the fact that oil is traded in US dollars; if the US had control of Iraqi oil, it could distort the market to Russia's enormous disadvantage. In addition, Russia has interests in Iraqi oil; an American takeover could see them lost. Already on its knees, Russia could be beggared before a mile of the Afghanistan pipeline is laid.

 Many other countries are also concerned by the rise in US power. Martin Woollacott, writing in The Age (Melbourne, Australia) and The Guardian (Britain) reports on how the UN Security Council has become a vehicle for expressing global public opinion, and quotes The Wall Street Journal as suggesting that the UN weapons inspections have been less about containing Iraq as they are about containing the United States.
    ALTERNATIVE OUTCOMES?

 The scenario clarifies the seriousness of America's position and explains its frantic drive for war. It also suggests that solutions other than war are possible if not likely. Could America agree to share the trading goodies by allowing Europe to have a negotiated part of it? Not very likely, but it is just possible Europe, with the support of other countries, can stare down the USA and force such an outcome. Time will tell. What about Europe taking the statesmanlike, humanitarian and long view, and withdrawing, leaving the oil trading to the US, with appropriate safeguards for ordinary Iraqis, other Gulf nations, democracy in Venezuela and physical control of oil so it did not fall into American hands? Very unlikely.

 In a way, a loss for Europe at this stage might be a better outcome for the world, provided the US could be prevented from gaining physical control of very large quantities of oil. That might then force Europe, Japan and others to adopt a smarter approach -- accelerating the development of alternative energy technologies and strategies which would reduce the developed world's reliance on oil for energy and produce goods tradable in currencies other than dollars — shifting the world trade balance over time.

    Now that would be a very positive outcome for everyone. . . . .
    SOME REFERENCES AND FURTHER INFORMATION:

 This war is about more than oil. OIL DOLLARS!!!! DOLLARS, THE EURO AND WAR IN IRAQ. This story is based on material posted by Richard Douthwaite on the FEASTA list in Ireland.

 'The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth' by W. Clark, January 2003 (revised 20 February), Independent Media Center, [URL="https://www.indymedia.org/"]www.indymedia.org[/URL]

    USA intelligence agencies revealed in plot to oust Venezuela's President

    Washington Post Split Screen In Strike-Torn Venezuela By Mark Weisbrot, Sunday, January 12, 2003; Page B04

    Newsday, April 21, 2002 U.S. Is the Primary Loser in Failed Venezuelan Coup By Larry Birns and Alex Volberding,

    Asia Times online: Global Economy US dollar hegemony has got to go By Henry C K Liu. 11 April, 2002.

    Peak Oil Presentation at the Technical University of Clausthal Dr C. J. Campbell, December 2000

    The Observer The Enemy Within by Gore Vidal London, Sunday 27 October 2002

    The Atlantic Monthly The End of the West by Charles A. Kupchan, November 2002.

    The Age (Melbourne, Australia) Why the UN really matters By Martin Woollacott, 14 March 2003

    The Anglo-American Military Axis by Michel Chossudovsky:

 "The Bush Administration's war plans have nothing to do with "Saddam's weapons of mass destruction" or his alleged links to Osama bin Laden. The proposed invasion of Iraq is intended to exclude rival European, Russian and Chinese interests from the Middle-East and Central Asian oil fields. While in the Balkans, the US "shared the spoils" with Germany and France, in the context of military operations under NATO and UN auspices, the invasion of Iraq is intended to establish US hegemony, while weakening Franco-German and Russian influence in the region."

[URL]https://www.globalresearch.ca/articles/CHO303B.html[/URL]

    'The Age', Melbourne, Australia 20 March 2003

 "The real reasons America is invading Iraq America is seeking to ward off any threat to its economic domination of the world", writes Kenneth Davidson.

 Geoffrey Heard is a Melbourne, Australia, writer on the environment, sustainability and human rights. Geoffrey Heard © 2003. For fair use only/ pour usage équitable seulement .

[URL="https://ist-socrates.berkeley.edu/%7Epdscott/iraq.html"]https://ist-socrates.berkeley.edu/~pdscott/iraq.html[/URL]

[B]BUSH'S DEEP REASONS FOR WAR ON IRAQ: OIL, [/B][B]PETRODOLLARS, AND THE OPEC EURO QUESTION[/B]
(Updated 5/27/03)

As the United States made preparations for war with Iraq, White House Press Secretary Ari Fleischer, on 2/6/03, again denied to US journalists that the projected war had "anything to do with oil." <1> He echoed Defense Minister Donald Rumsfeld, who on 11/14/02 told CBS News that "It has nothing to do with oil, literally nothing to do with oil."

Speaking to British MPs, Prime Minister Tony Blair was just as explicit: "Let me deal with the conspiracy theory idea that this is somehow to do with oil. There is no way whatever if oil were the issue that it would not be infinitely simpler to cut a deal with Saddam...." (London Times 1/15/03).

Nor did Bush's State of the Union Message, or Colin Powell's address to the United Nations Security Council, once mention the word "oil." Instead the talk was (in the president's words) of "Iraq's illegal weapons programs, its attempts to hide those weapons from inspectors, and its links to terrorist groups."

However our leaders are not being candid with us. Oil has been a major US concern about Iraq in internal and unpublicized documents, since the start of this Administration, and indeed earlier. As Michael Renner has written in Foreign Policy in Focus, February 14, 2003, "Washington's War on Iraq is the Lynchpin to Controlling Persian Gulf Oil."

But the need to dominate oil from Iraq is also deeply intertwined with the defense of the dollar. Its current strength is supported by OPEC's requirement (secured by a secret agreement between the US and Saudi Arabia) that all OPEC oil sales be denominated in dollars. This requirement is currently threatened by the desire of some OPEC countries to allow OPEC oil sales to be paid in euros.

The Internally Stated US Goal of Securing the Flow of Oil from the Middle East

As early as April 1997, a report from the James A. Baker Institute of Public Policy at Rice University addressed the problem of "energy security" for the United States, and noted that the US was increasingly threatened by oil shortages in the face of the inability of oil supplies to keep up with world demand. In particular the report addressed "The Threat of Iraq and Iran" to the free flow of oil out of the Middle East. It concluded that Saddam Hussein was still a threat to Middle Eastern security and still had the military capability to exercise force beyond Iraq's borders.

The Bush Administration returned to this theme as soon as it took office in 2001, by following the lead of a second report from the same Institute. <2> This Task Force Report was co-sponsored by the Council on Foreign Relations in New York, another group historically concerned about US access to overseas oil resources. The Report represented a consensus of thinking among energy experts of both political parties, and was signed by Democrats as well as Republicans. <3>

The report, Strategic Energy Policy Challenges for the 21st Century, concluded: "The United States remains a prisoner of its energy dilemma. Iraq remains a de-stabilizing influence to ... the flow of oil to international markets from the Middle East. Saddam Hussein has also demonstrated a willingness to threaten to use the oil weapon and to use his own export program to manipulate oil markets. Therefore the US should conduct an immediate policy review toward Iraq including military, energy, economic and political/ diplomatic assessments."

The Task Force meetings were attended by members of the new Bush Administration's Department of Energy, and the report was read by members of Vice-President Cheney's own Energy Task Force. When Cheney issued his own national energy plan, it too declared that "The [Persian] Gulf will be a primary focus of U.S. international energy policy." It agreed with the Baker report that the U.S. is increasingly dependent on imported oil and that it may be necessary to overcome foreign resistance in order to gain access to new supplies.

Later the point was made more bluntly by Anthony H. Cordesman, senior analyst at Washington's Center for Strategic and International Studies: "Regardless of whether we say so publicly, we will go to war, because Saddam sits at the center of a region with more than 60 percent of all the world's oil reserves."

The Unstated US Goals of Increasing the Flow of Oil from the Middle East, and US Dominance of the Area

Behind the acknowledged concern about the "free flow" of Persian Gulf oil are other motives. Following the recommendations of the Task Force Report, the Bush administration wishes to increase international (which may well turn out to mean US) investment in the under-developed Iraq oilfields. On 1/16/03 the Wall Street Journal reported that officials from the White House, State Department, and Department of Defense have been meeting informally with executives from Halliburton, Schlumberger, ExxonMobil, ChevronTexaco and ConocoPhillips to plan the post-war expansion of oil production from Iraq (whose oilfields were largely held by US companies prior to their nationalization). The Journal story has since been denied by Administration officials; but, as the Guardian noted on 1/27/03, "It stretches credulity somewhat to imagine that the subject has never been broached." <4>

It is worth pointing out that Saddam Hussein already has offered exploratory concessions (which remained inactive because of the UN sanctions) to France, China, Russia, Brazil, Italy, and Malaysia. If Saddam is replaced by a new client regime, it seems likely that these concessions will be superseded, although there are reports that the US has offered France, Russia and China a share of post-war Iraqi oil, as an inducement to get their support in the Security Council. <5> Last September former CIA Chief Woolsey threatened in the Washington Post (9/15/02) that the price for participation by France and Russia in the post-war Iraq oil bonanza should be their support for "regime change." <6> It would not take much of such menacing talk from official sources to turn the Bush campaign against Iraq into a campaign against Europe (see Postscript).

Iraq's proven oil reserves are 113 billion barrels, the second largest in the world after Saudi Arabia, and eleven percent of the world's total. The total reserves could be 200 million barrels or more, all of it relatively easy and cheap to extract. Thus increasing Iraqi oil production will diminish the market pressure on oil-importing countries like the US. It will also weaken the power of OPEC to influence oil markets by decisions to restrict output. Indeed, were Iraqi oil production to expand to near its capacity, the quotas established by OPEC would cease to be honored in today's market. <7>

But the US is not just interested in oil from Iraq, it is concerned to maintain political dominance over all the oil-producing countries of the region. Secretary of State Colin Powell gave a glimpse of US intentions when he told the Senate Foreign Relations Committee on February 6 that success in the Iraq war "could fundamentally reshape that region in a powerful, positive way that will enhance U.S. interests." In conceding that it will be necessary to station US troops in occupied Iraq for the foreseeable future, the US is serving notice to Iran and to Saudi Arabia (both of which were once secure bases for US troops but are so no longer) that the US will reassert its presence as the dominant military power in the region.

The Unstated US Goal of Preserving Dollar Hegemony Over the Global Oil Market

Dominance of Middle Eastern oil will mean in effect maintaining dollar hegemony over the world oil economy. Given its present strategies, the US is constrained to demand no less. As I explain in this extract from my book, Drugs, Oil, and War (pp. 41-42, 53-54), the present value of the US dollar, unjustified on purely economic grounds, is maintained by political arrangements, one of the chief of which is to ensure that all OPEC oil purchases will continue to be denominated in US dollars. (This commitment of OPEC to dollar oil sales was secured in the 1970s by a secret agreement between the US and Saudi Arabia, before the two countries began to drift apart over Israel and other issues.) <8>

The chief reason why dollars are more than pieces of green paper is that countries all over the world need them for purchases, principally of oil. This requires them in addition to maintain dollar reserves to protect their own currency; and these reserves, when invested, help maintain the current high levels of the US securities markets.

As Henry Liu has written vividly in the online Asian Times (4/11/02),

"World trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy. The world's interlinked economies no longer trade to capture a comparative advantage; they compete in exports to capture needed dollars to service dollar-denominated foreign debts and to accumulate dollar reserves to sustain the exchange value of their domestic currencies. To prevent speculative and manipulative attacks on their currencies, the world's central banks must acquire and hold dollar reserves in corresponding amounts to their currencies in circulation. The higher the market pressure to devalue a particular currency, the more dollar reserves its central bank must hold. This creates a built-in support for a strong dollar that in turn forces the world's central banks to acquire and hold more dollar reserves, making it stronger. This phenomenon is known as dollar hegemony, which is created by the geopolitically constructed peculiarity that critical commodities, most notably oil, are denominated in dollars. Everyone accepts dollars because dollars can buy oil. The recycling of petro-dollars is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973.

"By definition, dollar reserves must be invested in US assets, creating a capital-accounts surplus for the US economy. Even after a year of sharp correction, US stock valuation is still at a 25-year high and trading at a 56 percent premium compared with emerging markets."

But central bankers around the world do not expect either the US dollar or the US stock markets to sustain their current levels. As William Greider in The Nation (9/23/02) has pointed out:

"US economy's net foreign indebtedness--the accumulation of two decades of running larger and larger trade deficits--will reach nearly 25 percent of US GDP this year, or roughly $2.5 trillion. Fifteen years ago, it was zero. Before America's net balance of foreign assets turned negative, in 1988, the United States was a creditor nation itself, investing and lending vast capital to others, always more than it borrowed. Now the trend line looks most alarming. If the deficits persist around the current level of $400 billion a year or grow larger, the total US indebtedness should reach $3.5 trillion in three years or so. Within a decade, it would total 50 percent of GDP."

There is also a major potential threat to the overpriced dollar in Japan's unresolved deflationary crisis. As observers like Lawrence A. Joyce have commented, the dollar would take a major pummeling if the Japanese government (as seems quite possible) were suddenly required to fulfil its legal obligations to bail out failed Japanese banks (which could easily happen if a sustained scarcity of oil were to keep oil prices at $40 a barrel or higher):

"There is only one place where the Japanese government can get enough money to bail out its banking system: The Japanese government owns about 15% of our U.S. Treasury securities. And it would have to start selling them if it found itself facing a major banking crisis.

"That would send the already ailing dollar down even further. And the initiation of a sale of our Treasury securities by Japan, of course, would immediately trigger a worldwide stampede to do the same before the securities become worth only a fraction of what they were purchased for. At the same time, interest rates in the U.S. would immediately go through the roof."

Washington is of course aware of these problems, and believes that overwhelming military strength and the will to use it supply the answer, persuading or forcing other countries to support the dollar at its artificial level as the key to their own security. In an article entitled "Asia: the Military-Market Link," and published by the U.S. Naval Institute in January 2002, Professor Thomas Barnett of the US Naval War College, wrote: "We trade little pieces of paper (our currency, in the form of a trade deficit) for Asia's amazing array of products and services. We are smart enough to know this is a patently unfair deal unless we offer something of great value along with those little pieces of paper. That product is a strong US Pacific Fleet, which squares the transaction nicely."

There is some merit to this argument with respect to friendly countries like Japan, whose defense costs have been lowered by the US presence in Asia. But of course the Islamic countries of the world are less likely to appreciate the "great value" of a threatening US presence. Instead they are more likely to follow the example of Malaysian Prime Minister Mahathir Mohamad, and turn to the Islamic gold dinar as a way to diminish dollar hegemony in world markets and increase the power of Islamic nations to challenge US policies.

The United States has at present little reason to fear a challenge to the dollar from Malaysia. But Malaysia is an Islamic country; and the US has every reason to fear a similar challenge from the Islamic nations in OPEC, were they to force OPEC to cease OPEC oil sales in dollars, and denominate them instead in euros.

The Unstated US Goal of Preserving Dollar Hegemony Against Competition from the Euro

As noted in a recent article by W. Clark, "The Real But Unspoken Reasons for the Iraq War", the OPEC underpinning for the US dollar has shown signs of erosion in recent years. Iraq was one of the first OPEC countries, in 2000, to convert its reserves from dollars to euros. At the time a commentator for Radio Free Europe/Radio Liberty predicted that Saddam's political act "will cost Iraq millions in lost revenue." In fact Iraq has profited handsomely from the 17 percent gain in the value of the euro against the dollar in that time. <9>

Other countries have gradually been climbing on to the euro bandwagon. An article in the Iran Financial News, 8/25/02, revealed that more than half of Iran's Forex Reserve Fund assets had been converted from dollars to euros. In 2002 China began diversifying its currency reserves away from dollars into euros. According to Business Week (2/17/03) Russia's Central Bank in the past year has doubled its euro holdings to 20 percent of its $48 billion foreign exchange reserves. And for a very good reason, according to its First Deputy Chairman Oleg Vyugin: "Returns on dollar instruments are very low now. Other currency instruments pay more."

Business Week continues:

`The story is the same across the globe. Money traders say that institutions as diverse as Bank of Canada, People's Bank of China, and Central Bank of Taiwan are giving more weight to the European currency. By the end of this year, they predict, the euro could account for 20% of global foreign currency reserves, which today amount to a cool $2.4 trillion. Little more than a year ago, the euro made up just 10%. "No one is saying that the euro's going to replace the dollar as the premier reserve currency," says Michael Klawitter, a currency strategist at WestLB Research in London. "But it will increase in importance for many central banks."...

`The shift to the euro has big implications for the foreign exchange markets and the U.S. and European economies. Currency specialists say the yawning U.S. current account deficit, now at 5%, is bound to drive the dollar down further, and the euro still higher, over the next two to four years. Although the greenback may stage a short-term recovery once the looming war with Iraq is over, predictions are that it will then continue its downward trend, and that central banks will play their part in the descent. "Even if central banks increase their euro holdings by just a few percent, it will have a major impact in the markets," says Klawitter. "We're talking many billions of dollars."'

If not deterred, OPEC could follow suit. Libya has been urging for some time that oil be priced in euros rather than dollars. Javad Yarjani, an Iranian senior OPEC official, told a European Union seminar in April 2002 that, despite the problems raised by such a conversion, "I believe that OPEC will not discount entirely the possibility of adopting euro pricing and payments in the future."

Meanwhile Hugo Chavez has been taking Venezuelan oil out of the petrodollar economy by bartering oil directly for commodities from thirteen other third world countries. Although this has not yet qualified Venezuela for official membership in Bush's "axis of evil," the heavy hand of the Bush Administration in the recent coup attempt against Chavez was only too obvious. (See "Venezuela Coup Linked to Bush Team," London Observer, 4/21/02, for details about the roles of US officials Elliot Abrams, Otto Reich, and John Negroponte.) <10>

Conclusion: How Should the US Be Addressing These Real Problems?

To conclude, the Bush administration is not threatening Iraq out of pique or whim. The recent policies of both parties have indeed made the US vulnerable to foreign oil and petrodollar pressures. But hopefully decent Americans will protest the notion that it is appropriate to rain missiles and bombs upon civilians of another country, who have had little or nothing to do with this crisis of America's own making.

Some in addition will continue to explore avenues whereby America's oil and financial vulnerabilities can be diminished without continuing down the road to Armageddon. These problems are serious, but economists have put forward proposals for diminishing them peacefully and multilaterally. With respect to oil, Ralph Nader has just written, "The demand is simple: Stop this war before it starts and immediately establish a sane national energy security strategy." In fact one key ingredient of such a strategy, restriction of demand, can be found in saner parts of the Baker Institute reports that the Bush administration has mostly chosen to ignore.

But an energy strategy for the United States must be addressed in the larger context of an economic and financial restructuring of global institutions and currency flows. With respect to the more esoteric financial problems of the dollar, the economist and futurist Hazel Henderson has written that "My recommendations for reforming current international institutions, revitalizing the UN and expanding civic society are summarized in Beyond Globalization (1999). A more balanced world order must center on reforming global finance, taxing currency exchange and reducing the dollar's unsustainable role as the world's de facto reserve currency (which is destructive for all countries -- even the US itself). I favor a global reserve currency regime based on the parity of the US dollar and the euro. The fundamentals in the USA and the EU suggest that the G-8 has an opportunity to peg the dollar and the euro into a trading band. This, together with the new issue of SDR's [Special Drawing Rights]. proposed by all the IMF country members, promoted by George Soros and opposed only by the USA, would lend to more stable currency markets."

Without endorsing these specific proposals, I wish to second two rather obvious principles:

1) The problems of global financial instability must be addressed. As George Soros, famed as the man who broke the British pound in 1992, wrote later in the Financial Times,” "To argue that financial markets in general, and international lending in particular, need to be regulated is likely to outrage the financial community. Yet the evidence for just that is overwhelming."

2) A multilateral approach to these core problems is the only way to proceed. The US is strong enough to dominate the world militarily. Economically it is in decline, less and less competitive, and increasingly in debt. The Bush peoples' intention appears to be to override economic realities with military ones, as if there were no risk of economic retribution. They should be mindful of Britain's humiliating retreat from Suez in 1956, a retreat forced on it by the United States as a condition for propping up the failing British pound.

America's influence in the world has up to now been based largely on good will generated by its willingness to resolve matters multilaterally. This legacy of good will should be acknowledged and consolidated by the Bush Administration, as it faces the difficult post-war challenge of restoring law and order in Iraq. US military might may be unchallenged, but the health of our economy and finance depends on peace and cooperation with our friends.

FOOTNOTES

<1> Ari Fleischer Press Briefing of February 6, 2003:

Q Since you speak for the President, we have no access to him, can you categorically deny that the United States will take over the oil fields when we win this war? Which is apparently obvious and you're on your way and I don't think you doubt your victory. Oil -- is it about oil?

MR. FLEISCHER: Helen, as I've told you many times, if this had anything to do with oil, the position of the United States would be to lift the sanctions so the oil could flow. This is not about that. This is about saving lives by protecting the American people....

Q There are reports that we've divided up the oil already, divvied it up with the Russians and French and so forth. Isn't that true?....

MR. FLEISCHER: No, there's no truth to that, that we would divide up the oil fields.

(Concerning Mr. Fleischer's second answer, see footnotes 4 and 5 -- PDS.)

For an exhaustive rebuttal of a similar statement by Ari Fleischer on 10/30/02, see Larry Chin, "The Deep Politics of Regime Removal in Iraq", onlinejournal.com.

<2> In an earlier draft of this essay I quoted extensively (as have many other writers) from a news story by Neil Mackay in the Scotland Sunday Herald (10/6/02). This story claimed that Vice-President Cheney himself commissioned the second Task Force Report, and that former US Secretary of State James Baker delivered the Report to Cheney. I now doubt that either claim is true.

<3> One of the Baker Task Force members was Kenneth Lay, the former chief executive of Enron, which went bankrupt after carrying out massive accountancy fraud. The Task Force Report begins with references to "recent energy price spikes" and "electricity outages in California," which we now know were engineered by Enron market manipulations for which two Enron energy traders have since pleaded guilty to conspiracy charges (Forbes, 2/5/03).

<4> An extremely interesting news item last October in Alexander's oilandgas.com revealed that the US was planning not only for the post-war exploitation of Iraq's oil reserves, but for Iraq's relationship to OPEC as well:

"30-10-02 The US State Department has pushed back its planned meeting with Iraqi opposition leaders on exploiting Iraq's oil and gas reserves after a US military offensive removes Saddam Hussein from power to early December. According to a source at the State Department, all the desired participants are not yet available.

"The Bush administration wants to have a working group of 12 to 20 people focused on Iraqi oil and gas to be able to recommend to an interim government ways of restoring the petroleum sector following a military attack in order to increase oil exports to partially pay for a possible US military occupation government -- further fuelling the view that controlling Iraqi oil is at the heart of the Bush campaign to replace Hussein with a more compliant regime. (Emphasis added -- PDS)....

"According to the source, the working group will not only prepare recommendations for the rehabilitation of the Iraqi petroleum sector post-Hussein, but will address questions regarding the country's continued membership in OPEC and whether it should be allowed to produce as much as possible or be limited by an OPEC quota, and it will consider whether to honour contracts made between the Hussein government and foreign oil companies, including the $ 3.5 b[illio]n project to be carried out by Russian interests to redevelop Iraq's oilfields, which, along with numerous other development projects, has been thwarted by United Nations sanctions.

<5> "Oil firms wait as Iraq crisis unfolds" by Robert Collier, San Francisco Chronicle,9/29/02:

`Iraqi opposition leaders suggest that unless France, Russia and China support the U.S. line in the Security Council, their oil companies may find themselves blacklisted.

`"We will examine all the contracts that Saddam Hussein has made, and we will cancel all those that are not in the interest of the Iraqi people and will reopen bidding on them," said Faisal Qaragholi, operations officer of the Iraqi National Congress, the opposition coalition based in London that plays a central role in the American anti-Hussein strategy.

`Ahmed Chalabi, the INC leader, has gone even further, proposing the creation of consortium of American companies to develop Iraq's oil fields.'

<6> As the Asia Times reported on 10/21/02,

`The war of positioning for a possible post-Saddam Iraqi environment is getting more ruthless by the minute. American oil conglomerates are openly courting representatives of the Iraqi National Congress (INC), the umbrella opposition. The darling of Exxon Mobil and Chevron Texaco is Ahmed Chalabi, US vice President [B]****[/B]

`To widespread doubts about how a pro-American post-Saddam government would respect contracts signed with non-American oil giants, the INC has reassured all players - mostly Russian and European - that the new post-Saddam administration will honor all its PSAs.

`The Future of Iraq Group, a State Department task force, officially is not talking about oil - which sounds like a joke. [Cf. footnote 4 -- PDS] And there's also no official confirmation that oil has been a key issue in the current hardcore Security Council negotiations between the US and Britain, on one side, and France, Russia and China on the other. But it is obviously not by historical accident that oil companies from these five permanent Security Council members are all positioning themselves for the post-Saddam environment.

`People like former CIA supremo James Woolsey are not even disguising Washington's plan to turn Iraq into an American protectorate with an Arab Hamid Karzai al-la Afghanistan eager to open the oil taps for American oil giants. Woolsey had been openly saying that if France and Russia contributed to "regime change", their oil companies would be able to "work together" with the new regime and with American companies. Otherwise, they would be left contemplating passing cargoes in the Gulf.'

<7> Note that the true issue here is not just access to Iraq oil, but control over it. As Michael Parenti reminds us, in 1998, when the UN allowed Iraq to increase its exports into an already over-supplied oil market, this was perceived as a threat to US interests:

`The San Francisco Chronicle (22 February 1998)

<8> "The US handled the quadrupling of oil prices in the 1970s by arranging, by means of secret agreements with the Saudis, for the recycling of petrodollars back into the US economy. The first of these deals assured a special and on-going Saudi stake in the health of the US dollar; the second secured continuing Saudi support for the pricing of all OPEC oil in dollars. See David E. Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets (Ithaca: Cornell UP, 1999), x, 103-1a, 121). These two deals assured that the US economy would not be impoverished by OPEC oil price hikes. The heaviest burdens would be borne instead by the economies of less developed countries" (Peter Dale Scott, Drugs, Oil, and War: The United States in Afganistan, Colombia, and Indochina, (Lanham, MD: Rowman & Littlefield, 2003), 41-42; cf. 53-54).

<9> The 17 percent gain was calculated as of February 2003, when the euro was worth $1.08. Now, as of May 2003, the euro is worth $1.16.

<10> In August 2000 Chavez met with Saddam Hussein in Baghdad, the first head of state to visit him since the 1991 Gulf War. Chavez told the press later that "We spoke at length on how to boost the role of OPEC." This was part of an extended Chavez tour to bolster OPEC unity against US-led pressure to lower oil prices, then at nearly $30 a barrel.

[URL]https://www.globalresearch.ca/articles/ENG401A.html[/URL]
[B]A New American Century?[/B]
[B]Iraq and the hidden euro-dollar wars[/B]
by F. William Engdahl

Current  Concerns at [URL="https://www.currentconcerns.ch/"]www.currentconcerns.ch[/URL] ,  June 2003
[URL="https://www.globalresearch.ca/"]www.globalresearch.ca[/URL]   9 February 2004

The URL of this article is: [URL]https://globalresearch.ca/articles/ENG401A.html[/URL]

 Despite the apparent swift U.S. military success in Iraq, the U.S. dollar has yet to benefit as safe haven currency. This is an unexpected development, as many currency traders had expected the dollar to strengthen on the news of a U.S. win. Capital is flowing out of the dollar, largely into the Euro. Many are beginning to ask whether the objective situation of the U.S. economy is far worse than the stock market would suggest. The future of the dollar is far from a minor issue of interest only to banks or currency traders. It stands at the heart of Pax Americana, or as it is called, The American Century, the system of arrangements on which America's role in the world rests.

 Yet, even as the dollar is steadily dropping against the Euro after the end of fighting in Iraq, Washington appears to be deliberately worsening the dollar fall in public comments. What is taking place is a power game of the highest geopolitical significance, the most fateful perhaps, since the emergence of the United States in 1945 as the world's leading economic power.

 The coalition of interests which converged on war against Iraq as a strategic necessity for the United States, included not only the vocal and highly visible neo-conservative hawks around Defense Secretary Rumsfeld and his deputy, Paul Wolfowitz. It also included powerful permanent interests, on whose global role American economic influence depends, such as the influential energy sector around Halliburton, Exxon Mobil, Chevron Texaco and other giant multinationals. It also included the huge American defense industry interests around Boeing, Lockheed-Martin, Raytheon, Northrup-Grumman and others. The issue for these giant defense and energy conglomerates is not a few fat contracts from the Pentagon to rebuild Iraqi oil facilities and line the pockets of [B]****[/B] Cheney or others. It is a game for the very continuance of American power in the coming decades of the new century. That is not to say that profits are [not] made in the process, but it is purely a byproduct of the global strategic issue.

 In this power game, least understood is the role of preserving the dollar as the world reserve currency, as a major driving factor contributing to Washington's power calculus over Iraq in the past months. American domination in the world ultimately rests on two pillars -- its overwhelming military superiority, especially on the seas; and its control of world economic flows through the role of the dollar as the world's reserve currency. More and more it is clear that the Iraq war was more about preserving the second pillar -- the dollar role -- than the first, the military. In the dollar role, oil is a strategic factor.
    American Century: the three phases

 If we look back over the period since the end of World War II, we can identify several distinct phases of evolution of the American role in the world. The first phase, which began in the immediate postwar period 1945-1948 and the onset of Cold War, could be called the Bretton Woods Gold Exchange system.

 Under the Bretton Woods system in the immediate aftermath of the World War, the order was relatively tranquil. The United States had emerged from the War clearly as the one sole superpower, with a strong industrial base and the largest gold reserves of any nation. The initial task was to rebuild Western Europe and to create a NATO Atlantic alliance against the Soviet Union. The role of the dollar was directly tied to that of gold. So long as America enjoyed the largest gold reserves, and the U.S. economy was far the most productive and efficient producer, the entire Bretton Woods currency structure from French Franc to British Pound Sterling and German Mark was stable. Dollar credits were extended along with Marshall Plan assistance and credits to finance the rebuilding of war-torn Europe. American companies, among them oil multinationals, gained nicely from dominating the trade at the onset of the 1950's. Washington even encouraged creation of the Treaty of Rome in 1958 in order to boost European economic stbility and create larger U.S. export markets in the bargain. For the most part, this initial phase of what Time magazine publisher Henry Luce called 'The American Century', in terms of economic gains, was relatively 'benign' for both the U.S. and Europe. The United States still had the economic flexibility to move.

 This was the era of American liberal foreign policy. The United States was the hegemonic power in the Western community of nations. As it commanded overwhelming gold and economic resources compared with Western Europe or Japan and South Korea, the United States could well afford to be open in its trade relations to European and Japanese exports. The tradeoff was European and Japanese support for the role of the United Sates during the Cold War. American leadership was based during the 1950's and early 1960's less on direct coercion and more on arriving at consensus, whether in GATT trade rounds or other issues. Organizations of elites, such as the Bilderberg meetings, were organized to share the evolving consensus between Europe and the United States.

    This first, more benign phase of the American Century came to an end by the early 1970's.

 The Bretton Woods Gold Exchange began to break down, as Europe got on its feet economically and began to become a strong exporter by the mid-1960's. This growing economic strength in Western Europe coincided with soaring U.S. public deficits as Johnson escalated the tragic war in Vietnam. All during the 1960's, France's de Gaulle began to take its dollar export earnings and demand gold from the U.S. Federal Reserve, legal under Bretton Woods at that time. By November 1967 the drain of gold from U.S. and Bank of England vaults had become critical. The weak link in the Bretton Woods Gold Exchange arrangement was Britain, the 'sick man of Europe'. The link broke as Sterling was devalued in 1967. That merely accelerated the pressure on the U.S. dollar, as French and other central banks increased their call for U.S. gold in exchange for their dollar reserves. They calculated with the soaring war deficits from Vietnam, it was only a matter of months before the United States itself would be forced to devalue againstgold, so better to get their gold out at a high price.

 By May 1971 the drain of U.S. Federal Reserve gold had become alarming, and even the Bank of England joined the French in demanding U.S. gold for their dollars. That was the point where rather than risk a collapse of the gold reserves of the United States, the Nixon Administration opted to abandon gold entirely, going to a system of floating currencies in August 1971. The break with gold opened the door to an entirely new phase of the American Century. In this new phase, control over monetary policy was, in effect, privatized, with large international banks such as Citibank, Chase Manhattan or Barclays Bank assuming the role that central banks had in a gold system, but entirely without gold. 'Market forces' now could determine the dollar. And they did with a vengeance.

 The free floating of the dollar, combined with the 1973 rise in OPEC oil prices by 400% after the Yom Kippur War, created the basis for a second phase of the American Century, the Petrodollar phase.
    Recycling petrodollars

 Beginning the mid-1970's the American Century system of global economic dominance underwent a dramatic change. An Anglo-American oil shock suddenly created enormous demand for the floating dollar. Oil importing countries from Germany to Argentina to Japan, all were faced with how to export in dollars to pay their expensive new oil import bills. OPEC oil countries were flooded with new oil dollars. A major share of these oil dollars came to London and New York banks where a new process was instituted. Henry Kissinger termed it, 'recycling petrodollars'. The recycling strategy was discussed already in May 1971 at the Bilderberger meeting in Saltsjoebaden, Sweden. It was presented by American members of Bilderberg, as detailed in the book Mit der Ölwaffe zur Weltmacht.[1]

 OPEC suddenly was choking on dollars it could not use. U.S. and UK banks took the OPEC dollars and relent them as Eurodollar bonds or loans, to countries of the Third World desperate to borrow dollars to finance oil imports. The buildup of these petrodollar debts by the late 1970's laid the basis for the Third World debt crisis in the 1980's. Hundreds of billions of dollars were recycled between OPEC, the London and New York banks and back to Third World borrowing countries.

 By August 1982 the chain finally broke and Mexico announced it would likely default on repaying Eurodollar loans. The Third World debt crisis began when Paul Volcker and the U.S. Federal Reserve had unilaterally hiked U.S. interest rates in late 1979 to try to save the failing dollar. After three years of record high U.S. interest rates, the dollar was 'saved', but the entire developing sector was choking economically under usurious U.S. interest rates on their petrodollar loans. To enforce debt repayment to the London and New York banks, the banks brought the IMF in to act as 'debt policeman'. Public spending for health, education, welfare was slashed on IMF orders to ensure the banks got timely debt service on their petrodollars.

 The Petrodollar hegemony phase was an attempt by the United States establishment to slow down its geopolitical decline as the hegemonic center of the postwar system. The IMF 'Washington Consensus' was developed to enforce draconian debt collection on Third World countries, to force them to repay dollar debts, prevent any economic independence from the nations of the South, and keep the U.S. banks and the dollar afloat. The Trilateral Commission was created by David Rockefeller and others in 1973 in order to take account of the recent emergence of Japan as an industrial giant and try to bring Japan into the system. Japan, as a major industrial nation, was a major importer of oil. Japanese trade surpluses from export of cars and other goods was used to buy oil in dollars. The remaining surplus was invested in U.S. Treasury bonds to earn interest. The G-7 was founded to keep Japan and Western Europe inside the U.S. dollar system. From time to time into the 1980's various voices in Japan would call for three currncies -- dollar, German mark and yen -- to share the world reserve role. It never happened. The dollar remained dominant.

 From a narrow standpoint, the Petrodollar phase of hegemony seemed to work. Underneath, it was based on ever-worsening economic decline in living standards across the world, as IMF policies destroyed national economic growth and broke open markets for globalizing multinationals seeking cheap production outsourcing in the 1980's and especially into the 1990's.

 Yet, even in the Petrodollar phase, American foreign economic policy and military policy was dominated by the voices of the traditional liberal consensus. American power depended on negotiating periodic new arrangements in trade or other issues with its allies in Europe, Japan and East Asia.
    A Petro-euro rival?

 The end of the Cold War and the emergence of a new Single Europe and the European Monetary Union in the early 1990's, began to present an entirely new challenge to the American Century. It took some years, more than a decade after the 1991 Gulf War, for this new challenge to emerge full-blown. The present Iraq war is only intelligible as a major battle in the new, third phase of securing American dominance. This phase has already been called, 'democratic imperialism', a favorite term of Max Boot and other neo-conservatives. As Iraq events suggest, it is not likely to be very democratic, but definitely likely to be imperialist.

 Unlike the earlier periods after 1945, in the new era, the U.S. freedom to grant concessions to other members of the G-7 is gone. Now raw power is the only vehicle to maintain American long-term dominance. The best expression of this argument comes from the neo-conservative hawks around Paul Wolfowitz, Richard Perle, William Kristol and others.

 The point to stress, however, is that the neo-conservatives enjoy such influence since September 11 because a majority in the U.S. power establishment finds their views useful to advance a new aggressive U.S. role in the world.

 Rather than work out areas of agreement with European partners, Washington increasingly sees Euroland as the major strategic threat to American hegemony, especially 'Old Europe' of Germany and France. Just as Britain in decline after 1870 resorted to increasingly desperate imperial wars in South Africa and elsewhere, so the United States is using its military might to try to advance what it no longer can by economic means. Here the dollar is the Achilles heel.

 With creation of the Euro over the past five years, an entirely new element has been added to the global system, one which defines what we can call a third phase of the American Century. This phase, in which the latest Iraq war plays a major role, threatens to bring a new, malignant or imperial phase to replace the earlier phases of American hegemony. The neo-conservatives are open about their imperial agenda, while more traditional U.S. policy voices try to deny it. The economic reality faced by the dollar at the start of the new Century, defines this new phase in an ominous way.

 There is a qualitative difference emerging between the two initial phases of the American Century -- that of 1945-1973, and of 1973-1999 -- and the new emerging phase of continued domination in the wake of the 9.11 attacks and the Iraq War. Post-1945 American power before now was predominately that of a hegemon. While a hegemon is the dominant power, in an unequal distribution of power, its power is not generated by coercion alone, but also by consent among its allied powers. This is because the hegemon is compelled to perform certain services to the allies such as military security or regulating world markets for the benefit of the larger group, itself included. An imperial power has no such obligations to allies, and not the freedom for such, only the raw dictates of how to hold on to its declining power -- what some call 'imperial overstretch'. This is the world which neo-conservative hawks around Rumsfeld and Cheney are suggesting America has to dominate, with a policy of pre-emptive war.

    A hidden war between the dollar and the new Euro currency for global hegemony is at the heart of this new phase.

 To understand the importance of this unspoken battle for currency hegemony, we first must understand that since the emergence of the United States as the dominant global superpower after 1945, U.S. hegemony has rested on two unchallengeable pillars. First, the overwhelming U.S. military superiority over all other rivals. The United States today spends on defense more than three times the total for the entire European Union, some $ 396 billion versus $118 billion last year, and more than the next 15 largest nations combined. Washington plans an added $ 2.1 trillion over the coming five years on defense. No nation or group of nations can come close in defense spending. China is at least 30 years away from becoming a serious military threat. No one is serious about taking on U.S. military might.

 The second pillar of American dominance in the world is the dominant role of the U.S. dollar as reserve currency. Until the advent of the Euro in late 1999, there was no potential challenge to this dollar hegemony in world trade. The Petrodollar has been at the heart of the dollar hegemony since the 1970's. The dollar hegemony is strategic to the future of American global predominance, in many respects as important if not more so, than the overwhelming military power.
    Dollar fiat money

 The crucial shift took place when Nixon took the dollar off a fixed gold reserve to float against other currencies. This removed the restraints on printing new dollars. The limit was only how many dollars the rest of the world would take.

 By their firm agreement with Saudi Arabia, as the largest OPEC oil producer, Washington guaranteed that the world's largest commodity, oil, the essential for every nation's economy, the basis of all transport and much of the industrial economy, could only be purchased in world markets in dollars. The deal had been fixed in June 1974 by Secretary of State Henry Kissinger, establishing the U.S.-Saudi Arabian Joint Commission on Economic Cooperation. The U.S. Treasury and the New York Federal Reserve would 'allow' the Saudi central bank, SAMA, to buy U.S. Treasury bonds with Saudi petrodollars. In 1975 OPEC officially agreed to sell its oil only for dollars. A secret U.S. military agreement to arm Saudi Arabia was the quid pro quo.

 Until November 2000, no OPEC country dared violate the dollar price rule. So long as the dollar was the strongest currency, there was little reason to as well. But November was when French and other Euroland members finally convinced Saddam Hussein to defy the United States by selling Iraq's oil-for-food not in dollars, 'the enemy currency' as Iraq named it, but only in euros. The euros were on deposit in a special UN account of the leading French bank, BNP Paribas. Radio Liberty of the U.S. State Department ran a short wire on the news and the story was quickly hushed.[2]

 This little-noted Iraq move to defy the dollar in favor of the euro, in itself, was insignificant. Yet, if it were to spread, especially at a point the dollar was already weakening, it could create a panic selloff of dollars by foreign central banks and OPEC oil producers. In the months before the latest Iraq war, hints in this direction were heard from Russia, Iran, Indonesia and even Venezuela. An Iranian OPEC official, Javad Yarjani, delivered a detailed analysis of how OPEC at some future point might sell its oil to the EU for euros not dollars. He spoke in April, 2002 in Oviedo Spain at the invitation of the EU. All indications are that the Iraq war was seized on as the easiest way to deliver a deadly pre-emptive warning to OPEC and others, not to flirt with abandoning the Petro-dollar system in favor of one based on the euro.

 Informed banking circles in the City of London and elsewhere in Europe privately confirm the significance of that little-noted Iraq move from petro-dollar to petro-euro. 'The Iraq move was a declaration of war against the dollar', one senior London banker told me recently. 'As soon as it was clear that Britain and the U.S. had taken Iraq, a great sigh of relief was heard in London City banks. They said privately, "now we don't have to worry about that damn euro threat"'.

 Why would something so small be such a strategic threat to London and New York, or to the United States that an American President would apparently risk fifty years of alliance relations globally, and more to make a military attack whose justification could not even be proved to the world?

    The answer is the unique role of the petro-dollar to underpin American economic hegemony.

 How does it work? So long as almost 70% of world trade is done in dollars, the dollar is the currency which central banks accumulate as reserves. But central banks, whether China or Japan or Brazil or Russia, do not simply stack dollars in their vaults. Currencies have one advantage over gold. A central bank can use it to buy the state bonds of the issuer, the United States. Most countries around the world are forced to control trade deficits or face currency collapse. Not the United States. This is because of the dollar reserve currency role. And the underpinning of the reserve role is the petrodollar. Every nation needs to get dollars to import oil, some more than others. This means their trade targets dollar countries, above all the U.S.

 Because oil is an essential commodity for every nation, the petrodollar system, which exists to the present, demands the buildup of huge trade surpluses in order to accumulate dollar surpluses. This is the case for every country but one -- the United States which controls the dollar and prints it at will or fiat. Because today the majority of all international trade is done in dollars, countries must go abroad to get the means of payment they cannot themselves issue. The entire global trade structure today works around this dynamic, from Russia to China, from Brazil to South Korea and Japan. Everyone aims to maximize dollar surpluses from their export trade.

 To keep this process going, the United States has agreed to be 'importer of last resort' because its entire monetary hegemony depends on this dollar recycling.

 The central banks of Japan, China, South Korea, Russia and the rest all buy U.S. Treasury securities with their dollars. That in turn allows the United States to have a stable dollar, far lower interest rates, and run a $ 500 billion annual balance of payments deficit with the rest of the world. The Federal Reserve controls the dollar printing presses, and the world needs its dollars. It is as simple as that.
    The U.S. foreign debt threat

 But, not so simple perhaps. This is a highly unstable system, as U.S. trade deficits and net debt or liabilities to foreign accounts are now well over 22% of GDP as of 2000, and climbing rapidly. The net foreign indebtedness of the United States -- public as well as private -- is beginning to explode ominously. In the past three years since the U.S. stock collapse and the re-emergence of budget deficits in Washington, the net debt position, according to a recent study by the Pestel Institute in Hanover, has almost doubled. In 1999, the peak of the dot.com bubble fury, U.S. net debt to foreigners was some $ 1.4 trillions. By the end of this year, it will exceed an estimated $ 3.7 trillion! Before 1989, the United States had been a net creditor, gaining more from its foreign investments than it paid to them in interest on Treasury bonds or other U.S. assets. Since the end of the Cold War, the United States has become a net foreign debtor nation to the tune of $3.7 trillion! This is not what Hilmar Kopper could all 'peanuts'.

 It does not require much foresight to see the strategic threat of these deficits to the role of the United States. With an annual current account (mainly trade) deficit of some $500 billion, some 5% of GDP, the United States must import or attract at least $1.4 billion every day, to avoid a dollar collapse and keep its interest rates low enough to support the debt-burdened corporate economy. That net debt is getting worse at a dramatic pace. Were France, Germany, Russia and a number of OPEC oil countries to now shift even a small portion of their dollar reserves into euro to buy bonds of Germany or France or the like, the United States would face a strategic crisis beyond any of the postwar period. To pre-empt this threat, was one of the most strategic hidden reasons for the decision to go for 'regime change' as it is known, in Iraq. It is as simple and as cold as this. The future of America's sole superpower status depended on pre-empting the threat emerging from Eurasia and Euroland especially. Iraq was andis a chess piece in a far larger strategic game, one for the highest stakes.
    The euro threatens the hegemony of the US

 When the euro was launched at the end of the last decade, leading EU government figures, bankers from Deutsche Bank's Norbert Walter, and French President Chirac went to major holders of dollar reserves -- China, Japan, Russia -- and tried to convince them to shift out of dollars at least a part of their reserves, and into euros. However, that clashed with the need to devalue the too-high euro, so German exports could stabilize Euroland growth. A falling euro was the case until 2002.

 Then, with the debacle of the U.S. dot.com bubble bursting, the Enron and Worldcom finance scandals, and the recession in the U.S., the dollar began to lose its attraction for foreign investors. The euro gained steadily until the end of 2002. Then, as France and Germany prepared their secret diplomatic strategy to block war in the UN Security Council, rumors surfaced that the central banks of Russia and China had quietly began to dump dollars and buy euros. The result was a dollar free-fall on the eve of war. The stage was set should Washington lose the Iraq war, or it turn into a long, bloody debacle.

 But Washington, leading New York banks and the higher echelons of the U.S. establishment clearly knew what was at stake. Iraq was not about ordinary chemical or even nuclear weapons of mass destruction. The 'weapon of mass destruction' was the threat that others would follow Iraq and shift to euros out of dollars, creating mass destruction of the United States' hegemonic economic role in the world. As one economist termed it, an end to the dollar reserve role would be a 'catastrophe' for the United States. Interest rates of the Federal Reserve would have to be pushed higher than in 1979 when Paul Volcker raised rates above 17% to try to stop the collapse of the dollar then. Few realize that 1979 dollar crisis was also a direct result of moves by Germany, and France, under Schmidt and Giscard, to defend Europe together with Saudi Arabia and others who began selling U.S. Treasury bonds to protest Carter Administration policy. It is also worth recalling that after the Volcker dollar rescue, the Reagan Administraion, backed by many of today's neo-conservative hawks, began a huge U.S. military defense spending to challenge the Soviet Union.
    Eurasia versus the Anglo-American Island Power

 This fight over petro-dollars versus petro-euros, which started in Iraq, is by no means over, despite the apparent victory of the United States in Iraq. The euro was created by French geopolitical strategists for establishing a multipolar world after the collapse of the Soviet Union. The aim was to balance the overwhelming dominance of the U.S. in world affairs. Significantly, French strategists rely on a British geopolitical strategist to develop their rival power alternative to the U.S., namely Sir Halford Mackinder.

 This past February, a French intelligence-connected newsletter, Intelligence Online, wrote a piece, 'The Strategy Behind Paris-Berlin-Moscow Tie'. Referring to the UN Security Council bloc of France-Germany-Russia to try to prevent the U.S.-British war moves in Iraq, the Paris report notes the recent efforts of European and other powers to create a counterpower to that of the United States. Referring to the new ties of France with Germany and more recently with Putin, they note, 'a new logic, and even dynamic seems to have emerged. An alliance between Paris, Moscow and Berlin running from the Atlantic to Asia could foreshadow a limit to U.S. power. For the first time since the beginning of the 20th Century, the notion of a world heartland -- the nightmare of British strategists -- has crept back into international relations.'[3]

 Mackinder, father of British geopolitics, wrote in his remarkable paper, 'The Geographical Pivot of History' that the control of the Eurasian heartland, from Normandy France to Vladivostock, was the only possible threat to oppose the naval supremacy of Britain. British diplomacy until 1914 was based on preventing any such Eurasian threat, that time around the expansion policy of the German Kaiser eastwards with the Baghdad Railway and the Tirpitz German Navy buildup. World War I was the result. Referring to the ongoing efforts of the British and later Americans to prevent a Eurasian combination as rival, the Paris intelligence report stressed, 'That strategic approach (i.e. to create Eurasian heartland unity) lies at the origin of all clashes between Continental powers and maritime powers (UK, U.S. and Japan) ... It is Washington's supremacy over the seas that, even now, dictates London's unshakeable support for the U.S. and the alliance between Tony Blair and Bush.'

 Another well-connected French journal, Reseau Voltaire.net, wrote on the eve of the Iraq war that the dollar was 'The Achilles heel of the USA'.[4] That is an understatement to put it mildly.
    Iraq was planned long before

 This emerging threat from a French-led Euro policy with Iraq and other countries, led some leading circles in the U.S. policy establishment to begin thinking of pre-empting threats to the Petro-dollar system well before Bush was even President. While Perle, Wolfowitz and other leading neo-conservatives played a leading role in developing a strategy to preserve the faltering system, a new consensus was shaping which included major elements of traditional Cold War establishment around figures like Rumsfeld and Cheney.

 In September 2000, during the campaign, a small Washington think-tank, the Project for a New American Century, released a major policy study: 'Rebuilding America's Defenses: Strategies, Forces and Resources for a New Century'. The report is useful in many areas to better understand present Administration policy. On Iraq, it states, 'The United States has sought for decades to play a more permanent role in Gulf regional security. While the unresolved conflict with Iraq provides the immediate justification, the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein.'

 This PNAC paper is the essential basis for the September 2002 Presidential White Paper, 'The National Security Strategy of the United States of America'. The PNAC's paper supports a 'blueprint for maintaining global U.S. pre-eminence, precluding the rise of a great power rival, and shaping the international security order in line with American principles and interests. The American Grand Strategy must be pursued as far into the future as possible.' Further, the U.S. must, 'discourage advanced industrial nations from challenging our leadership or even aspiring to a larger regional or global role.'

 The PNAC membership in 2000 reads like a roster of the Bush Administration today. It included Cheney, his wife Lynne Cheney, neo-conservative Cheney aide, Lewis Libby; Donald Rumsfeld; Rumsfeld Deputy Secretary Paul Wolfowitz. It also included NSC Middle East head, Elliott Abrams; John Bolton of the State Department; Richard Perle, and William Kristol. As well, former Lockheed-Martin vice president, Bruce Jackson, and ex-CIA head James Woolsey were on board, along with Norman Podhoretz, another founding neo-con. Woolsey and Podhoretz speak openly of being in 'World War IV'.

 It is becoming increasingly clear to many that the war in Iraq is about preserving a bankrupt American Century model of global dominance. It is also clear that Iraq is not the end. What is not yet clear and must be openly debated around the world, is how to replace the failed Petro-dollar order with a just new system for global economic prosperity and security.

 Now, as Iraq threatens to explode in internal chaos, it is important to rethink the entire postwar monetary order anew. The present French-German-Russian alliance to create a counterweight to the United States requires not merely a French-led version of the Petro-dollar system, some Petro-euro system, that continues the bankrupt American Century, only with a French accent, and euros replacing dollars. That would only continue to destroy living standards across the world, adding to human waste and soaring unemployment in industrial as well as developing nations. We must entirely rethink what began briefly with some economists during the 1998 Asia crisis, the basis of a new monetary system which supports human development, and does not destroy it.
    References:

 1 Engdahl, F. William, Mit der Ölwaffe zur Weltmacht, edition steinherz, Wiesbaden, 2002. Chapter 9-10 detail the creation and impact of the Petrodollar recycling and the secret 1973 Saltsjoebaden meeting in preparing the oil shock.

 2 Radio Liberty/RFE press release, Charles Recknagel, 'Iraq: Baghdad moves to Euro', November 1, 2000. The wire was picked up for about 48 hours by CNN and other media and promptly vanished from the headlines. Since William Clark's article, 'The real but unspoken reasons for the upcoming Iraq war' appeared in the Internet on February 2, 2003, a lively online discussion of the oil-euro factor has taken place, but outside occasional references in the London Guardian press, little in mainstream media has been said of this strategic background factor in the Washington decision to go against Iraq.

 3 Intelligence Online, no.447: 20/02/2003. 'The Strategy Behind Paris-Berlin-Moscow Tie'. Intelligence Online Editor, Guillaume Dasquie, is a French specialist on strategic intelligence and has worked for French intelligence services on the bin Laden case and other investigations. His reference to French Eurasian geopolitics clearly reflects high-level French thinking.

 4 Reseau voltaire.net, 'Suprematie du dollar: Le Talon d'Achille des USA', appeared April 4, 2003. It details a French analysis of the vulnerability of the dollar system on the eve of Iraq war.[/SIZE]                                                                                                                                                                                                                                                           [SIZE=1] Washington DC, undated.  Cheney's pal and major contender for the title of Iraq's number one opposition figure. Chalabi, the INC leader, has already stressed on the record that he favors the creation of a "US-led consortium to develop Iraqi oil fields. American companies will have a big shot at Iraqi oil."  headlined its story "IRAQ'S OIL POSES THREAT TO THE WEST." In fact, Iraqi crude poses no threat to "the West" only to Western oil investors. If Iraq were able to reenter the international oil market, the Chronicle reported, "it would devalue British North Sea oil, undermine American oil production and---much more important---it would destroy the huge profits which the United States [read,US oil companies] stands to gain from its massive investment in Caucasian oil production, especially in Azerbaijan."'[/SIZE]