Coastal Post Online


May, 2003

Petrodollars Vs Petroeuros-Why We Fight Oiled War II
By Jim Scanlon
   Dick Cheney said, "This has nothing to do with oil." President Bush and his spokesman Ari Fleisher, deny repeatedly that oil has anything to do with it. Tony Blair said, "...there is no way ever if oil were the issue..." Colin Powell did not mention it in his speech to the UN. The mantra of the administration is "The oil belongs to the Iraqi people".
   But is oil the issue? And is the euro and the dollar and national economies involved? Many scholars and thoughtful commentators think so. The US military is, without doubt, the strongest in the world and, without doubt, the US economy is declining. For many decades the US was a creditor nation, lending money to others, but during the 1980s the US became a debtor nation, buying more goods outside the country, and building up a foreign debt of some $2,500,000,000,000, which is expected to rise to $3,500,000,000,000 over the next 3 years! This debt is sustained by the inflow of foreign investment money which has fallen dramatically since September 11, 2001, imperiling the value of the dollar and the way we live.
   Argentina's economy collapsed with a foreign debt of only $132,000,000,000. This collapse was tolerated only because oil and international goods are not denominated in the peso.
   Basically, and greatly simplified, the US trades pieces of paper (the dollar) for things that other countries make. At present, oil sales of the OPEC cartel are denominated in US dollars, which requires that countries buying oil pay in dollars. Both buyer and seller therefore maintain dollar reserves and, in maintaining dollar reserves, they must invest them The existence of the newly instituted and widely accepted euro, allows sales of oil to be denominated denominated in euros. Iraqi oil was priced in euros. Libya and Iran (Axis of Evil Countries) have toyed with pricing oil sales in euros, as has Hugo Chavez of Venezuela --- who recently survived two coup d'etat attempts.
   The three largest "proven" oil reserves in the world are in Saudi Arabia (a feudal state), Iraq and the United Arab Emirates (a collection of small feudal states). Taking over Iraq, installing a protectorate as feudal as possible, and pricing its oil in dollars takes enormous pressure off the US currency and its economy. It also helps explain part of the resistance of France and Germany, both euro countries, to the US and UK attack on Iraq. One might predict from the foregoing, that, if the Anglo American invasion is successful, the UK will not switch to the euro and that the European Union will be weakened.
   It is critical to remember that the importance of Persian Gulf oil is not only in it's vast volume, but in its accessibility and ease of transport. The basic reason we are fighting is to preserve the Almighty Dollar as almighty.
   Based on the above, one might predict that, despite threatening other middle eastern countries, there will be no further invasions in the foreseeable future and no serious coup attempts against any country with the exception of Venezuela.
   It is strange and unusual to hear George Bush, Richard Cheney and others constantly referring to the oil in Mesopotamia as "belonging to the Iraqi people." One does not hear of the oil in Texas or Alaska or Nigeria as "belonging to the American people" or "the Nigerian people." It sounds much too socialistic. Just recently (April 18th) George Shultz, Secretary of the Treasury under Richard Nixon and Secretary of State under Ronald Reagan, and now a director of the Bechtel Corporation, suggested that Iraq's oil be privatized. Iraq is, as is Kuwait, an artificial country whose borders were drawn by British and French imperial officials at the end of World War I when the Turkish Empire was dismembered. It is a "Balkanized" state, a conglomeration of vastly different peoples and cultures. There are some similarities to the now defunct Yugoslavia also a remnant of the Turkish and Austro-Hungarian Empires, which was allowed to disintegrate, in reality, if not legally. It appears that Iraq will not be allowed to disintegrate.


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