Political News--April & May of 06

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Continued on the Euro, oil & Iraq

Contiuation of the previous page by  Clark 

"Its industrial base is so uncompetitive that it consistently imports more than it

exports; its current-account deficit, the gap between all its current foreign

earnings and foreign spending, is now a stunning 5 per cent of GDP,

continuing a trend that has lasted for more than 25 years and which is the

cause of all that foreign debt. As a national community, it has virtually ceased

to save so that government and individuals alike live on credit.

To finance the current-account deficit, a reflection of the lack of saving, the US

relies on foreigners supplying it with the foreign currency it can't earn itself. . . .

"But if foreigners got windy about the prospects for share and property prices

and stopped buying, or began to withdraw some of the trillions they have

invested in the US economy, then the dollar would collapse. Already, it has

fallen nearly 10 per cent against the euro over the last six weeks, but that

could just be the beginning. Economists at the Federal Reserve have


estimated that the dollar needs to fall by 30 per cent to bring the flow of

imports and exports into balance, but in today's markets such a fall doesn't

happen gradually. It happens precipitately.

"If America and Britain spurn a second UN Resolution and go to war with the

active opposition of key members of the Security Council like France and

Russia, be sure the flow of dollars into the US will slow down dramatically, and

be sure there will be a stampede of foreigners trying to sell. Shares on Wall

Street that Bush is so anxious to prop up are still massively overvalued.

Against this background, there could be a devastating sell-off, with all the

depressing knock-on consequences for American consumer confidence and

business investment.

"What the markets were signaling last week was that this is sufficiently within

the bounds of possibility that it was worth taking precautionary action, hence

the selling. If the war was over in a few weeks, the risks would be containable,

and there will be some shares well worth buying at today's prices. But if the

war was prolonged or the subsequent peace unstable, then the pressure on

the dollar and Wall Street could become very severe indeed, reinforcing the

depressive influences on an economy where the underlying imbalances are so


"The US approach has been unilateralist here as everywhere else: it does

what it likes as it likes, a policy that is now showing its limits. Bush needs badly

to change course, which Tony Blair should be urging on him. The UN process

needs to be respected and reinforced, not least to reassure the markets, and

better systems of economic governance need to be put in place. The US's

military capacity may allow unilateralism; its soft economic underbelly, we are

discovering, does not." [46]

These articles indicate that many central banks are reducing their reliance on dollars, and

quite possibly sending a message about their opposition to the U.S.'s position on Iraq.

Mr. Hutton is correct; our current economic structure simply cannot afford a significant

divesture of foreign investments, nor can the indebted US consumer and corporate

sectors absorb such disruptions. Although these currency movements are typically

described as purely economically derived decisions, it would be naïve to suggest that

geopolitics and global tensions have not played a role in the broad movement away from

the dollar. The world has no interest in challenging the US militarily, but given our debt

levels, we have become quite vulnerable from an economic perspective. . Hence, it is

inadvisable for President Bush to pursue an aggressive, unilateral application of U.S.

military force without broad U.N./international support.

European Commentary on the Essay:

`The Real Reasons for the Upcoming War With Iraq'


To finish, in January 2003, Mr. Coílín Nunan reviewed a draft of my essay on an

Internet forum. He subsequently published an exceptional summary on an Irish website

(www.feasta.org). Hopefully our efforts will facilitate public awareness, and stimulate a

more honest debate on the Iraq issues. Below are excerpts from his informative article

"Oil, Currency, and the War on Iraq."

"One of the stated economic objectives, and perhaps the primary objective,

when setting up the euro was to turn it into a reserve currency to challenge the

dollar so that Europe too could get something for nothing.

"This however would be a disaster for the US. Not only would they lose a large

part of their annual subsidy of effectively free goods and services, but

countries switching to euro reserves from dollar reserves would bring down the

value of the US currency. Imports would start to cost Americans a lot more and

as increasing numbers of those holding dollars began to spend them, the US

would have to start paying its debts by supplying in goods and services to

foreign countries, thus reducing American living standards. As countries and

businesses converted their dollar assets into euro assets, the US property and

stock market bubbles would, without doubt, burst. The Federal Reserve would

no longer be able to print more money to reflate the bubble, as it is currently

openly considering doing, because, without lots of eager foreigners prepared

to mop them up, a serious inflation would result which, in turn, would make

foreigners even more reluctant to hold the US currency and thus heighten the


"There is though one major obstacle to this happening: oil. Oil is not just by far

the most important commodity traded internationally, it is the lifeblood of all

modern industrialised economies. If you don't have oil, you have to buy it. And

if you want to buy oil on the international markets, you usually have to have

dollars. Until recently all OPEC countries agreed to sell their oil for dollars only.

So long as this remained the case, the euro was unlikely to become the major

reserve currency: there is not a lot of point in stockpiling euros if every time

you need to buy oil you have to change them into dollars. This arrangement

also meant that the US effectively part-controlled the entire world oil market:

you could only buy oil if you had dollars, and only one country had the right to

print dollars -- the US.

"If on the other hand OPEC were to decide to accept euros only for its oil

(assuming for a moment it were allowed to make this decision), then American

economic dominance would be over. Not only would Europe not need as many

dollars anymore, but Japan which imports over 80% of its oil from the Middle

East would think it wise to convert a large portion of its dollar assets to euro

assets (Japan is the major subsidizer of the US because it holds so many

dollar investments). The US on the other hand, being the world's largest oil

importer would have, to run a trade surplus to acquire euros. The conversion

from trade deficit to trade surplus would have to be achieved at a time when its

property and stock market prices were collapsing and its domestic supplies of

oil and gas were contracting. It would be a very painful conversion.

"The purely economic arguments for OPEC converting to the euro, at least for


a while, seem very strong. The Euro-zone does not run a huge trade deficit nor

is it heavily indebted to the rest of the world like the US and interest rates in

the Euro-zone are also significantly higher. The Euro-zone has a larger share

of world trade than the US and is the Middle East's main trading partner. And

nearly everything you can buy for dollars you can also buy for euros -- apart, of

course, from oil . . .

"All of this is bad news for the US economy and the dollar. The fear for

Washington will be that not only will the future price of oil not be right, but the

currency might not be right either. Which perhaps helps explain why the US is

increasingly turning to its second major tool for dominating world affairs:

military force." [47]

Saving the American Experiment (March 10, 2003)

Considering the core economic challenges that our nation faces, and the deplorable oil

currency war that I fear we are about to witness in Iraq, this author advocates that the

global monetary system be reformed without delay. This would include the dollar and

euro designated as equal international reserve currencies, and placed within an exchange

band along with a dual-OPEC oil transaction currency standard. Additionally, the G7

nations should also explore a third reserve currency option regarding a yen/yuan bloc for

Asia. Such reforms may lower our ability to fund massive deficits, consume excessive

oil/energy, and project a global military force, but they could improve the quality of our

lives and that of our children by reducing animosity towards the U.S. and force our

government to pursue more fiscally responsible polices.

Given that 95% of the world's transportation system is dependent on depleting

hydrocarbons, the urgency in which we must pursue new and alternative methods of

energy production cannot be overstated. Indeed, it is plausible that if the US government

effectively advocates energy reform regarding our own consumption levels, we as a

nation could simultaneously pursue the crucial patriotic goal of enhancing the security of

our nation by becoming one of the world's leaders in developing and implementing

alternative energy sources. This is the missed opportunity that real US leadership could

have provided in the aftermath of 9/11. We could have received an inspiring call to duty,

challenging our nation to "go to the moon" by the end of this decade regarding energy

policy, but instead the message was: "Unite. Go shopping, and don't be afraid to fly."

Failing to rally the citizenry for truly patriotic purposes to strengthen our nation was

perhaps one of the greatest missed opportunities since the end of the Cold War.

We need a real National Energy Policy instead of an "endless war on terrorism." Today's

"blowback" is partly due to our ongoing support of corrupt Middle East

regimes/dictatorships. [48] Creating a more equitable global monetary system while

maintaining a strong transatlantic relationship with Europe is in the long-term national


security interest of the U.S. Hopefully monetary and energy reform could mitigate future

armed or economic warfare over oil, thus ultimately fostering a more stable, safer, and

prosperous 21st century.

Tragically, President Bush's administration does not appear willing to initiate the

arduous structural changes that our economy must undertake if we are to adapt and

accommodate the euro as the second World reserve currency. Furthermore, this

administration has not communicated to the People the urgent need for energy reform.

Instead, they intend to enforce global dollar monopoly for oil transactions via the

application of superior U.S. military force. My essay was written out of patriotic duty in

an effort to illustrate that such a military-centric geostrategy for Empire has produced

international isolation of the U.S., and may ultimately result in our economic failure. I

firmly believe our nation will be better prepared to meet this decade's challenges if the

citizenry is cognizant of why the worldview is coalescing against the U.S., why our

nation is attempting by force to secure Iraq's oil, revert its oil currency back to the dollar,

and install a permanent US military presence in the Persian Gulf region. We must not

allow the militant imperialism of this administration to bring down the American


"Of all the enemies to public liberty war is, perhaps, the most to be dreaded

because it comprises and develops the germ of every other . . . No nation

could preserve its freedom in the midst of continual warfare."

-- James Madison


References: Addendum Section

44. Associated Press, "US Dollar on Shaky Ground," January 24, 2003

45. McCarthy, Grainne "Dollar's Decline Starting To Accelerate, Rattling Nerves," Dow

Jones Newswire, January 25, 2003

46. Hutton, Will, "Why Bush is sunk without Europe," The Observer, January 26, 2003

47. Nunan, Coílín, "Oil, Currency, and the War on Iraq," Feasta.org, January 2003 (PDF)

48. Johnson, Chalmers, Blowback; The Cost and Consequences of American Empire,

Owl Books (2003)


Post-War Commentary (January 1, 2004)

"Hussein has not developed any significant capability with respect to weapons

of mass destruction. He is unable to project conventional power against his


--Colin Powell on February 24, 2001

"Our conservative estimate is that Iraq today has a stockpile of between 100

and 500 tons of chemical weapons agent. That is enough agent to fill 16,000

battlefield rockets. Even the low end of 100 tons of agent would enable

Saddam Hussein to cause mass casualties across more than 100 square

miles of territory, an area nearly five times the size of Manhattan."

--Colin Powell at the UN on February 5, 2003

"Simply stated, there is no doubt that Saddam Hussein now has weapons of

mass destruction,"

--Dick Cheney on August 26, 2002.

"Intelligence leaves no doubt that Iraq continues to possess and conceal lethal


--George W. Bush on March 18, 2003

"We are asked to accept Saddam decided to destroy those weapons. I say

that such a claim is palpably absurd."

--Tony Blair on March 18, 2003

"Why of course the people don't want war. . . . That is understood. But, after

all, it is the leaders of the country who determine the policy, and it's always a

simple matter to drag the people along whether it's a democracy, a fascist

dictatorship, a parliament or a communist dictatorship . . . the people can

always be brought to the bidding of the leaders. . . . All you have to do is tell

them they are being attacked, and denounce the pacifists for lack of patriotism,

and exposing the country to greater danger.

--Hermann Goering, Nazi Reichsmarshal and Luftwaffe chief

at Nuremberg trials, 1945

From the Roman Empire to today, the propaganda tactics for war as discussed by

Hermann Goering remain effective. It is deplorable that even in the US or UK, people

can always be "brought to the bidding of the leaders." It is New Years Day, almost nine

months since the invasion of Iraq. The American people are slowly realizing how much

they were misled about this war. Many books will be written about how these events

unfolded, so I will only briefly summarize my general observations in a few opening

paragraphs, and then return to the basic underlying Geostrategic and macroeconomic

reasons for the Iraq war. First, it has emerged that a small clique of neoconservative

ideologues and an Iraqi exile provided most of the fraudulent "intelligence data" that

was publicized by the Executive Branch. This disinformation was apparent before the

war, but now it is simply irrefutable. A brief synopsis of events follows.

Apparently in 2001-2002 the DIA and CIA were not giving Secretary of Defense Donald

Rumsfeld intelligence information that would justify a US invasion of Iraq. In fact, it

was well known to our intelligence agencies that Iraq's WMD was dormant, and as early

as 1998 it was understood that Saddam had no ties to Al Qaeda. [49] To date, no


professionals in the CIA, DIA, MI5 or MI6 have provided reliable evidence linking

Saddam Hussein to bin Laden, Al Qaeda or to the September 11th attacks. [50]

Undeterred, Donald Rumsfeld set up his own secretive and rather autonomous unnamed

intelligence unit referred to simply as the "cell." This small group later merged into his

other small "intelligence unit" called the Office of Special Plans (OSP).

The purpose of these "intelligence units" was to bypass the CIA and DIA, and to provide

"faith-based intelligence" to Vice President Cheney and President Bush. The OSP's sole

purpose was to promote the Iraq war. This group self-mockingly referred to themselves

the "cabal". [51] The following is a slightly modified chart from the February 2004

edition of Mother Jones. [52]

It is now obvious the main rationales for the Iraq war were developed by a rather

unprecedented government conspiracy perpetrated by a small number of radical

neoconservatives in the OSP, plus Iraqi exiles in the INC. In essence, the justification for

invading of Iraq was a coordinated and transparent pack of fabrications and deceptions --

designed to create the requisite societal fear for an invasion. I suspect the OSP "cabal"

will go down in history as the `Office of Special Propaganda.' It is disconcerting that 19

men were able to instill massive levels of irrational fear into the citizenry by creating


visions of "mushroom clouds" and "1000 metric tons" of Anthrax.

Of course our elitist, corporate-controlled media dutifully repeated all this propaganda

verbatim. Indeed, the 2002-2003 propaganda campaign by the OSP and the Bush

administration was designed to portray an "imminent threat" to U.S. national security --

regardless of the facts. According to former intelligence professionals, members of the

OSP are dangerous ideologues. The following is a review of the findings regarding the

search for WMD, as of October 2003: [53]

Claims about Iraqi WMD vs. Actual Facts

Precursor Chemicals: 3,307 tons Found: None

Tabun, nerve agent Found: None

Mustard agent Found: None

Sarin, nerve agent Found: None

VX nerve agent, 1.6 tons Found: None

Anthrax spores raw material: 25,550 liters Found: None

Botulinnum toxin Found: One vial of Sarin B, 10

years old, in an Iraqi scientist's

domestic refrigerator

Alfotoxins Found: None

Ricin Found: None

Mobile bio-weapons laboratories: possibly 18 Found: Two suspected mobile

labs found to be harmless,

possibly purchased from the

UK in 1987 as atmospheric

hydrogen balloon labs for

artillery aiming purposes

Bombs, rockets, and shells for poison,

gas: up to 30,000 shells

Found: None

L-29 unmanned aerial vehicles for delivering

biological and chemical weapons

Found: None


 Nuclear weapons material Found: None (corroded parts

from a single 12-year old

centrifuge buried under a rose

bush in the back yard of a

former Iraqi scientist)

Al Hussein surface-to-surface missile with

410 mile/650 kilometer range, up to 20

Found: None

With their mission accomplished, Donald Rumsfeld disbanded the OSP in September

2003. Despite the so-called Congressional investigation into "intelligence failures"

regarding Iraq, there is "strong resistance" by the Republicans to investigate the OSP

and related activities. It is highly doubtful Congress will expose the truth in the near

future, as it would make Richard Nixon's "dirty tricks" and the Watergate scandal simply

pale in comparison. Indeed, if Thomas Jefferson, James Madison, or George Washington

were alive today, they would probably demand these nineteen men be immediately

charged with high crimes and treason.

As I noted a year ago, it would seem more likely that Al Qaeda will search within the

former states of the Soviet Union for a source of WMD. Initially, the Bush

administration froze funding for the Russian non-proliferation WMD destruction

program, but now have unfrozen funding. [49]

According to retired 27-year veteran of the CIA, Ray McGovern, there is an "incredible

amount of unease and disarray" between the neoconservatives and US intelligence

professionals. [54] Aside from the Iraq debacle, the CIA may be distraught at the

apparently politically motivated "outing" of Valerie Plume, a covert CIA agent whose

expertise was in the field of reducing the proliferation of the WMD. Such irresponsible

behavior, possibly emanating from the Executive branch of our government, needlessly

jeopardizes the national security of the U.S.

Regarding the post-war situation in Iraq, it appears to be an unfortunate and

deteriorating situation. Despite the ongoing resistance in the form of guerilla warfare and

almost daily deaths of U.S. soldiers, this administration is moving forward with their

Geostrategic goals. On May 9th, 2003 the Bush administration presented U.N. Security

Council Resolution 1483, proposing to drop all sanctions against Iraq, and allow the

U.S./U.K. to completely control Iraq's oil production revenue. Due to US pressure, this

UN resolution was passed on May 22, 2003. However, according to the original UN

resolutions from 1990, the sanctions could not to be lifted until the U.N. certifies Iraq as

being free of WMD. Interestingly, the Bush administration blocked Dr. Blix and all of

the U.N. inspectors from returning to Iraq in the "post-war" period, and successfully had

the UN sanctions lifted regardless of Iraq's WMD status. Why? Empire.

Neoconservative Geostrategy is based upon the idea of a US "Global Empire" and


therefore it could not be tolerated for any nations, be it France, Russia or China to gain

control over 40 billion barrels of Iraqi oil, or for that oil be sold in the euro currency.

(This assumes Iraq reserves are in fact 112 billion barrels, of which those three nations

would have gained legal exploration access to 35% of Iraq's total reserves -- but only if

Iraq was declared by the UN to be free to WMD). The European media has noted that

had Dr. Blix and the U.N. inspectors been allowed to complete their `pre-war' inspection

process for an estimated 6 more months in 2003, they could have ultimately determined

Iraq was indeed free of WMD.

In that scenario, the lease contracts and oil exploration rights that the Russians, French

and Chinese held regarding Iraq's oil fields could have been legally initiated. Indeed,

lifting the UN sanctions would have allowed foreign investment to begin rebuilding and

exporting Iraqi's vast reserves, while simultaneously impeding the ability of major

US/UK oil companies to gain access to Iraqi oil given Saddam's dislike of the US/UK

post-1991 foreign policies towards Iraq.

Returning to the core macroeconomic reasons for the Iraq war, it should be noted that

under the UN's `oil for food' program, the U.N. provided oversight of Iraq's oil receipts,

which in 2000 became denominated in euros, and then deposited into a French bank.

The passage of UN resolution 1483 effectively ended French involvement with Iraqi oil

via the UN `oil for food' program. Incidentally, the various contracts that Saddam

Hussein signed during the 1990's regarding oil exploration leases with France, Russia

and China are now also void. Without a doubt, oil is the critical substance for all

industrialized nations, and with the imminent global Peak Oil phenomenon, the U.S.

government is using the military to insure U.S. access to the largest reserves. The price

of the Iraq war is not yet clear, but the history of Empires is quite unambiguous. They

always end with military overextension and subsequent economic decline.

On April 28, 2003, I read the first article in the mainstream US media (msnbc.com) since

the autumn of 2000 that addressed some of the issues regarding Iraqi oil exports in the

euro. Apparently until the U.N. sanctions were lifted; Iraq's oil was to remain under UN

control in the "oil for food" program. However, UN Resolution 1483 passed on May 22,

2003 establishing a joint US/UK administered "Iraqi Assistance Fund" which provided

the mechanism to quietly and legally reconvert Iraqi's oil exports back to the dollar. To

reiterate, the following excerpts from this forthright msnbc.com article is the only

mainstream US media reference that I could locate during 2003 that discussed the Iraq

war and the underlying petrodollar versus petroeuro issues. It was entitled "In Round 2,

It's the Dollar versus the Euro" (implying the Iraq war was `Round 1').

A new world is being created. Ironically, the most troublesome clash of

civilizations in it may not be the one the academics expected: not Islamic

fundamentalists vs. the West in the first instance, but the United States against


To oversimplify, but only slightly, it's the dollar vs. the euro.


. . . The Europeans and the United Nations want the inspections regime to

resume because as long as it is in place, the U.N. "oil-for-food" program

remains in effect. Not only does France benefit directly-its banks hold the

deposits and its companies have been involved in the oil sales-the entire EU

does as well, if for no other reason than many of the recent sales were

counted not in dollars but in euros. The United Nations benefits because it has

collected more than a billion dollars in fees for administering the program. As

long as the 1990 sanctions remain in effect, Iraq can't "legally" sell its oil on the

world market. At least, to this point, tankers won't load it without U.N.

permission, because they can't get insurance for doing so.

Sometime in the next few weeks, push will come to shove. There are storage

tanks full of Iraqi crude waiting in Turkish ports. For now, Rumsfeld and Powell

are playing "bad cop, bad cop." "This isn't on the president's radar screen right

now," an aide told me. "Powell is totally on board, though. He is as angry at the

French as anyone else, maybe more. There may come a time when the smart

thing to do is turn the whole Iraq situation over to the U.N. This is not that

time." Meanwhile, if the rest of the world tries to block any and all Iraq oil sales,

it's possible that American companies will find a way to become the customer

of first and last resort.

And we'll pay in dollars. [55]

Although the author addressed this subject somewhat obliquely, his final sentence is

quite candid. Indeed, my original hypothesis from December 2002 was reinforced in a

Financial Times article dated June 5th 2003 which confirmed Iraqi oil sales returning to

the international markets were once again denominated in U.S. dollars, not euros. Not

surprisingly, this detail was never mentioned in our imperialist, corporate-controlled US

media, but confirmation of this fact provides insight into one of the crucial -- yet

overlooked -- rationales for the Iraq war.

"The tender, for which bids are due by June 10, switches the transaction back

to dollars -- the international currency of oil sales -- despite the greenback's

recent fall in value. Saddam Hussein in 2000 insisted Iraq's oil be sold for

euros, a political move, but one that improved Iraq's recent earnings thanks to

the rise in the value of the euro against the dollar." [56]

Additionally, one notable post-war realization is the dollar's new role in Iraq. In April

2003 it was reported that US dollars are being flown into Iraq in order to pay the Iraq

civil servants $20 per week as a "temporary" measure. [57] Ironically, some Iraqis were

returning to a newly appreciating Iraq Dinar or supposedly dead "Saddam Dinar" --

instead of U.S. dollars. [58]

Given the lack of WMD in Iraq, the lack of evidence tying Saddam to the September

11th attacks, and the lack of any proof that Saddam had worked with the Al Qaeda

terrorist organization, the Bush administration is trying to switch the rational of the Iraq


war to "spreading democracy." Again, the facts on the ground do not support this

assertion. In June 2003 Paul Bremer unilaterally canceled the request from the Iraqis to

hold local elections. [59] Not surprisingly, this administration has also discussed

disbanding the Coalition Provisional Authority (CPA). In the harsh reality of oil and

geostrategy, the US probably does not want a real democracy in Iraq for the same

reasons that the CIA and British overthrew Iran's fledgling democracy in 1953. In order

to understand why the U.S. does not promote democracies in the oil producing states of

the Persian Gulf, I recommend that others read All the Shah's Men by Stephen

Kinzer. [60] There are lessons to learn from what happened in Iran fifty years ago.

At the time, Prime Minister Mohammed Mossadegh, a nationalist and anti-communist,

and requested that the British allow Iran to audit the oil proceeds from Iran's oil exports.

He felt Iran was not getting sufficient financial returns on their vital resources. The

British resisted, and Mossadegh made a decision that was beneficial to Iran, but not the

British. After the British refused to share with Iran more of the profits over its oil export,

Dr. Mossadegh made the unfortunate mistake of nationalizing Iran's oil in 1951. At the

time the Anglo-Iranian oil company (later to become BP) was reaping 88% of the profits

from Iran's oil exports. [61] Prime Minister Mossadegh then offered the British 25% of

the profits after he nationalized Iran's oil. The British responded by blockading Iran and

freezing Iran's assets. Furthermore, the British claimed that nationalization of Iran's oil

was illegal. This was a dubious claim over Iran's sovereignty, so Dr. Mossadegh argued

his case in front of the United Nations and won. Undeterred, Winston Churchill asked

President Truman to help overthrow Mossadegh, but Truman declined.

However, in 1953 incoming President Eisenhower did agree to the coup, and the CIA

successfully overthrew Prime Minister Mossadegh in August 1953. The US/UK then

installed Mohammed Shah, who later became despised as a US-puppet, and whose

brutal SAVAK secret police force ultimately radicalized Iranian society. This

"blowback" resulted in the Iranian Revolution of 1979. It is interesting to note that

current Islamic mullahs in Iran do not speak with reverence about Dr. Mossadegh (who

was a secular leader), but apparently the Iranian people fondly remember his secular

government. Below is an excerpt from All the Shah's Men.

"Why did you Americans do that terrible thing?" a relative of Mossadegh

demands of Kinzer. "We always loved America. To us, America was the great

country, the perfect country, the country that helped us while other countries

were exploiting us. But after that moment, no one in Iran ever trusted the

United States again. I can tell you for sure that if you had not done that thing,

you would never have had that problem of hostages being taken in your

embassy in Tehran. All your trouble started in 1953. Why, why did you do

it?" [60]

As evidenced by Stephen Kinzer's interviews with various Iranians, it is clear the Iranian

people were quite pro-US before we intervened and overthrew their democracy.

Regrettably, many Iranians have not forgiven us for what we did to them 50 years ago.


Ironically, Iran still appears to be the best candidate for a large Middle Eastern

democracy. Perhaps if our government leaves Iran alone, and in conjunction with a

peaceful resolution to the Israeli-Palestinian conflict, the Iranian people might eventually

revise their Constitution. Reforming their government to reflect a more democratic and

secular nation is plausible given the large and youthful Iranian population who embraces

a more open society. In the meantime, we should attempt to build confidence by

providing diplomatic engagement, and assistance as needed, such as offering

humanitarian aid in the aftermath of the earthquake that struck Iran in December 2003.

Undoubtedly, President Bush's declaration that Iran is an "Axis of Evil" has damaged the

US-Iran relationship, and thus has allowed the E.U. to establish enhanced trade

relationships with Iran. It is obvious that any U.S. military or covert action against Iran

would be completely unilateral, and even the U.K. has warned that "regime change" in

Iran is not a plausible option. In fact, threatening Iran is only creating more "blowback"

against the United States. As for Iraq, the "blowback"/resistance is continuing despite

Saddam's capture, making the "installment" of democracy even more unrealistic. I

suspect a real democracy in Iraq would most likely nationalize Iraq's oil industry in an

effort to keep the critical oil profits within the country, thereby greatly facilitating the

rapid rebuilding of Iraq society (infrastructure, healthcare, education, etc.)

Obviously re-nationalizing Iraq's oil industry is not something the Bush administration

and its major campaign contributors are interested in pursuing. The Iraq war was over

power, and UN Resolution 1483 insured U.S./U.K. control over Iraq's oil revenue,

contrary to reports that the Iraqi people wanted the United Nations to retain control of

Iraqi's oil resources. Despite its faults, the UN simply has more credibility in the eyes of

the world community than Paul Bremer, and that includes the Iraqi citizenry as well. On

the contrary, the Bush administration's major paymasters -- the military-oil-industrial

conglomerates -- expect and are receiving hundreds of billions of our tax dollars. (ie. nobid

contracts for Halliburton and Bechtel corporations, etc).

However, there are also macroeconomic reasons why I doubt we will see democratic

rule in Iraq -- the petrodollar versus petroeuro oil currency issue. As of December 30,

2003 the euro was worth 25% more than the dollar ( 1.25 to $1.00). Given the EU's

upcoming enlargement plans for 2004, and the fact that following this enlargement 60%

of OPEC oil will be imported by the EU, from a purely economic perspective it makes

sense for Iraq to do what Iran has recently done -- require payment for oil in euros, not

dollars. Of course the emergence of a `petroeuro' is one of the crucial reasons why we

overthrew Saddam in the first place. Therein lies the paradox for the United States -- In a

true democracy the leader of Iraq would be expected to do what is in the best interest for

the majority of Iraqi citizens, regardless of whether they are Shi'ite, Sunni or Kurdish. At

this time it would be logical to re-nationalize Iraq's oil industry (which the Bush

administration privatized after the invasion -- but only for the "major" US and UK oil



Further, it would be economically advantageous to denominate oil sales in the currency

that would provide Iraq with the most purchasing power and trade potential in which to

rebuild the country -- which given current valuations now and into the foreseeable future

implies the euro. Self-determination and democratic rule does not always fit U.S.

"hegemonic interests." Much of the current "anti-Americanism" in the Middle East is

based on the hypocrisy of our foreign policies -- we say we stand for democracy, yet we

have a long history of propping up "stable" but brutal and oppressive regimes. Examples

include Iran 1953-1979, Iraq 1963-1990, Saudi Arabia 1944-present, and our overtly

biased policies regarding the Israel-Palestinian conflict.

Below are excerpts from an article on www.prudent bear.com. While this author

acknowledges the issues regarding Iraq and the dollar/euro oil conflict, he suggests that

reporting the truth is "freedom of screech" (in Washington DC the truth has been

reduced to "political hate speech.")

At present, we notice that many US citizens are exercising their "freedom of

screech" to politicize the fact that the current President miss-stated the case

for immediate war with Iraq. Perhaps the President should be praised for

"doing what was right" for America's interests, even though the Administration

could be faulted for the "way it was done". I, for one, would not want to bring

back an Arab oil embargo and long lines at the gas pump. [62]

The idea that re-denominating oil exports in a different currency is the same as an "Arab

oil embargo" is an interesting display of flawed logic, especially from a website that

promotes increased market transparency, fiscal discipline, and is rightfully pre-occupied

with the Fed's expansion of the US money supply. Despite these flaws, the author

acknowledge the key issue:

. . . the one factor underpinning American prosperity is keeping the dollar the

World Reserve Currency. This can only be done if the oil producing states

keep oil priced in dollars, and all their currency reserves in dollar assets. If

anything put the final nail in Saddam Hussein's coffin, it was his move to start

selling oil for Euros.

The US is the sole super power and we control and dictate to the Middle East

oil producers. America has the power to change rulers if they can't follow the

"straight line" the US dictates. America's prosperity depends on this.

Governments have secrets. If politicians always told the truth, there wouldn't

be any secrets. So, if governments are to keep secrets, how can you fault a

politician for not telling the whole truth? We would assert that the President

failed to present the real case for Iraq, which is: 1) prosperity for America

based on controlling Middle East oil, and on maintaining the Dollar as the

World Reserve Currency, and 2) peace and stability, which the guaranteed

access to oil brings to the world. [62]

I find his statement about the "need" for government secrets to be rather tautological,


circular in logic, and certainly not in the spirit of what the Founding Fathers stated was

imperative to a functioning democracy -- an informed citizenry. I would suggest to the

author and other like-minded individuals that our nation (including the President) owes

the truth to the families of our soldiers who have been killed or wounded, and to those

who continue to fight and die in Iraq. Additionally, some of us are burdened with a

lower tolerance threshold for hypocrisy when it comes to life and death. In any event,

the author is quite correct that much of our prosperity has been created by artificial

geopolitical arrangements, some of which are slowly coming unglued.

During the Cold War and into the present day, the US has supported many dictators and

oppressive regimes in the Middle East that did not always "follow the `straight line' the

US dictates." We seem unable to learn from history. Indeed, the 2003 Iraq war is the

third US-sponsored `regime change' in Iraq since the end of WWII. [63] Therefore, we

must not be naïve in believing that the Bush administration has any intent of establishing

democratic rule in Iraq, assuming it is possible. As Americans, we have engaged in

wishful thinking that somehow the US military was capable of invading Iraq and

"installing" democracy. We are an Empire trying to reaffirm our position as the world's

only Superpower, thus altruism is not our goal. Our goal in Iraq is to install a

pliant/puppet-regime. The facts on the ground in Iraq speak for themselves:

The US ended UN control of Iraq's oil revenue and quickly changed Iraq's oil

transaction currency from euros back to dollars, just as I predicted they would

a year ago . . .

The neoconservatives canceled Iraq's oil contracts with other nations (ie.

France, Russia and China, thus creating new and potentially dangerous

geopolitical alliances)

Paul Bremer unilateral blocked municipal elections that were to held in Iraq in

June 2003 (He basically implied that the `outcome' of elections would not be

preferable to the U.S.)

The neoconservatives threatened Iran and Syria during the Iraq war despite

the fact that Al Qaeda is an organization financed by Saudi Arabians who

promote intolerant Whabbism.

The neoconservatives have alienated most of the world due to their unilaterism

and overtly vindictive actions regarding Iraq's reconstruction contracts (In

December 2003 Paul Wolfowitz released a document barring non-coalition

nations such France, Russia, Germany, Canada and Mexico from participating

in Iraqi reconstruction projects)

Simply put, we cannot win this war from a strategic point, and we desperately need the

U.N to involve itself in Iraq. It is the U.S. soldiers whose morale is suffering the worse,

they believed their mission was to "disarm Iraq" of its "massive" WMD program, and

are now the targets of nationalists Iraqis. However, because the current administration


went to war without approval of the U.N. Security Council, the US has placed the UN in

the position that active support of the United States and U.K. in Iraq would in effect

legitimize the U.S. invasion. If truth be told, numerous international lawyers have

opined the US/UK led invasion meets the definition of a "war of aggression," implying

the war violated the United Nations Charter, and was illegal. [64]

Hence, the UN is now in a very uncomfortable position. Irrefutably, unless the current

US administration agrees to relinquish some of its power in Iraq, thereby allowing the

UN and world community to participate in the rebuilding of Iraq, along with a

coordinated withdrawal of most US soldiers in exchange for international troops wearing

the distinct light-blue UN helmets, we should expect nothing but a very ugly, protracted

and costly guerilla war with Iraqi nationalists. Time is not on our side, the longer we are

seen as unilateral occupiers who have come to Iraq to `seize the oil,' the more highly

radicalized Iraqi society will become. Likewise, we should also learn from our own

history in Iran that despotic US puppets often get overthrown in due time.

As for the ongoing guerilla/resistance war in Iraq, this should have been expected given

Iraq's nationalistic inclinations/history. Although most of the Iraqis are glad Saddam is

gone, they will not tolerate an extended presence of American troops in Iraq unless the

U.N. and some sort of legitimate Iraqi governing body control these troops. The lack of

UN involvement negates the legitimacy required for the current US military presence in

Iraq. US unilaterism has produced not only a quagmire for our soldiers, but a magnet for

young Islamic' jihadis.' [65]

Regarding the US military, it was reported in the Stars and Stripes that 49% of the

participants in the survey were not going to re-enlist. [66] Morale is very low, and those

whom I have spoken to no longer believed "in their mission." Aside from the budget

deficits and war related expenses that are pushing our nation further into debt, it is

becoming increasingly obvious that we need a bigger military to fulfill the stated

objectives of the neoconservative dream of "Global Empire." After nine months in Iraq,

it is clear that by the spring of 2004 the US military will run out of fresh reserves. Other

than a few nations, most of the world community is not going to send troops into Iraq

because they do not want the neoconservatives to pursue their global Geostrategy, and it

appears the UN does not want to legitimize the concept of "preventative war" either.

According to various reports, our regular army and reserves appear very unhappy about

these extended deployments -- as it is often financially painful, sometimes destroys

families, and it is difficult to fight a war to disarm Iraq -- when no WMD seem to

exist. [67] Obviously the current administration would prefer to avoid any discussion of

the draft until after the 2004 Elections. Nonetheless, unless in early 2004 other nations

suddenly begin sending thousands of troops into Iraq, conscription may become

necessary -- even under a Democratic President in 2005. Obviously the draft will be

highly controversial. Indeed, in order to successfully enact the draft; a new and ominous

existential threat would have to emerge. Given that the neoconservative conspiracy


behind Iraq and the OSP has been exposed, I doubt even the Bush administration will be

able to succeed in scaring the American people into the necessity of conscription

For those who remain skeptical that a draft is being considered, the Selective Service

website provides information suggesting the President has requested that activation of

draft be available within 75 days of Congressional authorization. A careful reading

suggests June 15, 2005 is the target date. After 30 years of dormancy, why else would

the Selective Service suddenly request $29 million in order to bring the US draft

apparatus up to 90% operational capability? [68]

Undoubtedly, the requirements for Global Empire and five more wars will require many

more soldiers. The neoconservatives have a plan for global domination, but their

execution has been poor and incredibly arrogant. It is interesting to note that in

September 2003 the Directorate for Special Operations and Low-Intensity Conflict at the

Pentagon showed the controversial movie from the 1960s The Battle for Algiers. The

invitation at the Pentagon stated the following:

"How to win a battle against terrorism and lose the war of ideas. Children

shoot soldiers at point-blank range. Women plant bombs in cafes. Soon the

entire Arab population builds to a mad fervor. Sound familiar? The French

have a plan. It succeeds tactically, but fails strategically. To understand why,

come to a rare showing of this film." [69]

Based on a story from the Common Dreams website, the idea came from a civilian-led

group with "responsibility for thinking aggressively and creatively" on issues of guerrilla

war. The Pentagon employee stated, "Showing the film offers historical insight into the

conduct of French operations in Algeria, and was intended to prompt informative

discussion of the challenges faced by the French." It should also be noted that former

U.S. National Security Adviser Zbigniew Brzezinski also recommended this same movie

the following month after the Pentagon screening. In an October 2003 speech Brzezinski

stated: "If you want to understand what's happening right now in Iraq, I recommend The

Battle for Algiers." [70]

Another issue addressed in my original essay was the possibility of Iran moving towards

a petroeuro for oil exports. A June 2003 article in the Hindu Business Line confirmed

my earlier prediction regarding Iran's imminent movement towards the euro. Dr

Mohammed Jaffar Mojarrad, Vice-Governor of the Iranian Central Bank stated for this

article that Iran actually made the switch to the euro for its oil payments in the summer

of 2003. Although Iranian oil is still priced in dollars, the payment for its oils exports to

the EU is now denominated in euros.

"Iran's oil and gas exports destined mostly for Europe are already

denominated in euros. Iran produces about 3.5 barrels and is the second

largest oil exporter among the Organisation of Petroleum Exporting Countries

(OPEC). About 30 per cent of the Iran's oil exports are destined for European


markets. The other two large consumers of Iranian Oil are India and China.

Even in the case of Indian only a small quantum of the oil imports come

through the ACU mechanism.

But, he added, the switch to the euro, which as done during the last few

months had helped the country to negate the effects of a depreciating dollar

and falling international oil prices. He said that if the country had continued its

receipts in US dollars, it would have meant large losses, which would have

translated into domestic inflation. This was because large volumes of its

imports are also sourced from Europe. The Iranian central bank was keen to

avert that situation and had consequently adopted the euro-denominated

payments to ensure that the losses were minimised. The country had also

resorted to managing its reserves to minimise the effects of the depreciating

dollar, he added. [71]

Given the continuing devaluation of the dollar, pressure will build within OPEC to

switch to the euro. The central impediment to such a switch is that all three

internationally traded crude oil pricing "markers" are currently denominated in dollars

(West Texas Intermediate crude, Norway Brent crude and UAE Dubai crude). Given the

rapid decline of oil output from the North Sea, it is possible another crude marker could

emerge later this decade, perhaps denominated in euros. It is also possible that during

2004-2005 OPEC could decide to denominate oil in a "basket of currencies," which

would include the euro. OPEC contemplated this idea in the early 1970s after the US

dollar devalued following the collapse of the Bretton Woods Agreement. [72]

Certainly one of the most interesting and troubling pieces of news regarding the

dollar/euro issues and the potential political fallout from the unauthorized Iraq war

relates to Russia. In mid-October 2003, after meeting with German Chancellor Gerhard

Schroeder, Russian President Vladimir Putin mentioned that Russian oil sales could be

re-denominated in euros.

"We do not rule out that it is possible. That would be interesting for our

European partners," Putin said at a joint news conference with German

Chancellor Gerhard Schroeder in the Urals town of Yekaterinburg, where the

two leaders conducted two-day talks.

"But this does not depend solely on us. We do not want to hurt prices on the

market," he said.

A move by Russia, as the world's second largest oil exporter, to trade oil in

euros, could provoke a chain reaction among other oil producers currently

mulling a switch and would further boost the euro's gradually growing share of

global currency reserves.

That would be a huge boon to the euro zone economy and potentially

catastrophic for the United States. Dollar-based global oil trade now gives the

United States carte blanche to print dollars without sparking inflation -- to fund

huge expenses on wars, military build-ups, and consumer spending, as well as


cut taxes and run up huge trade deficits.

Almost two-thirds of the world's currency reserves are kept in dollars, since oil

importers pay in dollars and oil exporters keep their reserves in the currency

they are paid in. This effectively provides the U.S. economy with an interestfree

loan, as these dollars can be invested back into the U.S. economy with

zero currency risk.

If a Russian move to the euro were to prompt other oil producers to do the

same, it could be a "catastrophe" for the United States, Ibrahim said. "There

are already a number of countries within OPEC that would prefer to trade in

euros." [73]

Continuing in this same Moscow Times article, two other pieces of vital information

were revealed. If Saudi Arabia were evaluating a "petroeuro," it would imply major

geopolitical and macroeconomic shifts. Although I doubt Saudi Arabia would make this

switch, we shall see . . .

"And after the war in Iraq, there is growing debate in the United States'

traditional ally Saudi Arabia on a switch too, though its government has not

come down firmly on one side, Ibrahim said. "There is a revision going on of its

strategic relationship with the United States. Already, they're buying more

[French-made] Airbuses," he said. "The Saudi Crown Prince [Abdullah Bin

Abdul Aziz Al-Saud]'s visit to Russia was of great significance and the regime

is talking about closer cooperation with LUKoil and other Russian companies."

Furthermore, this article candidly reinforced my original thesis that the creation of a

"petroeuro" was indeed one of the core reasons for the 2003 US/UK invasion of Iraq.

Under Saddam Hussein, Iraqi oil was traded in euros. "This was another

reason [why the U.S. attacked]," Ibrahim said. "There is a great political

dimension to this. Slowly more power and muscle is moving from the United

States to the EU, and that's mainly because of what happened in Iraq," he


Putin had previously brought up the proposal to switch to euros as prime

minister in October 1999, at a meeting of EU leaders in Helsinki. Then, in an

attempt to forge a new bloc to counterbalance the United States, he made the

proposal alongside calling for closer cooperation between Russia and the EU,

including on security issues.

Since then, however, Russia's ties with the United States have warmed

considerably -- and it is unclear whether Putin would risk damaging that

relationship by going ahead with the euro move, analysts said.

. . . Yevgeny Gavrilenkov, chief economist at Troika Dialog and an earlier

architect of the Putin government's first economic plan, said debate is growing

on a move to the euro as Russia mulls siding with the EU. "Such an idea is

really possible," he said. "Why not? More than half of Russia's oil trade is with


Europe. But there will be great opposition to this from the United States."

. . . LUKoil vice president Leonid Fedun said Thursday that he saw no problem

in the euro switch and that payments for such transactions would be minimal,

at just 0.08 percent.

The proposition that Russia, currently the 2nd largest oil exporter, switching to the euro

will be met with "great opposition" from the United States is quite an understatement.

Nevertheless, according to the above excerpts, from a purely monetary and trade

perspective a Russian switch to the euro appears logical. Obviously the US government

would prefer Russia sell its oil in dollars or a dual currency arrangement. It would highly

advisable for the US to negotiate and compromise with Russia regarding access to Iraq's

oil and the issues regarding Iraqi debts.

Also, a Russian oil executive suggested that oil from the Urals region in Russia could

become an `alternative crude oil marker' with respect to internationally traded oil

contracts. This may be unlikely given that Russia's Peak Oil production occurred in

1987, but such an event could provide a new euro-based oil pricing mechanism.

Regardless, by the end of this decade I suspect Norway and Sweden will likely ascend to

the euro, thus facilitating the Brent crude marker being re-denominating in the euro.

There appears to be fall-out from the Iraq war in some countries that are not under US

control. In April 2003 Bloomberg News reported that Indonesia, a small non-OPEC

producer with a Muslim majority was evaluating a "petroeuro."

"Pertamina, Indonesia's state oil company, dropped a bombshell recently. It's

considering dropping the U.S. dollar for the euro in its oil and gas trades.

Other Asian countries may not be far behind any move in Indonesia to dump

the dollar. The reasons for this are economic and political, and they could

trigger a realignment that undermines U.S. bond and stock markets over

time." [74]

Additionally, some articles have suggested that other countries such as Malaysia may

soon be dropping the dollar in favor of the euro. These countries perceive that switching

to the euro will eventually diminish our ability to pursue an agenda of global militant

Imperialism. In fact, it appears that a disconcerting "anti-dollar" movement could be

spreading. Indeed, in 2003 a Wall Street Journal reporter witnessed an unusual anti-war

protest in Nigeria, an OPEC member.

"Newspaper columnists and anti-war activists in countries stretching from

Morocco to Indonesia have rallied behind the sentiments shouted in a Nigerian

street protest witnessed by a Wall Street Journal reporter this week: "Euro yes!

Dollar no!" [75]

The Bush administration probably believes the occupation of Iraq and the installation of

large and permanent U.S. military bases in Iraq will thwart remaining OPEC producers


from even considering switching the denomination of their oil sales from dollars to

euros. However, using the military to enforce dollar hegemony for oil transactions

strikes me as a rather unwieldy and inappropriate Geostrategy. Regrettably, President

Bush and his neo-conservative advisors appear to have chosen to apply a military option

to a U.S. economic problem that requires a multilateral treaty. History may not look

kindly upon their actions.

Paradoxically, for a variety of economic and political reasons, it appears that a growing

number of oil producers in the Middle East, South America, and Russia may wish to

transition their oil pricing from dollars to euros, or perhaps denominate oil in a "basket

of currencies." Disturbingly, we may be witnessing the emergence of a European-

Russian-OPEC alliance in an effort to counter American militant imperialism. Although

you will not hear it spoken publicly, the broad international movement away from the

dollar may be an effort to facilitate "regime change" here in the U.S. Indeed, if the

dollar's steep devaluation in 2004 parallels 2003, every American will suffer for the

misguided policies of our government. We need to quickly change course.

Despite the current stock market "rally", there is much to be concerned about regarding

the long-term structural imbalances of our economy, and the Bush administration's

flawed tax, economic and most principally their overtly Imperialist foreign polices could

place the dollar's status as the World Reserve currency and/or oil transaction currency

role in jeopardy, or at the very least significantly diminished over the next few years. In

the event that such a hypothesis materializes, the U.S. economy will require

restructuring in some manner to account for the reduction of either of these two pivotal

advantages. This will be an exceedingly painful process if it occurs in a disorderly

manner, perhaps reminiscent of the 1930's Great Depression. Certainly a multilateral

treaty recognizing these issues would be preferable before the onset of serious economic

dislocations -- or warfare.

Only time will tell what will happen in the aftermath of the Iraq war and U.S.

occupation, but I am confident my research will contribute to the historical record and

help others understand some of the important but unspoken reasons for why we

conquered Iraq. Regrettably, until the U.S. agrees to a more balanced Global Monetary

system, and embarks on a viable National Energy Strategy, our nation will continue to

pursue hypocritical foreign policies incompatible with the principles established by the

founding fathers regarding democracy, liberty and freedom.


In conclusion, the Iraq war was designed to 1) secure U.S./U.K. oil supplies before and

after global Peak Oil, and 2) to have a large military presence to "dissuade" other oilproducers

from moving towards the euro as an oil transaction currency. These are the


two crucial elements for maintaining U.S. hegemony over the world economy.

Reconverting Iraq back to the petrodollar was not the critical issue, but preventing any

further momentum towards a petroeuro is a critical component of current US

Geostrategy. While deceiving the American people into war, this administration sent a

message to other OPEC-producers -- "You are either with us or against us."

However, in the end I predict the rules of economics and the laws of physics will prevail

over the dreams of Global Empire. It will be increasingly "sensible" for OPEC to redenominate

oil sales in euros once the EU expands in 2004. [76] Additionally, Peak Oil

will usher in an era in which demand for oil will forever outstrip supply. The

neoconservatives understand what this means -- the end of US Hyper power, and thus

the end of their dreams of a US Global Empire. The true test of US leadership and the

citizenry will be acknowledging that our nation will soon endure some economic

hardship. Everyone on earth will be impacted by Peak Oil, and given that reality --

multilaterialism rather than unilateralism is the only way to create a peaceful outcome.

First, the industrialized economies need to develop new energy policies and

technologies, but here in the US we have the most to lose due to our high consumption

rate and structural debt problems. In fact, out entire "suburban" infrastructure was

designed for the utilization of automobiles and we do not have enough mass transit in

place when Peak Oil arrives. We have a lot of work to do, not enough time, and too

much debt, which further reduces our options. Secondly, our currency is challenged for

the first time since WWII with an alternative -- the euro.

So, we have been reduced to using military force to maintain our hegemonic status, but

under the neoconservatives we are doing it in such an overt, arrogant way that the world

community is objecting. Disparaging the United Nations while unsuccessfully bribing

our allies to support the Iraq war is a radical departure from decades of US diplomatic

policy. Furthermore, the world community is probably more aware of the implications of

the Project for a New American Century than the US citizens are, and the world does not

appear ready to accept the US as a militant, unilateral hyper-power. Neoconservatives

fail to understand that the industrialized world can and will topple us from our

hegemonic status if they perceive us to be a greater threat to world stability than the

economic disruptions that would occur from the displacement of the dollar standard. Let

us hope the world will not allow a disorderly dollar decline or "panic."

The dollar is our Achilles Heel, and it will also be our undoing if we do not change

course and compromise with the European Union, otherwise we will probably have

military conscription, political repression and tyranny at home, and the American

Experiment as we have known it for the past 227 years will end. This need not be the

case. What we as citizens must realize is that overt pursuit of Empire abroad will

ultimately result in tyranny at home. We have already begun this process with the

incessant fear mongering, deception and intolerant portrayal of events surrounding the

Iraq war. Furthermore, our civil rights and Constitutional protections are being


dangerously eviscerated (possible elimination of Posse Comitatus, along with various

hidden provisions within Patriot Acts I & II, Office of Homeland Security, and various

Executive Orders).

The only way out of this dilemma is international cooperation, real leadership, global

monetary reform and sacrifices by the US citizenry regarding energy consumption. U.S.

Politicians are not interested in being truthful with the People, as both parties are more

or less in the pockets of the military-energy conglomerates. Real Campaign Finance

Reform may be the only way in which the US can enact the sufficient energy reforms

that will be required with the onset of Peak Oil.

1. In order to save the American Experiment the neoconservative goal of US "Global

Domination" must be quickly discarded by a new administration. The concept of the

U.S. violating international law with unilateral "preventative wars" will simply not be

tolerated by most industrialized nations. Hopefully one of the first official acts of the

44th President will be to officially disavow the "Bush Doctrine" of preventive warfare.

Such a gesture would allow the world community to breath a collective sign of relief,

and extend to the new administration much needed political capital. Multilateral

cooperation will be needed for the following issues/reforms.

2. We must restore some semblance of fiscal responsibility in this country if we want to

save the dollar. The Iraq conflict has cost the US approximately $300 billion dollars by

the end of 2003, and estimates of current military expenditures are approximately $1

billion per week. Unlike the 1991 Gulf War, US taxpayers (and their children and

grandchildren) will pay for the 2003 Iraq war. It has been said that the credit

worthiness of a currency is based upon the ability of the government to collect tax

revenue from its citizens. Perhaps the devaluation of the dollar during 2002-2003

reflects the world community's lack of faith in this administration's tax policies.

Passing large tax cuts in 2003 while in the midst of a war in Iraq is the ultimate act of

fiscal irresponsibility. The American people appear ignorant of the historical correlation

between wars and taxes. Do we honestly believe we can afford massive tax cuts

along with massive increases in military and domestic spending? Not even a French

socialist would dare to do what we have done. I suspect 2003 was the first time in

modern history that a nation decreased taxes while in the midst of a major war. We

need to dispel with this ideological and quasi-mystical belief about tax cuts: "Nothing is

more important in the face of a war than cutting taxes." -- Tom Delay (R-TX)

The IMF and the finance ministers of the world community must think we have lost our

collective minds. I do not envy the fiscal mess the next US President will inherit. The

next President will have the unenviable task of attempting to balance the current

budget deficit, which will require increasing taxes, perhaps to their pre-2001 levels.

Some semblance of fiscal sanity will be required to support the dollar. While such a

tax policy will be wildly unpopular, we need to face reality, throughout history and into

the present day -- wars are very expensive. We have not yet paid for Afghanistan war,

or the Iraq invasion, it is all borrowed money. To date the price has been a significant

devaluation of our currency. Although our `war taxes' will probably be avoided until

after the 2004 Elections, this is only a temporary respite. Without a UN mandate for

starting the Iraq war, it is inevitable the US citizens will pay heavily for the Iraq war.

3. The Federal Reserve may soon be prompted to raise interest rates in an effort to stem


the weakening dollar, but we are in a perilous situation. US corporations and

consumers have acquired so much debt that a rate hike might starve-off domestic

economic growth. A rate increase may cause a lot of pain for average Americans, but

we have lived in the fantasy of huge tax cuts, low-interest rates, huge budget deficits

and a huge trade account deficit for much too long. Militant Empires have never been

cheap. The wildcard seems to be the dollar, which is being rapidly debased. Exactly

how much pain will occur when and if the Federal Reserve increases the lending rates

above 1.0% is unknown. In a best-case scenario, the Fed would spread this pain over

several years, but dollar devaluation will probably occur precipitously.

4. Propose to the UN to form an International Consortium of energy scientists &

researchers from all over the globe to develop alternative fuels for transportation.

Could be a combo of biomass, fuel cells, renewables, etc. The US, as the greatest

energy consumer, must show leadership in developing and promoting alternatives.

Along with rejecting the Bush Doctrine, this will do much to repair our international

image. Imagine the Manhattan Project but on an international scale, hopefully a $50+

billion yearly international effort beginning in 2005. Redirecting funds and brainpower

from our military R&D is warranted. We don't have much time, as some have

suggested we may have arrived at a plateau in global oil production . . .

5. The U.N. should form an International Group of scientists and engineers to study

energy depletion stemming from global Peak Oil. Considerable financial resources

totaling tens of billions should provide to this Group by the International community.

The UN should also devise some type of methodology regarding the distribution of

hydrocarbons. This will be an equally contentious and difficult reform to achieve, but

the only alternative is either oil warfare in the Persian Gulf, or economic warfare in the

international foreign exchange markets. Both of these adverse outcomes can be

avoided if the international community can agree to some sort of complex energy

formula that reflects economic output and population growth statistics.

The UN should attempt to establish guidelines, along with an enforcement mechanism

based on energy price. The bottom line is the US needs to use less energy, and we

need to immediately begin improving our infrastructure before the full effects of Peak

Oil make our energy reforms excessively painful and expensive. Given that we

consume 25% of the world hydrocarbons, we have both the most to gain and most to

lose if energy reforms are not implemented during this decade. Mother Nature and

Peak Oil will not wait for the scientists or the politicians to act . . .

6. Global monetary reform: A painful but absolutely necessary reform to "rebalance" the

global economy. The US consumer cannot go into indefinite debt as the single engine

for global growth, nor can the Federal Reserve continue to "re-inflate" the bubbles into

perpetuity. Economists such as Stephen Roach (Morgan Stanley) and Richard

Duncan (author of The Dollar Crisis [77]) have suggested the excessive growth of

global credit in conjunction with the structural problems of the US dollar may create a

deflationary contraction of the global economy. In other words, a deflationary

depression could occur with a significant devaluation/ panic on the dollar, and the

downturn will be very long lasting unless the global aggregate demand increases. The

G8 nations should begin the process of global monetary reform. However, I remain

skeptical these reforms will take place until a truly significant crisis unfolds

Regardless, the global economy will be more balanced and better off with three

engines of global growth: the US, the EU and Asia. First reform should be the euro as

the 2nd International Reserve currency, at parity with the dollar, thereby allowing a


dual-OPEC oil transaction currency standard. This should join the US with the EU as

two equal "co-hegemons."

At some point a third world reserve currency will make sense for the Asian bloc,

perhaps a Yuan/Yen currency around 2010 that allows China and Japan to purchase

oil with their own reserve currency. These reforms are obviously very controversial

proposals, but again, I fear that failure to compromise on these monetary issues will

ultimately result in a dangerous and unstable multi-polar world engaged in global oil

and/or economic warfare. It is preferable to begin negotiations that compromise on

these monetary/energy issues via multilateral accords before things get desperate in

the post-Peak Oil environment.

Under the above scenarios regarding monetary reform, we may have to reduce our

overblown military expenditures by a considerable amount, perhaps 50% ("only" $200

billion per year), and spend our tax revenues on reducing our debts and improving our

energy infrastructure for a less energy intensive existence. That transition will

undoubtedly be difficult for those who drive large SUVs, but our choices are

increasingly limited. The past few generations including the Baby Boomers, Generation

X or Generation Y, all grew-up with the US as a Superpower. To even imagine a

different scenario -- where the US shares power with the EU as an equal (and ultimately

with China) creates cognitive dissonance. However the "Greatest Generation," to which

my grandparents belong, grew-up when America was not a superpower, and they

endured hardships that strengthened their characters. We too must adapt to new realities.

My principal concern at is time? Has our nation become too militarized and too fearful

of shadowy enemies supposedly lurking inside every airplane or foreign nation? (Similar

to the German population of the 1930s) Will we be able to willingly overcome our

irrational fear, and peacefully make some painful but necessary adjustments to our

economy and society? As Mr. Brzezinski noted, it is troubling the US has acquired a

rather "paranoiac" view of the world. [78] We must throw off such fears and be realistic,

it is we who have changed, not the world. Indeed, no industrialized or developing nation

wants the US economy to collapse. They admire our technical base, R&D capability,

education system, and of course they need us as consumers.

However, what the world community realizes is the `war on terrorism' is a cynically

strategy used by the Bush administration to reaffirm the US status as the global

hegemonic Empire. This is a dangerous policy. Our problems with Al Qaeda are based

on a few radical zealots who distort religion to justify their crimes. While terrorist tactics

are utterly cruel and never justifiable, there are often causes for their anger, usually

political grievances. Bin Laden does not "hate our freedoms" -- according to his own

words he hates our foreign policies. He is a violent "anti-imperialist militant Islamist."

Bin Laden is a product of Whabbism, but his views grotesquely distort Islam. This

intolerant version of Islam is practiced only in Saudi Arabia and by Saudi-financed

madrassas in Pakistan. Saudi Arabia needs to undertake immense internal political and

social reform, and perhaps resolving the Israeli-Palestinian conflict could facilitate



In truth, apprehending Al Qaeda members and reducing terrorism will require massive

international cooperation via joint intelligence/police operations involving the US, EU,

Africa, central Asia and the Middle Eastern states. I suggest that a highly empowered

INTERPOL (International Police) operation would produce the least amount of

"blowback" in a worldwide anti-terrorism campaign. [79] According to senior FBI

agents, as of late 2002 there were only about 200 hard-core Al Qaeda members still at

large. [80] In comparison, Al Capone's infamous Chicago mafia had about two to three

times as many members as Al Qaeda. However, the FBI did not bomb Sicily during our

`war against organized crime.' We cannot stop Al Qaeda by bombing or via "regime

change." The situation in post-Saddam Iraq is a prime example of this dangerously

flawed ideology, as we have created terrorists where they did not previously exist.

We must acknowledge that terrorism has and will exist as long as man walks the earth,

so we must live in dignity, not in fear. Reducing ignorance and oppression that breeds

fear and hatred will reduce future recruits for terrorist groups. We must frame

international terrorism as acts of crimes against humanity, committed by a small number

of criminals. We need to adjust our perception accordingly, and work diligently together

within the international framework.

Moreover, we must also face the facts regarding one of the prime causes of anti-

Americanism in the Middle East. If the Isreali-Palestinain conflict is resolved peacefully

via a two-state solution, the humiliation in the general Arab population will eventually

subside, allowing much needed political reform. Both the Israelis and the Palestinians

are entitled to live in peace, security, and prosperity. Although some will argue

differently, objective observers realize that a peaceful resolution to the Isreali-Palestinan

issue is one of the most critical components to winning the campaign against terrorism. I

pray the next US President will succeed in achieving this goal.

I believe the real struggle in the US is more internal than external. If we truly practiced

our values as majestically articulated in the Declaration of Independence, Constitution

and Bill of Rights, we would have the world's respect, not the world's fear and loathing.

Overcoming the current "anti-Americanism" requires a balanced foreign policy

regarding Israel, and a viable National Energy Strategy that will allow us to stop

supporting repressive regimes. The key is a policy of sustained energy reform -- which

would then allow more enlightened foreign policies -- just as the founding fathers

envisioned. Our struggle? Can we return to our republican origins and restrain ourselves

from seeking Empire? Can we rejoin the community of industrialized nations -- as an

equal to the EU? The ultimate test for the American Experiment? Can we once again

begin living within our means -- from both fiscal and energy perspectives? If we can do

that, our problems with today's "anti-Americanism" and tomorrow's terrorist will quickly


Quite frankly, in order to save the American Experiment and stop our slide towards an


isolated and authoritarian state, we must elect an enlightened administration in 2004. It

would appear that four difficult challenges await the next U.S. administration, including;

1) negotiating global monetary reform, 2) broadly re-organizing U.S. fiscal policies, 3)

developing a National Energy Strategy, and 4) attempting to repair our damaged foreign

relationships with the UN, EU, Russia, and the Middle East. Sadly, the next U.S.

President will have to undertake these challenges from a weakened position both

economically and diplomatically. I do not envy the arduous journey that awaits the 44th

President of the United States.

Dear readers, it is not hyperbole to suggest the destiny of the United States may very

well be determined by the 2004 Elections. We are at an epochal moment in history. The

reality is the beginning of the 21st century will either be a disastrous time period of oil

related military and economic warfare, or a noble effort at international cooperation via

global energy and monetary reform. The choice is ours: Will we desperately fight for

Empire under the guise of the "war on terror" -- or will we heed the wisdom of founding

fathers by "resisting the temptation" of Empire -- and compromise for Peace? The path

we choose in November 2004 will determine not only our future, but also the future of

millions of people around the world.


"America will never be destroyed from the outside. If we falter and lose our

freedoms, it will be because we destroyed ourselves."

"I am a firm believer in the people. If given the truth, they can be depended

upon to meet any national crisis. The great point is to bring them the real


-Abraham Lincoln

I have sworn upon the altar of God eternal hostility against every form of

tyranny imposed upon the mind of man."

-- Thomas Jefferson

# # #

References (post-war commentary)

49. Dreyfuss, Robert and Vest, Jason, "The Lie Factory," Mother Jones, February 2004


50. Sengupta, Kim, "Intelligence agencies doubt al-Qa'ida links," UK Independent,

February 4, 2003

51. Hersh, Seymour, "Selective Intelligence: Donald Rumsfeld Has His Own Special

Sources. Are They Reliable?," The New Yorker, May 6, 2003

52. "The Lie Factory," ibid.

53. Hiro, Dilip, Secrets and Lies, Nation Books (2003)

54. "Interview: 27-Year CIA Veteran," by Will Pitt, www.truthout.org, June 26, 2003

55. "In Round 2, it's the dollar vs. euro," Newsweek, April 23, 2003

56. Hoyos, Carol & Morrison, Kevin, "Iraq returns to international oil market," Financial

Times, June 5, 2003

57. "US to pay its Iraqi workers in dollars," Times Online [UK], April 23, 2003

58. Anderson William L., "Dollar or Dinar?", mises.org, April 29, 2003

59. Booth, William Booth & Chandrasekaran, Rajiv, "Occupation Forces Halt Elections

Throughout Iraq," Washington Post, June 28, 2003

60. Stephen, Kinzer, All the Shah's Men: An American Coup and the Roots of Middle East

Terror, John Wiley & Sons (2003)

61. Enforcing American Hegemony - A Timeline, Josh Buermann

62. Benson, Richard, "Oil, the Dollar, and US Prosperity," www.prudentbear.com, August

11, 2003

63. Vance, Laurence, "Eight Facts about Iraq," www.lewrockwell.com, January 2, 2004

64. Links to Opinions on Legality of War Against Iraq, robincmiller.com

65. O'Loughlin, Ed, "It's guerilla war, new commander admits," The Herald, July 18, 2003

66. Goldenberg, Suzanne "US troops question presence in Iraq", UK Guardian, October

17, 2003

67. Pleming, Sue "Iraq: US Soldiers Complain of Low Morale," Reuters, July 17, 2003

68. Selective Service System, Annual Performance Plan, April 2003, www.sss.gov; See

Also: "Oiling up the draft machine?," November 4, 2003

69. Kaufman, Michael, "What Does the Pentagon see in `Battle of Algiers'?,"

CommonDreams.org, September 7, 2003

70. Speech by Zbigniew Brzezinski at New American Strategies for Security and Peace,

October 28, 2003

71. Shivkumar, C., "Iran offers oil to Asian union on easier terms," The Hindu Business


Line, June 16, 2003

72. Spiro, David, ibid.

73. Belton, Catherine, Putin: "Why Not Price Oil in Euros?" The Moscow Times, Oct. 10,

2003 (original article, expanded article)

74. Pesek Jr., William, "Indonesia May Dump Dollar; Rest of Asia Too?" Bloomberg, April

17, 2003

75. Geewax, Marilyn, "Muslims eye euro as new oil currency," The Sydney Morning

Herald, April 22, 2003

76. "European Central Bank believes pricing oil in euros is sensible," Moscow

Times/Alexander Gas & Oil News, October 14, 2003

77. Duncan, Richard, The Dollar Crisis: Causes, Consequences, Cures, John Wiley &

Sons (2003)

78. Zbigniew Brzezinski Speech, ibid.

79. "Interpol's involvement in the fight against international terrorism," www.interpol.int

80. Kelley, Jack, "Al-Qaeda fragmented, smaller, but still deadly," USA TODAY,

September 9, 2002

# # #

Michel Chossudovsky's book: War and Globalization, the Truth behind Sept 11

addressed the global tensions regarding US/EU strategic currency issues. The below

excerpts are found on Dr. Chossudovsky's website, and in the Fall 2003 (Issue #5)

magazine, Global Outlook.

The Anglo-American Military Axis

By Michel Chossudovsky

. . .

Euro versus Dollar: Rivalry Between America and "Old Europe"

. . . The [euro encroaches] upon the hegemony of the US dollar. . . . Wall Street is

clashing with competing Franco-German financial interests. The war in Iraq pertains

not only to control over [oil] reserves[, but also] the control over [currency,] money

creation and credit. . . .

The European common currency system has a direct bearing on strategic and political

divisions. London's decision not to adopt the common currency is consistent with the


integration of British financial and banking interests with those of Wall Street, not to mention

the Anglo-American alliance in the oil industry (BP, Exxon-Mobil, Texaco Chevron, Shell) and

weapons production (by the "Big Five" US weapons producers plus British Aerospace

Systems). This shaky relationship between the British pound and the US dollar is an integral

part of the Anglo-American military axis.

What is at stake is the rivalry between two competing global currencies: the euro and the US

dollar, with Britain's pound being torn between the European and the US-dominated currency

systems. In other words, two rival financial and monetary systems are competing worldwide

for the control over money creation and credit. The geopolitical and strategic implications are

far-reaching because that are also marked by splits on the Western defense industry and the

oil business.

In both Europe and America, monetary policy, although formally under State jurisdiction, is

largely controlled by the private banking sector. The European Central Bank based in

Frankfurt -- although officially under the jurisdiction of the EU -- is, in practice, overseen by a

handful of private European banks including Germany's largest banks and business


The . . . Federal Reserve Board is formally under State supervision -- marked by a close

relationship to the US Treasury. Distinct from the European Central Bank, the 12 Federal

Reserve banks (of which the Federal Reserve Bank of New York is the most important) are

controlled by their shareholders, which are private banking institutions. In other words, "the

Fed" as it is known in the US, which is responsible for monetary policy and hence money

creation for the nation, is actually controlled by private interests on Wall Street.

Currency Systems and `Economic Conquest'

. . . Ultimately, control over national currency systems is the basis upon which countries are

colonized. While the US dollar prevails throughout the Western Hemisphere, the euro and the

US dollar are clashing in the former Soviet Union, the Balkans, Central Asia, sub-Saharan

Africa and the Middle East.

In the Balkans and the Baltic States, central banks largely operate as colonial style `currency

boards' invariably using the euro as a proxy currency. What thus means is: German and

European financial interests are in control of money creation and credit. That is, the pegging

of the national currency to the euro -- rather than the US dollar -- means that both the

currency and the monetary system will be in the hands of German-EU banking interests.

More generally, the euro dominates in Germany's hinterland: Eastern Europe, the Baltic

States and the Balkans, whereas the US dollar tends to prevail in the Caucasus and Central

Asia. In these countries (which have military cooperation agreements with Washington) the

dollar tends (with the exception of the Ukraine) to overshadow the euro.

The `Dollarization' of national currencies is an integral part of America's Silk Road Strategy.

The latter consists in first destabilizing and then replacing national currencies with the

American greenback over an area extending from the Mediterranean to China's Western

border. The underlying objective is to extend the dominion of the Federal Reserve System --

namely, Wall Street -- over a vast territory.


What we are dealing with is an `imperial' scramble for control over national . . . economies

and currency systems, they seem to have also agreed on "sharing the spoils" -- ie.

Establishing their respective "spheres of influence." Reminiscent of the policies of `partition' in

the late 19th Century, the US and Germany have agreed upon the division of the Balkans;

Germany has gained control over national currencies in Croatia, Bosnia and Kosovo where

the euro is King. The US has established a permanent military presence in the region (i.e. the

Bondsteel military base in Kosovo).

# # #

Additional Recommended Reading

l Brethour, Patrick, "OPEC mulls move to euro for pricing crude oil," The Globe And

Mail, January 12, 2004

l Ahmed, Nafeez M., "Behind the War on Terror: Western Secret Strategy and the

Struggle for Iraq," New Society Publishers (2003)

l "Behind the Iraq Invasion," Aspects of India's Economy, Nos. 33&34, December 2002

l Cooper, Peter J, "Forget about the price of oil, what about the euro?," AME info.com

October 14, 2000

l "ECB blasts Bush economy," Eupolitix.com, October 30, 2003

l Engdahl, F. William, "A New American Century? Iraq and the hidden euro-dollar

wars," Current Concerns, No 4, June 2003

l Hentoff, Nat, The War on the Bill of Rights and the Gathering Resistance," Seven

Stories Press, 2003

l Isbell, Paul, "The Shifting Geopolitics of the Euro," Elcano Royal Institute, September

23, 2002

l Islam, Faisal, "When will we buy oil in euros? When it comes to the global oil trade,

the dollar reigns supreme. But it has a challenger, writes Faisal Islam,' The Observer,

February 23, 2003

l Makhijani, Arjun, "Saddam's Last Laugh: The Dollar Could be Headed for Hard Times

if OPEC Switches to the Euro," TomPaine.com, May 9, 2001

l Pincus, Walter, "CIA Finds No Evidence Hussein Sought to Arm Terrorists,"

Washington Post, November 16, 2003


l Sommers, Jeffrey, "Dollar Crisis and American Empire," Znet.com, June 20, 2003

l Notes on Project Censored: For the past several years, journalism students and

faculty at the University of California at Sonoma have reviewed important news stories

and published an annual book on stories that never "made the news." This past year

150 faculty and students reviewed a total of 900 stories for the 2003 publication. My

essay, `Real Reasons for the Upcoming Iraq War' was ultimately awarded by Project

Censor as one of the most important but "censored" news stories of 2003. Below are

links to their website. (A synopsis of my research is provided in story #19 in their

publication, Censored 2004.)

I would like to thank Dr. Peter Phillips for his ongoing efforts at Project Censored.

None of the authors published in `Censored 2004' receive any financial compensation

(only infamy), but if you would like a glimpse as to how our 6 US media conglomerates

profoundly censor our news, I recommend this book:

Phillips, Peter, Censored 2004: The Top-Twenty Five Censored Stories Seven Stories

Press, 2003

Over the past few years I have often been amazed by the degree to which the American

public remains willingly uninformed, and despite my skepticism, I sometimes wonder

about the validity of this statement.

"The CIA owns everyone of any significance in the major media."

--former CIA Director William Colby

Copyright © 2003-2004 William Clark

Reprinted for Fair Use Only.

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Revisited - The Real Reasons for the Upcoming War With Iraq:

A Macroeconomic and Geostrategic Analysis of the Unspoken Truth

by William Clark


Original Essay January 2003

-Revised March 2003

-Post-war Commentary January 2004

"To the living we owe respect, but to the dead we own only the truth."



l Note to readers

l Summary

l Revisited--The Real Reasons for the Upcoming War With Iraq:

A Macroeconomic and Geostrategic Analysis of the Unspoken Truth

m Synopsis

m Background on Hydrocarbons and US Geostrategy

m References

l Addendum: Notable International Monetary Movements

m European Commentary on the Essay:

`The Real Reasons for the Upcoming War With Iraq'

m Saving the American Experiment (March 10, 2003)

m References

l Post-War Commentary (January 1, 2004)

m Conclusion

m References

l Additional Recommended Reading

Note to readers: