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Petrodollar pumping US policy on Iran, backfire looms

As tensions between the US and Iran heat up, author Michael T. Winter
believes the main reason behind America’s harsh stance is Tehran’s move
to seek an alternative to the dollar as an oil currency.
­Economic sanctions, spearheaded by the US and, less willingly, the
EU could have a disastrous effect on both of their respective
economies. If Iran cannot sell their oil to Europe, there are plenty of
customers waiting in the wings, and if they come bearing not
petrodollars, but gold and sovereign currencies, then all the better for
Iran. These sanctions, if enforced, will in effect place a serious
dent in the power of the petrodollar.Any rhetoric regarding
Iran’s nuclear program and the insistence on crippling it is nothing
more than a US attempt to force regime change for one more receptive to
maintaining the hegemony of the petrodollar.The world now knows
the truth about the US and how they conduct their affairs. US
hostilities toward Iran have nothing to do with nuclear weapons
development. If that were the case, then North Korea and Pakistan would
be facing similar sanctions and threats, but they aren’t. The
difference of course is in what lies beneath the ground – oil. Iran has
it and the other guys don’t.At the heart of the issue is not
Iran’s dubious attempt to build nuclear weapons, or even oil, but how
that oil is paid for. In 1973, Richard Nixon promised King Faisal of
Saudi Arabia that the US would protect Saudi Arabian oilfields from any
and all interested parties seeking to forcefully wrest them from the
House of Saud. It’s important to remember that in 1973, Saudi Arabia
didn’t have a fraction of the military and ground forces it possesses
today (almost exclusively US manufactured weapons) and the USSR was very
much a threat.In return Saudi Arabia, and by extension OPEC,
agreed to sell their oil in US dollars only. As if that weren’t sweet
enough, as part of the deal, they were required to invest their profits
in US treasuries, bonds and bills. The real zinger is that all countries
purchasing oil from OPEC had to do so in US dollars, or ‘petrodollars’.
This strengthened the US dollar, resulting in a steady US
economic growth cycle throughout the 80’s and 90’s. Countries purchasing
OPEC oil started buying US treasury bills, bonds and securities to
ensure they could continue purchasing OPEC oil. This worked fine for
the US until 2001.No plan, however well formulated, functions smoothly indefinitely.

2001,
enter Saddam Hussein. He floated a plan to sell oil for European
currencies in lieu of petrodollars. Shortly after Iraq was ‘suddenly’
found to be seeking and stockpiling weapons of mass destruction –
allegations spearheaded by the US. The world knows what happened,
suffice it to say that Saddam is dead and Iraq is ‘back on track’,
selling its oil for petrodollars once again. Muammar Gaddafi
harbored the Lockerbie Bombers and allowed various terrorist
organizations establish training camps in Libya. He tried to buy a nuke
from China in 1972. In 1977, he approached Pakistan, then India. He
sought nerve gas from Thailand. In spite of well over fifty failed
assassination attempts on Gaddafi by Israel, the US and the UK, Libya
was left to its own devices for the most part. Seeking nukes and
harboring terrorists is one thing, but threatening the petrodollar is
quite another. Gaddafi made a fatal error when he decided to move away
from the petrodollar in favor of other currencies. This simply was not
tolerated by the US. Having already played the WMD card in Iraq,
something new was pulled from the US ‘regime change’ grab bag. Within a
year, ‘internal’ elements rose up in rebellion against Gaddafi and now
he is dead. Long live the petrodollar.Dominique Strauss-Kahn,
former head of the International Monetary Fund (IMF), suggested last
year that the Euro would be a more suitable oil reserve currency than
the US Dollar. Within three months of that statement, allegations of
rape ruined his career, derailing his bid for the French Presidency in
the process. Soon thereafter, all charges were dropped, but of course,
le dommage était fait – the damage was done. Christine Lagarde, DSK’s
replacement as head of the IMF sees no reason to change the current
arrangement, naturellement.The Iran situation is a little
trickier. The US has sought to dismantle Iran’s regime ever since the
1979 Iranian Revolution, so this round of hostilities, while not new,
reflects a new level of intensity. Why, after thirty years of
hostility, has the US ratcheted up its rhetoric? As Obama stated in his
recent State of the Union address, when it comes to Iran and the
insistence they dismantle their nuclear program, “no options are off the table”. By stating ‘no options’ this would include nuclear deployment as a deterrent.The
answer of course is that Iran is now seeking to disengage itself from
the petrodollar dynamic. In 2005, Iran sought to create an Iranian Oil
Exchange, thus bypassing the US controlled petrodollar. Fear that
western powers would freeze accounts in European and London banks put an
end to that plan. But that was not the end of their attempts,
and Iran sought other ways to get around the petrodollar noose. There
are rumors that India, which imports 12% of their oil from Iran, has
agreed to purchase oil for gold. Energy trade with China, importing 15%
of its oil and natural gas from Iran may be settled in gold, yuan, and
rial. South Korea plans to buy 10% of their oil from Iran in 2012, and
unless Seoul sides with American and European sanctions, it is likely to
use gold or their sovereign currency to pay for it. Also, Iran is
already dumping the dollar in its trade with Russia in favor of rials
and rubles.Iran is breaking the back of the petrodollar. Others
have tried, but Iran is succeeding. To understand how disastrous this
is for the US, one must have a basic understanding of how critical a
role the petrodollar plays in the economic health of the US.Through
King Faisal, Nixon elevated the US to supreme economic ascendency, not
unlike Damocles in his desire to rule. Sitting on the (economic) throne
of the world is great, but Nixon was either unaware of the sword
dangling over the US economic system, or chose to ignore it in favor of
reaping the rewards of the moment. By creating the petrodollar
paradigm, the US economy soared, as all countries of the world were
required to amass US currency to purchase oil from OPEC nations. Sales
of T-bills, securities and US bonds soared. US coffers fattened. With
the US dollar as the world’s oil currency reserve, economic fortune
favored the US. But with great reward comes great risk. While other
countries exchanged their currency for the dollar, (forfeiting value in
the process) the US simply printed more money to match their needs and
purchase their oil – essentially for free. The best example is that
while gasoline in the US cost $3.00 per gallon, in Europe that same
gallon costs $6.00 or more.Herein lies the danger. If Iran is
successful in its bid to set up their own bourse, or oil exchange, then
what need does the world have for all those US dollars? The answer is
none at all. As Iran creating gold and sovereign currency partnerships
with India, China, South Korea and Russia, the hegemony of the
petrodollar will be destroyed.The resulting sell-off of US
dollars, T-bills, securities, bonds and assets will flood the already
swollen world economy with even more useless dollars, ultimately
devaluing it into a position where hyper-inflation becomes a risk. So,
while the US government sabre-rattles and prattles on and on about
nuclear weapons and the threat Iran poses to the Middle East, the thin
veneer of lies spouted by the elite controlled media is being stripped
away, revealing the truth of their warmongering rhetoric.The US,
by their foolish insistence on enforcing embargoes and sanctions against
Iran, is hastening the end of the petrodollar and ushering in the age
of US dollar hyper-inflation. A practical example: One loaf of bread in
a healthy economy is $1.00. In an inflationary economy it’s $1.75. In a
hyper-inflationary economy, $500.00.Bullies may be large and dangerous, but rarely are they intelligent.

Damocles
wisely vacated the throne of Dionysius before the sword fell upon his
head, but the US is foolishly refusing to step down from their economic
dais in spite of the catastrophic effect current policy direction will
mean for US citizens and the world economy.­Michael T. Winter

http://rt.com/news/iran-attack-us-allegations-243/


Added: Feb-1-2012 Occurred On: Feb-1-2012
By: 104JebackaBrigada
In:
Iran
Tags: Petrodollar, pumping US, policy on Iran, backfire looms
Location: United States (load item map)
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