the end of the dollar hegemony and Iran

[Minotaurus]

i’ve just read (and heard) this speach by the republican congressman Dr. Ron Paul about the dollar hegemony

Iran planes to create an oil bourse where oil sales will be priced Euros, not dollars this year. Will an attack on Iran by USA have more to do with this than than their “nuklear ambitions” ?

some quotes from the speach

by Ron Paul
*Before the US House of Representatives, February 15, 2006 *

A hundred years ago it was called “dollar diplomacy.” After World War II, and especially after the fall of the Soviet Union in 1989, that policy evolved into “dollar hegemony.” But after all these many years of great success, our dollar dominance is coming to an end.

It has been said, rightly, that he who holds the gold makes the rules. In earlier times it was readily accepted that fair and honest trade required an exchange for something of real value.

…By the time the “dollar diplomacy” of William Howard Taft was clearly articulated, the seeds of American empire were planted.

…Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

…The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound. Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35th of an ounce of gold) as the world’s reserve currency

…Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

…The trade deficit last year was over $728 billion. A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria. The only restraining force will be the world’s rejection of the dollar.

…In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O’Neill, the major topic was how we would get rid of Saddam Hussein – though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O’Neill.

…There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq.

…In 2001, Venezuela’s ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. Within a year there was a coup attempt against Chavez, reportedly with assistance from our CIA.

…Now, a new attempt is being made against the petrodollar system. Iran, another member of the “axis of evil,” has announced her plans to initiate an oil bourse in March of this year. Guess what, the oil sales will be priced Euros, not dollars.

…Recent threats over nuclear power, while ignoring the fact that they are surrounded by countries with nuclear weapons, doesn’t seem to register with those who continue to provoke Iran.

…The dollar’s importance is obvious, but this does not diminish the influence of the distinct plans laid out years ago by the neo-conservatives to remake the Middle East. Israel’s influence, as well as that of the Christian Zionists, likewise played a role in prosecuting this war. Protecting “our” oil supplies has influenced our Middle East policy for decades.

…Though we don’t occupy foreign countries to directly plunder, we nevertheless have spread our troops across 130 nations of the world. Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don’t declare direct ownership of the natural resources – we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.

…Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar.

…The urgent arguments about Iran posing a military threat to the security of the United States are no more plausible than the false charges levied against Iraq. Yet there is no effort to resist this march to confrontation by those who grandstand for political reasons against the Iraq war.

you can read (or hear) the whole speach here

Why the US Hates Iraq, Iran, and Venezuela - LewRockwell

[TwoTrouts]

I think that this is information that should be listened to and taken to heart by all Americans. At one time it was the stated aim of Osama Bin Laden and al Queda to bring down the House of Saud and replace it with a true Islamic regime. Once this was accomplished, Opec could be forced to switch from dollars to Euros. Such a move would cripple the US economically and force a confrontation. It was hoped that Europe, benefiting from the dollars to euro switch, would stay out of the conflict.

[JohnT]

Wasn’t it supposed to open last March 20th?

[Lemur866]

It is complete bullshit to imagine that this would “cripple” the US.

Do we benefit from the dollar being a reserve currency? Sure we do. A small amount. But for trade like this it doesn’t matter, because the total amount of currency that must be reserved is very small compared to the amount of trade.

Any US oil company can buy Euros whenever they like. Any European oil company can buy dollars whenever they like. We have a global currency market. It. Makes. No. Difference.

The speculation that the US would prefer war to a euro denominated Iranian oil market is just about the stupidest thing I’ve heard this year. Yeah, America-hating oil producing countries want to switch away from dollar denomination. This is an existential threat to America…how? Oil is bought and sold on the world market. Currency is bought and sold on the world market. Brazil, Japan, China, Britain, Switzerland, Canada and Europe aren’t crippled by the lack of a yen or yuan or $C or franc or euro oil market, are they?

It’s crap, and the people spreading around this theory should be ashamed of themselves.

[Ryan_Liam]

@Lemur866

It is complete bullshit to imagine that this would “cripple” the US.

Do we benefit from the dollar being a reserve currency? Sure we do. A small amount. But for trade like this it doesn’t matter, because the total amount of currency that must be reserved is very small compared to the amount of trade.

Any US oil company can buy Euros whenever they like. Any European oil company can buy dollars whenever they like. We have a global currency market. It. Makes. No. Difference.

The speculation that the US would prefer war to a euro denominated Iranian oil market is just about the stupidest thing I’ve heard this year. Yeah, America-hating oil producing countries want to switch away from dollar denomination. This is an existential threat to America…how? Oil is bought and sold on the world market. Currency is bought and sold on the world market. Brazil, Japan, China, Britain, Switzerland, Canada and Europe aren’t crippled by the lack of a yen or yuan or $C or franc or euro oil market, are they?

It’s crap, and the people spreading around this theory should be ashamed of themselves.

Spot on, took the words out of my mouth. Been lurking for a while and whenever this kinda OP popped up, I always hoped it was debunked.

Like Lemur said, Europe doesn’t exactly have large amounts of Euros for Oil and it doesn’t make a damn difference to it’s economic power which if collectively measured, is the largest in the World.

[Minotaurus]

@Lemur866

It is complete bullshit to imagine that this would “cripple” the US.

Do we benefit from the dollar being a reserve currency? Sure we do. A small amount. But for trade like this it doesn’t matter, because the total amount of currency that must be reserved is very small compared to the amount of trade.

Any US oil company can buy Euros whenever they like. Any European oil company can buy dollars whenever they like. We have a global currency market. It. Makes. No. Difference.

The speculation that the US would prefer war to a euro denominated Iranian oil market is just about the stupidest thing I’ve heard this year. Yeah, America-hating oil producing countries want to switch away from dollar denomination. This is an existential threat to America…how? Oil is bought and sold on the world market. Currency is bought and sold on the world market. Brazil, Japan, China, Britain, Switzerland, Canada and Europe aren’t crippled by the lack of a yen or yuan or $C or franc or euro oil market, are they?

It’s crap, and the people spreading around this theory should be ashamed of themselves.

perhaps, but i’m not an macro-econom. However i do react when a republican politican talk strongly about this

[Alien]

Military action against Iran will have nothing to do with Iran’s desire to price oil in something else than dollars. It will only make a difference if others join in, which they wont. Neither will Europe benefit as things are now, it will only increase the value of the Euro and hurt business.

It will make a difference for the US should it happen, but this has been discussed to death already.

[slaphead]

@Alien

Military action against Iran will have nothing to do with Iran’s desire to price oil in something else than dollars. It will only make a difference if others join in, which they wont. Neither will Europe benefit as things are now, it will only increase the value of the Euro and hurt business.

It will make a difference for the US should it happen, but this has been discussed to death already.

I’m not even sure it will make a difference. Considering the US economy is perfectly able to sustain flushing hundreds of billions of dollars down the toilet every year in the form of half-baked subsidies, tarrifs, tax breaks and whatnot, not to mention incompetent military adventurism, the impact of a switch in commodity pricing from dollars to some random other form of accounting measure isn’t going to make a huge amount of difference.

Going crazy at the printing presses and debauching the currency would bring the ceiling crashing down in double-quick time, but that’s a whole different argument.

[Minotaurus]

loks like Iran strengten their economic ties with Venezuela and Bolivia

ISOICO signs $5b agreement with Venezuela

TEHRAN, May 10 (MNA) -– Iran Shipbuilding and Offshore Industries Complex Co. (ISOICO) has managed to conclude an agreement worth $5 billion on the development of marine industries and shipbuilding with Venezuela, noted Iran’s deputy industries and mines minister Mohsen Shaterzadeh.

Also, Iran, Venezuela and Bolivia have signed a trilateral memorandum of understanding (MOU) on the expansion of the shipbuilding industries, the Iranian official told Mehr News Agency (MNA) on Wednesday.

“Despite the $1 billion investment in the shipbuilding industries we have been able to employ only 30 percent of the potentials of the industry,” maintained the deputy minister who was speaking at a seminar held on the issue in the Iranian Caspian Sea resort of Mahmudabad.

Iran’s non-oil exports last year hit $10,500,000,000, Shaterzadeh further explained adding, industrial products accounted for 77 percent of the figure.

http://www.mehrnews.com/en/NewsDetail.aspx?NewsID=324420

other cases

Discussion about Exporting Logan from Iran to France
TEHRAN, May 10 (ISNA)-Iran’s government and Renault are reviewing the possibility of exporting Iranian manufactured Logan to France.

http://www.isna.ir/Main/NewsView.aspx?ID=News-714088&Lang=E

Peugeot to purchase $500m parts per year from Iranian manufacturers

TEHRAN, May 9 (MNA) -– French automaker Peugeot is planning to annually purchase from Iranian producers auto parts worth $500 million, Peugeot spokesman said.
In case of favorable political situation in Iran in the future, Peugeot will purchase auto parts worth $500 million from Iranian producers, the Persian service of Iranian Students News Agency (ISNA) quoted the French automaker official as saying to Bloomberg.

Iran is going to turn into one of Peugeot’s main sources of auto part supplies, he said adding, the company will continue and enhance its cooperation with Iran Khodro – the largest auto producer in the Middle East region.

http://www.mehrnews.com/en/NewsDetail.aspx?NewsID=323847

Iran-Khodro to export vehicles to South Asia

LONDON, May 7 (IranMania) - The Director for Asia and Pacific region of Iran’s giant auto-manufacturing company ‘Iran-Khodro Industrial Group’ said that Bangladesh and Pakistan have ordered over 5,000 gas-powered Samand models with right-hand steering-wheels, IRNA reported.

An official of Iran’s biggest automobile manufacturing company, said in March that 200 Samand models have already been exported to Russia since the start of 2006.

Iran Khodro Deputy Director for Exports and International Affairs Alireza Mirzaie told IRNA that the first batch of Samands were exported after the

company received the necessary license from the Russian Standards Institute.

He said that the exports, given the fact that the Russian Federation is a competitive market for vehicles in the world, shows that “Samand has captured a share of the market in the country.” He said that the export license granted to the company by the Russian Standards Institute is a laudable achievement for the Iranian vehicle industry.

“Exports of cars to Russia are expected to top 3,000 in the current year.”

Samand cars designed to suit the Russian climate and requirements of Russian customers are known as “North Samands,” he added.

http://www.iranmania.com/News/ArticleView/Default.asp?NewsCode=42605&NewsKind=Current%20Affairs

Belarussian president calls for promoting bilateral ties with Iran
http://www.irna.ir/en/news/view/menu-237/0604217576195421.htm
Iran-Venezuela Oil Cooperation
http://www.isna.ir/Main/NewsView.aspx?ID=News-702905&Lang=E

Iran don’t only export oil…

Samand Production Line in Azerbaijan
http://www.isna.ir/Main/NewsView.aspx?ID=News-710261&Lang=E
Tehran, April 29 (ISNA)-Iran is to start the manufacturing of Nissan’s Diesel trucks from the second half of 2006.

Show Thread - Iran Defense Forum

Iran’s auto manufacturers produce over 1m light, heavy vehicles
The nation’s auto manufacturing plants produced 839,031 passenger cars, 125,203 pick-up trucks, 32,169 trucks, 2,396 buses, 1,104 minibuses and 3,817 four-wheel drive sport-utility vehicles (SUVs), the Ministry of Industries and Mines said in a statement on Wednesday.
http://www.mehrnews.com/en/NewsDetail.aspx?NewsID=311276
Iran-khodro to manufacture Samand automobiles in Syria
http://www.irna.ir/en/news/view/menu-237/0604189924010247.htm
pictures of the iranian car Samand
http://www.ikco.com/products/images/lxmain.jpg
http://www.irandefence.net/attachment.php?attachmentid=989&stc=1&d=1145315733
http://auto.tom.com/autoimg/upload_dir/728/1114098323_73300.jpg
http://auto.tom.com/autoimg/upload_dir/728/1114098323_22635.jpg
http://64.40.99.49/Multimedia\pics\1382\6\Economy\1.jpg

[Alien]

@slaphead

I’m not even sure it will make a difference. Considering the US economy is perfectly able to sustain flushing hundreds of billions of dollars down the toilet every year in the form of half-baked subsidies, tarrifs, tax breaks and whatnot, not to mention incompetent military adventurism, the impact of a switch in commodity pricing from dollars to some random other form of accounting measure isn’t going to make a huge amount of difference.

Going crazy at the printing presses and debauching the currency would bring the ceiling crashing down in double-quick time, but that’s a whole different argument.

Depends on what you mean by ‘sustainable’. The dollar has declined by 40% against the euro in, what, 5 years? That’s not very sustainable to me, but the decline has been gradual. I don’t know that the numbers are, but I think something like 70% of world currency reserves are in dollars, and that 2 of every 3 dollar is held abroad. Now, how much of that is due to the trade deficit - whatever not recycled and reinvested in the States - and how much are actual reserves? I’m sure somebody knows. The dollar is still overvalued, unfortunately.

The other aspect is the geo-political significance of being the printer of the world’s reserve currency, basically, controlling the global economy, and, with it, foreign governments. A world where international loans are no longer paid in dollars and where the only foreign foreign dollar-holders are those with a surplus from US trade, that will be a different world.