Is there a scheming Doctor Evil behind the Bush Administration-labelled, 'Axis of Evil'?
The latest reports circulating around Iran's nuclear programme are of concern to both the United States and the state of Israel. Since 2002, the US has argued that Iran does not need nuclear power because of its abundant oil and natural gas reserves, since oil power is cheaper to produce than nuclear power. In a testimony to US Congress, a hawkish John Bolton stated that natural gas was being flared-off (burned without being used) by Iran, and if used for electricity generation instead, could generate some 4000 megawatts of continuous electricity. However, the UK Parliament's Office of Science and Technology who was investigating this claim, countered Bolton's argument by saying that his statement was not supported by a true analysis of the facts, i.e. that much of the gas flared-off by Iran is not considered 'recoverable' for energy use. Peak oil and the lag-time in building nuclear power plants (as demanded by President Bush in February 2006) also indicates that even oil producers ought to consider alternative sources of energy that will effectively allow them to conserve oil.
Iran contends that nuclear power is necessary for its growing population and its country's economic prosperity and industrialization. In support of this argument, it points to these simple facts: Iran's population has more than doubled in 20 years; the country regularly imports gasoline and electricity; and, burning fossil fuels is harmful to the environment. Furthermore, Iran questions the world's skeptics about why it shouldn't be allowed to diversify its sources of energy at a time when there are fears of its oil deposits eventually being depleted. Iran also raises financial questions that suggest developing its excess oil capacity would cost $40 billion, in comparison to harnessing nuclear power, which would only cost a fraction of this.
So, what is really going on?
One theory behind the US's resistance to accepting Iran's nuclear power ambition lies in Middle Eastern geopolitics. In principle, the US believes that it should deter Iran from obtaining a nuclear weapons capability. At present, Israel, a very close ally of the US, is the only country in the region with a suspected nuclear weapons program.
Another theory implicates the US in a complex and strategic economic battle to preserve 'dollar imperialism' as its hegemony began to be threatened by the euro. As it stands today, the US effectively controls the world's oil-market and the US dollar has become the 'fiat' international trading currency. The US currency accounts for approximately two-thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all the world exports are denominated in dollars and US currency accounts for about two-thirds of all official exchange reserves. The simple fact that billions of dollars worth of oil is priced in US dollars ensures the world domination of the dollar. It allows the US to act as the world's central bank, printing currency acceptable everywhere. The dollar has become an oil-backed, not gold-backed, currency.
(About the fiat dollar: Fiat money or currency (usually paper money) is a type of currency whose only value is that a government made a 'fiat' (decree) that the money is a legal method of exchange. Unlike commodity money, or representative money, it is not based in any other commodity such as gold or silver and is not covered by a special reserve. Fiat money is a promise to pay by the usurer and does not necessarily have any intrinsic value. Its value lies in the issuer's financial means and creditworthiness. Oil can be bought from OPEC only if you have dollars. Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the WB/IMF, which have to be paid back, with interest, in dollars. This creates a great demand for dollars outside the US. In contrast, the US only has to print dollar bills in exchange for goods. Even for its own oil imports, the US can print dollar bills without exporting or selling its goods. For instance, in 2003 the current US account deficit and external debt has been running at more than $500 billion. Put in simple terms, the U.S. will receive $500 billion more in goods and services from other countries than it will provide them. The imported goods are paid by printing dollar bills, i.e., 'fiat' dollars.)
Fiat dollars are important to the US economy. They are invested or deposited in US banks or the US Treasury by most non-oil producing, underdeveloped countries to protect their currencies and generate oil credit. Today foreigners hold 48 percent of the US Treasury bond market and own 24 percent of the US corporate bond market and 20 percent of all US corporations. In total, foreigners hold $8 trillion of US assets. Nevertheless, the foreign deposited dollars strengthen the US dollar and give the United States enormous power to manipulate the world economy, set rules, and prevail in the international market. If OPEC oil could be sold in other currencies, e.g. the euro, then US economic dominance-dollar imperialism or hegemony-would be seriously challenged. More and more oil importing countries would acquire the euro as their reserve, its value would increase, and a larger amount of trade would be transacted and denominated in euros. In such circumstances, the value of the dollar would most likely go down, some speculate between 20-40 percent.
On January 1, 1999, when 11 European countries formed a monetary union around this currency, Britain and Norway, the major oil producers, were absent. As the US economy began to slow down during the beginning of 2000, the stock markets in the western world began to yield lower dividends - investors from Gulf Cooperation Council nations lost over $800 million in the stock plunge. As investors sold US assets and reinvested in Europe, which seemed to be better shielded from a recession, the euro began to gain ground against the US dollar.
In November 2000, Iraq began selling its oil in euros. Iraq's oil for food account at the UN was also in euros and Iraq later converted its $10 billion reserve fund at the UN to euros. Several other oil producing countries have also agreed to sell oil in euros - e.g. Iran, Libya, Venezuela, Russia, Indonesia, and Malaysia. By July 2003, in following this movement, China announced that it would switch part of its dollar reserves into the world's emerging "reserve currency" (the euro).
With an Iranian nuclear programme in progress, does the Bush Administration really have the intention of going to war and subsequently occupying Iran? Or, is the Administration's strategic goal focused on destroying major weapons-sites, destabilizing the regime, and occupying only a sliver of land on the Iraqi order that contains 90% of Iran's oil wealth? In a recent article by Zolton Grossman, 'Khuzestan; the First Front in the War on Iran', Grossman cites the Beirut Daily Star which predicts that the "first step taken by an invading force would be to occupy Iran's oil-rich Khuzestan Province, securing the sensitive Straits of Hormuz and cutting off the Iranian military's oil supply, forcing it to depend on its limited stocks."
For now, it seems more likely that the Administration will only take the necessary actions to prevent the incipient Iran bourse (oil-exchange) from opening in March and precipitating a global sell-off of the debt-ridden dollar (the U.S. dollar in underwritten by a national debt that exceeds $8 trillion dollars with trade deficits that surpass $600 billion/year).
Here are a couple of good reads about the proposed euro-based bourse and the devastating effects it will have on the greenback: 'Petrodollar Warfare: Oil, Iraq and the Future of the Dollar', by William R. Clark, and, 'The Proposed Oil Bourse', by Krassimir Petrov, Ph.D.
Saying "hello" .... it doesn't cost anything and it's so simple to do.
