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 in 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 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 the failure
of gaining UN Security Council support for invading Iraq, the
USA has threatened to invade without authorisation. It would act
in breach of the UNs very constitution to allegedly enforced UN
resolutions.
It is plain bizarre.
Where does this desperation for war come from?
There are many things
driving President Bush and his administration to invade Iraq,
unseat Saddam Hussein and take over the country.
But the biggest one
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.
Iraq is a European
Union beachhead in that confrontation. America had a monopoly
on the oil trade, with the US dollar being the fiat currency,
but Iraq broke ranks in 1999, started to trade oil in the EU's
euros, and profited.
If America invades
Iraq and takes over, it will hurl the EU and its euro back into
the sea and 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. Presumably,
China would like to see the Europeans build a share of international
trade currency ownership at this point while it continues to grow
its international trading presence to the point where it, too,
can share the leadership rewards.
DEBATE BUILDING ON
THE INTERNET
Oddly, little or nothing
is appearing in the general media about this issue, although key
people are becoming aware of it - note the recent slide in the
value of the US dollar.
Are traders afraid
of war? They are more likely to be afraid there will not be war.
But 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, andratical.org.
This debate is
not about whether America would suffer from losing the US dollar
monopoly on oil trading - 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.
The USA could collapse economically.
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
dollars dominance.
In 1999, 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 bete noir, 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 its 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.
AMERICA'S PRECARIOUS
ECONOMIC POSITION
America is so eager
to attack Iraq 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 powerful
force in general international trade. 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 minimizing the
various contrived debts America has forced on some of them), the
US's difficulties would build.
Even if only a small
part of the oil trade went euro, that would do two 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.
* The markets would
over-react as usual and in no time, the US dollar's value would
be spiralling down.
THE US SOLUTION
America's response
to the euro threat was predictable. It has come out fighting.
It aims to achieve four 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.
* 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?
* Place the second
largest reserves of oil in the world under direct American control.
* Provide a secular,
subject state where the US 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. This would enable
the US to avoid using what it sees as the unreliable Turkey, the
politically impossible Israel and surely the next state in its
sights, Saudi Arabia, the birthplace of al Qaeda and a hotbed
of anti-American sentiment.
* Severely setback
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 - and put Venezuela's oil into American
hands.
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.
It is the boldest
grab for absolute power the world has seen in modern times. America
is hardly likely to allow the possible slaughter of a few hundred
thousand Iraqis stand between it and world domination. President
Bush did promise to protect the American way of life. This is
what he meant.
JUSTIFYING WAR
Obviously, the US
could not simply invade Iraq, so it began casting around for a
legitimate 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.
The USA's justifications
for invading Iraq are looking less impressive by the day.
The US's statements
that it would invade Iraq unilaterally without UN support and
in defiance of the UN make a total nonsense of any American 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.
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 reinstalled
a murderous group of warlords which America had earlier installed,
then deposed, in favour of the now hated 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.
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 Chive 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
for 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 will come later when munitions and equipment have
to be replaced after the war. But munitions, hardware and so on
are being replaced all the time -- contracts are out. Some contracts
will simply be brought forward and some others will be ramped
up a bit, but spread over a few years, the cost will 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 dollars it is going to war to
protect. 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 oiltrade 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 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 has control of Iraqi oil, it could distort
the market to Russia's enormous disadvantage.
In addition, Russia
has interests in Iraqi oil; an American take over could see them
lost. Already on its knees, Russia could be beggared before a
mile of the Afghanistan pipeline is laid.
ANOTHER SOLUTION?
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.
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 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 to the US, with appropriate safeguards for ordinary
Iraqis and democracy in Venezuela?
Europe might then
be forced to adopt a smarter approach- perhaps accelerating the
development of alternative energy technologies which would reduce
the EU's reliance on oil for energy and produce goods it could
trade for euros- shifting the world trade balance. Now that would
be a very positive outcome for everyone . . . . .
Geoffrey Heard
is a Melbourne, Australia, writer on the environment, sustainability
and human rights. . . . . . Geoffrey Heard C 2003. Anyone is free
to circulate this document provided it is complete and in its
current form with attribution and no payment is asked. It is prohibited
to reproduce this document or any part of it for commercial gain
without the prior permission of the author. For such permission,
contact the author at gheard@surf.net.au
SOME REFERENCES AND
FURTHER INFORMATION:
'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, 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.
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
Asia
Times online: Global Economy US dollar hegemony has got to go
By Henry C K Liu The
Observer, The Enemy Within by Gore Vidal London, Sunday 27
October 2002