< < <
Date Index
> > >
Oil, the Euro and Iraq
by n0705590
07 April 2003 08:14 UTC
< < <
Thread Index
> > >
Dear all,

I generally dislike posting articles or material freely available on the net.  
However, this one caught my eye, and I'm not quite sure how to work it out:


Basically, it attempts to demonstrate that the war was necessary because of a 
clear thret to the Dollar hegemony.  Still, I'm not sure whether I should buy 
the whole argument.  Perhaps AGF could enlighten us on this.  By the way, find 
below another article on the issue

Defending the dollar
07.04.2003 [08:35]

 Writing in the Sunday Times on March 30, Judge Richard Goldstone stated that 
there were only two lawful ways in which the U.S. could use military force 
against Iraq. One was if the UN Security Council sanctioned it; the other was 
in the case of "dire self-defence". The U.S. war against Iraq is in dire 
defence of dollar imperialism against the threat of the euro.

Put another way, the war is about world economic dominance. That, according to 
Australian analyst Geoffrey Heard, is the reason for the Bush Administration's 
determination to oust Saddam Hussein's regime, because his policy of selling 
oil in euros is threatening U.S. global hegemony.

The origin of Establishment America's problem with Iraq goes back to 1999 when 
Iraq broke ranks among the oil producers and began to trade its oil in euros 
instead of U.S. dollars. As Heard notes, under an Opec agreement all oil has 
been traded in greenbacks since 1971. America's monopoly of the oil business 
has premised the U.S. dollar's supremacy among world currencies. Initially the 
U.S. scoffed at Iraq's move to the euro but by 2001 disdain had turned to 
alarm. Iran indicated an interest in changing to euros while Russia has been 
seeking to increase its oil production aimed at European sales - in euros, of 
course. Venezuela, the world's fourth largest producer, has been cutting out 
the dollar in its dealings and bartering with various countries, including 

The net result of these developments meant that the dollar's stranglehold on 
oil was slipping and with it America's dominance of world trade. With Iraq 
having the world's second largest oil reserves, the American Establishment, 
which is sodden in oil investments, simply had to act against Saddam - even if 
it meant going to war. The alternative was the meltdown of the U.S. economy.

America was in serious trouble long before the Al-Qaeda attacks of September 
11, 2001. Its real threat came not from the Middle East so much as from the EU 
with its new currency, the euro. Commanding 40% of world trade, the EU poses a 
major challenge to continued U.S. dominance. If only a few Opec members 
switched to euros, argues Heard, that would hurt the U.S. in two critical 
ways: it would result in a stronger euro and an increase in the "eurozone" and 
it would trigger dollar dumping and depress the greenback's value.

With the dollar facing bleak times, the only thing left for the Bush 
administration as the proxy of Establishment America (Al Gore would have had 
to have done the same) was to come out fighting. In one respect, Bush has been 
very frank about the purpose of this war. He has said it is to protect the 
American way of life. Indeed. And that means ensuring the reign of dollar 

The war against Iraq is, therefore, a war both to defend and to assert dollar 
dominance. Heard sees four objectives for the U.S. in this war:

return Iraq's oil reserves to the dollar circle;

send a clear message to other oil producers as to what will happen to them if 
they try to leave the dollar zone; deal a setback to the EU and its euro; use 
the war as a cover to get Venezuela's oil back into the dollar circle by means 
of covert CIA action.

The cost of the war is not measured in terms of the images shown on our 
television screens. In fact, in Uncle Sam's view the cost of going to war is 
negligible compared to the cost of not going to war. The possible loss of U.S. 
power and the end of dollar imperialism, as far as Washington is concerned, 
far exceeds all other considerations.

The final aspects of Heard's analysis provide insight as to the positions of 
Australia and the UK. Having significant U.S. dollar reserves and strong trade 
links with the U.S., it is in Australia's interests to support the U.S. and to 
see to it that the ascendancy of the euro is checked. Britain, which has yet 
to adopt the euro as its currency, stands to gain time and room to manoeuvre 
by siding with the U.S. A U.S. victory would also, in effect, give the EU 
principals, France and Germany, bloody noses and place the UK in a position 
either to demand a better deal from the EU for adopting the euro or to 
distance itself from Europe and to align with America. A weakened and divided 
EU is a U.S. policy strategy.

Whose side should South Africa be on? It's really a case of Hobson's choice. 
When the U.S. economy went concave in 1929, the whole world was sucked in to 
its depression. Only the mad mullahs would want a repetition of that. Which is 
why the anti-U.S. rhetoric of the ANC government, compounded by Nelson 
Mandela's virulent anti-Bush remarks, is shortsighted. It would have been far 
better to have adopted a neutral stance, particularly since an election is due 
in a year's time. In 1999 the ANC's election expenses enjoyed considerable 
American and Middle Eastern funding. Given the physical and political costs of 
the war, the chances of a repeat of such funding in 2004 must range from 
uncertain to unlikely. Nonetheless, the aftershocks of the war on Iraq may 
cost the ANC dearly.


Damian Popolo
PhD candidate
Newcastle University
Department of Politics
Room 301

< < <
Date Index
> > >
World Systems Network List Archives
at CSF
Subscribe to World Systems Network < < <
Thread Index
> > >