Iran's New Bourse May
Threaten The Dollar
By Linda S. Heard
26 January, 2006
In 2000, Saddam Hussein announced that his country would begin pricing its oil in euros. Less than three years later, Iraq was invaded under the pretext it had an ongoing nuclear weapons programme and an arsenal of chemical and biological materials.
In March 2006, Iran is scheduled to open its own oil bourse that will trade in euros. But even before it can open its doors, Iran is being accused of harbouring a clandestine nuclear weapons programme and is being threatened with sanctions or worse.
Is the current US focus on Iran's nuclear facilities a genuine concern or is this another pretext to stave off a potential threat to the fiat dollar?
It should firstly be pointed out that Iran is not guilty of reneging on its obligations as a signatory to the Nuclear Non-Proliferation Treaty (NPT). Under the terms of that treaty Iran has an "inalienable right" to "develop research, production and use of nuclear energy for peaceful purposes without discrimination".
Iran's detractors maintain the Iranian government has been working on a covert weapons programme. They say Iran deliberately hid the existence of its secret nuclear facility at Natanz, 100 miles north of Isfahan but, strictly speaking, Iran was only obliged to open the plant to IAEA inspections 180 days prior to the introduction of uranium. This, Iran said, it intended to do and the IAEA is unable to prove otherwise.
It should also be stressed that Iran's moratorium on uranium enrichment negotiated with Britain, France and Germany, was voluntary. It was designed to allay suspicions that Iran intended developing nuclear weapons so that talks could proceed. When those talks broke down, Iran broke IAEA seals and continued with small-scale uranium enrichment, which it has the "inalienable right" to do.
So given that Iran has not behaved illegally, what is happening here? Does the West have the right to prevent a nation from pursuing nuclear technology indefinitely just because they happen not to like its government? In this case, the NPT is no longer worth the paper on which it's written.
Israel, India and Pakistan are nuclear powers who have not ratified the NPT and are, therefore, not subject to IAEA inspections. More so, they are not in any danger of being hauled before the UN Security Council or bombed.
On the contrary, Israel's nuclear status has been sanctified to the extent it is considered heresy to challenge it within the UN, while the US president has expressed his intention to work with India to "achieve full civil nuclear energy cooperation", a statement that contravenes the NPT.
Iran is, therefore, the victim of a US government value judgment. It is the US, cheered on by Israel, which has been pressuring Europe and the IAEA to put the Iranian file before the Security Council. On the other hand, Russia and China, beneficiaries of oil, gas and trade agreements with Iran, are working to avoid a repeat performance of the Iraq debacle.
While it's easy to understand Israel's nervousness concerning a possible Iranian bomb, especially after President Mahmoud Ahmadinejad's inflammatory anti-Israel rhetoric, the US agenda vis-à-vis Iran is less transparent.
On the surface, the US has much to lose by backing Iran into a corner when, as most experts admit, an Iranian bomb if that is indeed what is being pursued is more than four years off. Why the urgency?
If the US forces Iran down the Security Council route, it is not only likely to pull out from the NPT but may also put a plug on its oil, thrusting international markets into turmoil and forcing prices above the $100 per barrel mark. The Iranian government has already shown its intention to retaliate by shifting its assets out of British and European banks.
Iranian President Ahmadinejad has said he isn't interested in confrontation and wants to resume talks with the Europeans. The US Secretary of State Condoleezza Rice has rejected this request. America is playing a dangerous game. It is choosing aggression over dialogue, the isolation of Iran over its inclusion.
If a military option is employed, this would likely cripple the entire region. Iraq is particularly vulnerable since Shiite cleric Muqtada Al Sadr has already said his militia would defend Iran if Tehran was attacked. Members of the Iran-friendly Da'wa and Sciri Parties might be similarly disposed. Syria and Lebanon's Hezbollah are also expected to leap to Tehran's defence.
Bearing these pitfalls in mind, why is the US being so single minded?
A growing number of experts believe Iran's new oil bourse is more of a threat to US interests than nuclear missiles.
Krassimir Petrov, who teaches international finance in Bulgaria's American University, warns "should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar."
Editor and analyst Ryan McGreal points out that America's greatest export is currently the dollar and when "the balance of reserve holdings starts to shift from dollars to euros, that's very bad news for America's system of dollar hegemony."
William R. Clark, author of Petrodollar Warfare: Oil, Iraq and the Future of the Dollar writes, "the proposed Iranian oil bourse signifies that without some sort of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given US debt levels and the stated neoconservative project of US global domination, Tehran's objective constitutes an obvious encroachment on the dollar's supremacy in the crucial international oil market."
Linda S. Heard is a British specialist writer on Middle East affairs. She welcomes feedback and can be contacted by email at firstname.lastname@example.org.