They just got a different tool to use than we do: They kill innocent lives to achieve objectives. That's what they do. And they're good. They get on the TV screens and they get people to ask questions about, well, you know, this, that or the other. I mean, they're able to kind of say to people: Don't come and bother us, because we will kill you. Bush - Joint News Conference with Blair - 28 July '06

Thursday, February 23, 2006

Gwynne Dyer: Iran, oil and euros: the war scenario

cyprusmail: Here's the scenario. On March 20, Iran opens a new bourse (exchange) on which countries all over the world can buy and sell oil and gas not only for dollars but also for euros. It also establishes a new oil marker (oil pricing standard) based on Iranian crude and denominated in euros, in open rivalry to the existing West Texas Intermediate, Norway Brent and UAE Dubai markers, all of which are calculated in US dollars.
The Iranian bourse is an instant success with countries and companies that are unhappy about having to hold huge amounts of overvalued US dollars to finance their oil transactions, all of which must presently be conducted in that currency. Very large sums start to shift from the dollar to the euro, although exactly how much is unknown because the US Federal Reserve System (by pure coincidence, of course) has chosen late March as the time to stop publishing the data that would make it easy to know how fast the haemorrhage was.

But the US government knows, and is deeply alarmed by the danger that the dollar may be losing its status as the world's only reserve currency. Given the huge deficits that plague the US economy, the US dollar's value would collapse if other countries began to see it as just another currency, so the euro must be prevented from emerging as an alternative reserve currency. In practice, that means the Iranian experiment with a euro-denominated oil bourse must be stopped - and the only way to do that is to attack Iran.
Some of the scenario-mongers would change the sequence of events and have the US launch a "preventive" attack against Iran before it even opens the bourse. An alternative scenario has Washington persuading Israel to do the dirty work of actually launching air strikes against Iran. But a lot of people are genuinely worried that the whole crisis over Iran's alleged nuclear weapons programme is being whipped up to give Washington cover for a strike against Iran that is really meant to halt the bourse.

In support of this thesis, they argue that a similar initiative by Saddam Hussein, who began insisting that Iraq's oil exports be paid for in euros in 2000, led directly to the US invasion of 2003. The Iranians are going much further, and they will be punished too. How seriously should we take this argument? Read more