Viewpoint: Iraq issues: Atoms or oil?

The Bush administration has been making a lot of noise lately about Iran, claiming that Iran is pursuing a nuclear weapons program and must be stopped. It’s all a smokescreen for what’s really bothering GW and company.

Iran addressed the real reason for the Bush camp’s hostility., an Iranian news agency, reported Iran this week will move another step closer to creating its planned oil bourse or oil exchange.

The news agency reported the Oil Ministry and the Ministry of Economic Affairs and Finance are prepared to sign a memorandum of understanding that will prepare the way for the much-publicized initiative. The move was confirmed by another Iranian news source,

Hossein Talebi, director for information technology affairs for the National Iranian Oil Company, told the Fars news agency that the bourse project will proceed to the executive phase right after the memorandum is signed.

Talebi also said petrochemicals, crude oil and oil and gas products will be traded at the new exchange. “The oil exchange would strive to make Iran the main hub for oil deals in the region,” he said. Talebi added that most transactions will be carried out over the Internet. He said the new exchange could help to develop the petrochemical industry.

What has put a burr under the administration’s saddle is that the Iranian government intends to carry out these transactions in euros, not dollars, thus undercutting the U.S. medium as the preferred currency in the oil market.

That was one of the big reasons for the invasion of Iraq—Saddam was selling oil for euros instead of dollars. Therefore, he had to be ousted and a puppet regime installed in his stead.

In September, Iran announced its new exchange would be operational by March of next year. Experts from the International Petroleum Exchange [IPE] and the New York Mercantile Exchange [NYMEX] reportedly have confirmed the project is feasible. Both the IPE and NYMEX are owned by U.S. corporations.

Kamal Daneshyar, chairman of the Majlis Energy Commission, said at the first phase of this project Iran may sell its oil in both dollars and euros and then gradually move toward the euro as the sole currency for trade.

William Clark, in an article published by the Centre for Research on Globalization, later republished in The Guardian in the U.K., noted the oil and gas market is the world’s largest and that creation of an Iranian oil bourse “means that without some form of U.S. intervention, the euro is going to establish a firm foothold in the international oil trade.”

Clark went on to say: “It is now obvious that the invasion of Iraq had less to do with any threat from Saddam’s long-gone weapons of mass destruction program and certainly less to do with fighting international terrorism than it has to do with gaining control over Iraq’s hydrocarbon [oil] reserves and, in doing so, maintaining the U.S. dollar as the monopoly currency for the critical international oil trade.”

Clark said that since the spring of 2003, Iran has required payment in euros for its European and Asian exports, but the oil pricing for trades continues to be handled in dollars.

Last February, President Bush declared: “The notion that the United States is getting ready to attack Iran is simply ridiculous. Having said that, all options are on the table.”

Clark commented: “Numerous news reports have revealed that the neo-conservatives are quietly—but actively—planning for the second petrodollar war; this time against Iran.”

Other observers say the U.S. military is stretched too thin to be able to carry out such a plan, and, if it did try, this country would instantly be attacked by every nation that depends on Iranian oil. That includes China and India and, to some degree, Russia.

Bear in mind that Iran is militarily much stronger than Iraq. It has placed anti-ship missiles on the island of Abu Musa, giving it control of the vital Strait of Hormuz, a narrow neck of water that all oil tankers bound for the Persian Gulf must pass through. If that waterway were closed down, it could trigger a market panic with crude oil prices rocketing to $100 a barrel or more.

Some speculation says that either U.S. or Israeli air power might attack Iran’s nuclear installations. Iran has just purchased a supply of late model, ground-to-air missiles.

One recent study suggests that in the event of such an attack, a likely result would be immediate retaliation by Iran. That could be a prompt missile counter-attack on U.S. and Israeli bases in the Gulf, with a strong effort to destabilize Iraq and create a full-scale clash between the U.S. and Iraq’s Shiite majority. Iran also could cause trouble in Saudi Arabia and other states in the region that have large Shiite populations. It could also persuade the Lebanese Hezbollah to begin a series of rocket attacks on northern Israel.

Another concern for the administration is that Saudi investors might be interested in participating in an Iranian exchange, which, Clark said, further illustrates why petrodollar hegemony is becoming unsustainable.

He added that between 2003 and 2004, both Russia and China increased their central bank holdings of euros, which may be a coordinated move to expedite the expected rise of the euro as a second world reserve currency.

Another note of insanity is said to come from the office of Vice President Dick Cheney. Cheney reportedly has told the Pentagon to be ready to launch a tactical nuclear attack on Iran in the event of a terrorist attack on U.S. soil, even if Iran has no connection to the attack.

Clark, in concluding his article, said: “Either way, U.S. policy-makers will soon face two difficult choices; monetary compromise or continued petrodollar warfare.”

From the Dec. 7-13, 2005, issue

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