The conventional wisdom (if you’re a neocon) is that our mighty, peerless military has the Iranian regime over a barrel, in this case a gun barrel.
If you’re an actually aware, free-willed human being however, the wisdom is that Iran has us over a barrel, in this case oil. And they’re openly firing first. Bush’s foreign policy has gotten us into a sticky mess, and this time there may not be any hope. This is the scariest news article I’ve seen in a long time, and it may very well lead to war. Why?
OPEC’s considering getting out of the dollar business.
Iranian President Mahmoud Ahmadinejad said Sunday that OPEC’s members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a “worthless piece of paper.”
His comments at the end of a rare summit of OPEC heads of state exposed fissures within the 13-member cartel – especially after U.S. ally Saudi Arabia was reluctant to mention concerns about the falling dollar in the summit’s final declaration.
The hardline Iranian leader’s comments also highlighted the growing challenge that Saudi Arabia, the world’s largest oil producer, faces from Iran and its ally Venezuela within the Organization of Petroleum Exporting Countries.
“They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed U.S. President George W. Bush’s policies for the decline of the dollar and its negative effect on other countries.
Oil is priced in U.S. dollars on the world market, and the currency’s depreciation has concerned oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves.
“All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,” Ahmadinejad said. “Some said producing countries should designate a single hard currency aside from the U.S. dollar … to form the basis of our oil trade.”
Venezuelan President Hugo Chavez echoed this sentiment Sunday on the sidelines of the summit, saying “the empire of the dollar has to end.”
“Don’t you see how the dollar has been in free-fall without a parachute?” Chavez said, calling the euro a better option.
The dollar exists as the world’s reserve currency of choice because OPEC exclusively accepts dollars. If OPEC drops the dollar, everyone else will too, because there would be no reason to own what has become an increasingly “worthless piece of paper” anymore.
Got it? No OPEC exclusivity on the dollar as the currency for oil, no dollar. Our economy would quite literally collapse overnight. Surely the neocons would see this as a deliberate attack upon the US, and we would have no choice but to “respond in kind”.
And here’s the scary part, the one that makes this scenario of Bush and his ilk crying “economic warfare” a real possibility: The Saudis and Arab oil states are seeing the dollar in freefall and they’re willing to at least consider getting out of the singular business of propping up the dollar.
During Chavez’s opening address to the summit on Saturday, the Venezuelan leader said OPEC should “assert itself as an active political agent.” But Abdullah appeared to distance himself from Chavez’s comments, saying OPEC always acted moderately and wisely.
A day earlier, Saudi Arabia opposed a move by Iran on Friday to have OPEC include concerns over the falling dollar included in the summit’s closing statement after the weekend meeting. Saudi Arabia’s foreign minister even warned that even talking publicly about the currency’s decline could further hurt its value.
But by Sunday, it appeared that Saudi Arabia had compromised. Though the final declaration delivered Sunday did not specifically mention concern over the weak dollar, the organization directed its finance ministers to study the issue.
OPEC will “study ways and means of enhancing financial cooperation among OPEC … including proposals by some of the heads of state and governments in their statements to the summit,” OPEC Secretary General Abdalla Salem el-Badri said, reading the statement.
Iran’s oil minister went a step further and said OPEC will form a committee to study the dollar’s affect on oil prices and investigate the possibility of a currency basket.
“We have agreed to set up a committee consisting of oil and finance ministers from OPEC countries to study the impact of the dollar on oil prices,” Gholam Hussein Nozari told Dow Jones Newswires.
Iraqi Oil Minister Hussein al-Shahristani said the committee would “submit to OPEC its recommendation on a basket of currencies that OPEC members will deal with.” He did not give a timeline for the recommendation.
Got that? The entire reason that the world uses the dollar as the reserve currency of choice is that it’s the only one OPEC accepts. And we have literally financed the last two decades of American economic growth on the fact that the world needs oil to run, and they have to buy dollars in order to get oil. If that no longer happens, the dollar is dead. Kaput. Toast.
And the US along with it. We get a third world economy to go along with out third world dictatorship. The fact that OPEC is even considering doing this will continue to wreck the dollar, and OPEC knows it.
Somebody’s found a way to reign in the US after all, and we’re already paying the price for it. If OPEC goes through with this, the dollar will sink into oblivion and take us with it. If Bush’s neocons go to war to stop it, the dollar will end as well as the price of oil forces OPEC’s hand.
In other words, we’re at the edge of the abyss this morning.
Happy Turkey Day.
