Dollar Dropped in Iran Asset Move

http://news.bbc.co.uk/2/hi/business/6190865.stm

18 December 2006

Iran is to shift its foreign currency reserves from dollars to euros and use the euro for oil deals in response to US-led pressure on its economy. In a widely expected move, Tehran said it would use the euro for all future commercial transactions overseas.

Analysts said Tehran had been steadily shifting its foreign-held assets out of dollars since 2003 and that Monday's announcement was unlikely to affect the value of the dollar, which has weakened significantly in recent months.

 

Oil Producers Shun Dollar

http://www.ft.com/cms/s/277471c2-8889-11db-b485-0000779e2340.html

Dec 11 2006

Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements. The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.

Russia and the members of the Organization of the Petroleum Exporting Countries, the oil cartel, cut their dollar holdings from 67 per cent in the first quarter to 65 per cent in the second.

 

Imperial Hubris by Michael Scheuer, 2004

Economic Objective

 Just under the noise, death, and rhetoric yielded by the foregoing episodes of war lies a largely ignored factor that may constitute al Qaeda’s main war effort – the steady bleeding of the U.S. economy. The immediate impact is massive expenditures – at all levels of American government – that will add permanently to the size and cost of government. In addition to the cost of hiring thousands of federal employees for homeland security purposes; acquiring buildings, equipment, and training to make them effective; and requiring proportionate upgrading at state, municipal, and local levels; there lie what must be substantial amounts of unpredictable expenditures for overtime wages – in government and business alike – whenever Washington raises the threat level, or when high levels of security are provided at public places or functions heretofore not seen as serious security risks.

The September 11 attacks were not apocalyptic onslaughts on Western civilization. They were country-specific attacks meant to inflict substantial, visible, and quantifiable human and economic destruction on America.

 

Venezuela 'may swap oil currency'

http://news.bbc.co.uk/2/hi/business/4990302.stm

17 May 2006

Venezuela has hinted it could price its oil exports in euros rather than US dollars, further weakening its links to the US. President Hugo Chavez said he was considering taking the step following a similar declaration by Iran. Earlier this month, Iranian authorities gave backing for the launch of an oil exchange that traded solely in euros.

Experts have suggested that, should Iran demand payment for its exports in euros, central banks could opt to convert some of their dollar reserves to euros and therefore possibly trigger a further decline in the US currency.

The dollar has already come under pressure in foreign exchange markets in recent weeks, triggering nervousness in world stock markets. Central banks, especially in Asia, who hold large amounts of the US dollar, could find the value of their foreign currency reserves substantially reduced.

Iran - A Threat To The Petrodollar

 

http://www.countercurrents.org/rutledge161105.htm

16 November 2005

[Emilie Rutledge is a British economist based at the GulfResearchCenter in Dubai]

Iran’s reported intention is to invoice energy contracts in euros rather than dollars. The contention that this could unseat the dollar’s dominance as the de facto currency for oil transactions may be overstated but this has not stopped many commentators from linking America’s current political disquiet with Iran to the proposed Iranian Oil Bourse (IOB).

It is primarily the US which stands to lose out from any move away from the petrodollar status quo, it is the world’s largest importer of oil and a move away from invoicing oil in dollars to euros will undoubtedly have a negative effect on its economy.

Fewer nations would be willing to hold the dollar in reserve which would cause a significant devaluation and result in the loss seigniorage revenues. In addition US energy related companies stand to lose out as they will be unable to participate in the bourse due to the longstanding American trade embargo on Iran.

The current petrodollar system greatly benefits the US; it enables it to effectively control the world oil-market as the dollar has become the fiat currency for international trade. In terms of its own oil imports, the US. can print dollar bills without exporting commodities or manufactured goods as these can be paid for by issuing yet more dollars and T-bills.

George Perkovich, of the Washington based Carnegie Endowment for International Peace has argued that Iran’s decision to consider invoicing oil sales in euros is "part of a very intelligent strategy to go on the offense in every way possible and mobilize other actors against the US." This viewpoint however, ignores Iran’s economic motives, just because the decision, if eventually taken, displeases the US does not mean that the rationale is purely political.

 

Syria Picks Euros Over Dollars

http://english.aljazeera.net/NR/exeres/ABA36728-9F9D-4A2C-8F37-9C3230B7E971.htm

14 February 2006

Syria has switched all of the state's foreign currency transactions to euros from dollars amid a political confrontation with the United States. Duraid Durgham, the head of state-owned Commercial Bank of Syria, said on Monday: "This is a precaution. We are talking about billions of dollars. Switching to the euro will help us avoid settlement problems in the United States.

The Real Reasons Bush Went to War

http://www.guardian.co.uk/comment/story/0,3604,1270414,00.html

July 8, 2004

There were only two credible reasons for invading Iraq: control over oil and preservation of the dollar as the world's reserve currency.

In 1999, Iran mooted pricing its oil in euros, and in late 2000 Saddam made the switch for Iraqi oil. In early 2002 Bush placed Iran and Iraq in the axis of evil. If the other Opec countries had followed Saddam's move to euros, the consequences for Bush could have been huge. Worldwide switches out of the dollar, on top of the already huge deficit, would have led to a plummeting dollar, a runaway from US markets and dramatic upheavals in the US.