Iran
Iran’s real secret weapon
Could Iran's embrace of the euro bring down the American empire?
The Internet is suddenly alive with chatter about an “Iranian Oil Bourse,” supposedly scheduled to open for business in March 2006. Right now, the two leading oil exchanges in the world are the New York Mercantile Exchange and London’s International Petroleum Exchange. In both exchanges, trades for oil are denominated in U.S. dollars. But in the proposed Iranian exchange, oil trading will be denominated in euros.
The switch from dollars to euros, suggest some observers, could be the straw that breaks the back of the U.S. dollar’s global hegemony. According to this line of reasoning, the requirement that oil be purchased with greenbacks is the primary reason that the vast majority of the world’s nations stockpile their foreign exchange reserves in dollars. But if it was just as easy to buy oil with euros, then the world might begin to abandon the dollar, leading to its abrupt devaluation. The results would be catastrophic for the U.S. economy.
From this perspective, the current pressure on Iran over its nuclear program is naught but a smokescreen. The Bush administration cannot allow this Bourse to become a reality, and will invade Iran in order to stop it. As proof of this theory, say its proponents, all one has to do is look at the invasion of Iraq. In 2000, Saddam Hussein started requiring that purchases of Iraqi oil be made in euros. But within weeks of the conquest, it was back to dollars. QED — the invasion was motivated not by a desire to take over Iraq’s oil fields, but because the U.S. wanted to keep the dollar in its rightful position.
There are a couple of problems with the theory that the emergence of an Iranian oil exchange will bring about the downfall of the American empire. One is that, although oil trades are currently denominated in dollars, that doesn’t really present a huge obstacle to countries with euros burning a hole in their pocket. As a couple of critics have noted, it’s not so hard to convert euros into dollars, and vice versa. The idea that an Iranian oil exchange would, on its own, kick off a global run on the dollar is a bit of a stretch.
But, as is always the case with any good conspiracy theory, there is a nugget of truth at the heart of the matter. The euro is a legitimate contender for the prize of being the world’s leading currency, the first such real challenge to the dollar in many decades. Many economists are increasingly alarmed at the fact that the United States is sustaining its vast current account deficits solely on the strength of the desirability of its currency. Historically, there are plenty of good reasons for the popularity of the greenback — the U.S. is, after all, the world’s biggest economy, and has long been considered unlikely to default on its obligations.
But those obligations are growing to unprecedented heights. Meanwhile, the euro, after a very poor start, has steadily strengthened in comparative value. If nations start to diversify their foreign exchange holdings to weight them toward the euro, for whatever reason, that could initiate substantial selling pressure on the dollar. A successful launch of a euro-denominated Iranian oil exchange would be just one more point of pressure. But the chances that it could be the killer blow to overturn the current global economic status quo seem more the product of wishful thinking than cold reality.
UPDATE: A reader points to a Paul Krugman article written before the debut of the euro that casts more light on the euro vs. dollar debate.
Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.
Energy wars heat up
From Africa to South America, conflicts over waning resources are becoming more tense -- and dangerous
A member of the military stands guard near pump stations before a
ceremony in which oil operations at Heglig oilfield will resume in
Heglig, Sudan, May 2, 2012.
(Credit: Reuters/Mohamed Nureldin Abdallah) Conflict and intrigue over valuable energy supplies have been features of the international landscape for a long time. Major wars over oil have been fought every decade or so since World War I, and smaller engagements have erupted every few years; a flare-up or two in 2012, then, would be part of the normal scheme of things. Instead, what we are now seeing is a whole cluster of oil-related clashes stretching across the globe, involving a dozen or so countries, with more popping up all the time. Consider these flash-points as signals that we are entering an era of intensified conflict over energy.
Continue Reading CloseNYPD must spy on all Muslims to protect us from Iranian photographers
New York City's own constitutionally iffy intelligence agency justifies itself with fear-mongering
Ray Kelly (Credit: Reuters/Brendan McDermid) The NYPD is less a “police department” than a secretive and unaccountable international intelligence-gathering organization with a large minority-frisking division and the firepower of a mid-sized army. Lately they have been facing a bit of criticism for their style of intelligence-gathering, which seems to be done with more gusto than concern for civil liberties or… accuracy. Sometimes the NYPD’s muscular-but-stupid approach to spying gets them in trouble with the FBI. And when the organization that fights terror by recruiting shady weirdos to try to trick random Muslims into saying “jihad” into tape recorders says your practices are counterproductive and out of line, they are probably pretty counterproductive and out of line.
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Alex Pareene writes about politics for Salon and is the author of "The Rude Guide to Mitt." Email him at apareene@salon.com and follow him on Twitter @pareene More Alex Pareene.
Former Bush official warns against Iran attack
National Security Council advisor and Iraq hawk Stephen Hadley counsels diplomacy, not war
Stephen Hadley (Credit: AP/Alex Brandon) Another voice against war in Iran is heard and from perhaps an unexpected source. Former Bush administration National Security Advisor Stephen J. Hadley warned against an attack on the Islamic Republic yesterday. “If something needs to be done, it is not military action,” said Hadley. “There’s a wide spectrum between sheer diplomacy and military action.”
Hadley was an early and enthusiastic functionary in the war against Iraq. During the George H. W. Bush administration, he was a Pentagon aide to uber-hawk Paul Wolfowitz, and later served as a senior foreign policy advisor to George W. Bush’s presidential campaign. Hadley was instrumental in allowing the “Yellowcake Forgery” fabrication into Bush’s 2003 State of the Union address, a mistake for which he reportedly offered to resign. Taking over as national security advisor in 2005 from Condoleezza Rice, he was known for being on the relatively moderate spectrum of the Bush administration (well, at least when compared to Cheney and Rumsfeld). Upon leaving office, he formed a consulting shop with Rice, and he recently co-wrote a piece calling for negotiations with the Taliban.
Continue Reading CloseJordan Michael Smith writes about U.S. foreign policy for Salon. He has written for the New York Times, Boston Globe and Washington Post. More Jordan Michael Smith.
What Iran’s election results mean
The growing divide between the president and the Supreme Leader could be good news for the West
In front of a portrait of late Iranian leader Ayatollah Khomeini, former President Akbar Hashemi Rafsanjani casts his ballot for the parliamentary elections at a polling station in Tehran, Iran, Friday, March 2, 2012 (Credit: AP Photo/ISNA, Ruhollah Vahdati) BOSTON — It was no coincidence last week when Iran’s Supreme Religious leader, Ayatollah Ali Khamenei, praised a 64 percent turnout for parliamentary elections at home as well as President Barack Obama’s words that dampened talk of war against Iran. The elections gave him a commanding authority at home and a freer hand to deal with foreign threats.
Continue Reading CloseNazila Fathi reported out of Iran for nearly two decades, most recently for The New York Times. In 2009, following the elections, she was forced to leave the country because of government threats against her. She was a Nieman Fellow at Harvard in 2010 and is currently a fellow at the Shorenstein Center on Press, Politics and Public Policy at the Harvard Kennedy School. More Nazila Fathi.
A Hollywood party, with a nervous look to Iran
Behind the scenes at the Academy Awards with the star of "A Separation"
Payman Maadi (right) in "A Separation" The 405, Los Angeles’ leading freeway, is under construction. Lanes suddenly close and then merge haphazardly into the one nuzzled next to it. Center dividers inch closer and closer into carpool lanes. And drivers – which in a city of waitresses, actresses and waitresses longing to be actresses, might be the most infamous population of all — drive erratically as a result. The drivers are erratic because the road has become erratic; the road has become erratic because the city is erratic.
Continue Reading CloseRod Bastanmehr is a freelance writer, born in San Francisco, with a focus on film, culture and politics. His writing has appeared in Nerve, Thought Catalog, Not Coming to a Theatre Near You and more. More Rod Bastanmehr.
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