not about oil but .. save the wells, page-12

Sorry if this has already been posted but it does have some relevence to this thread

cheers


By Geoffrey Heard
Melbourne, Australia

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, and ratical.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 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