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Currency Wars

May 13, 2003

Euro vs Dollar

One of the major underlying reasons for the invasion of Iraq by the United States was in the defense of the American dollar. The Iraqi government did the unthinkable two years ago and began to sell what little oil they could for Euros, not dollars, establishing a precedent that the American government could not tolerate. The power behind the American dollar is in its ability to buy and sell oil, it is also the worlds “Reserve Currency” which enables central banks of nations to defend its currencies to speculative trading by holding large reserves in American dollars. So called old Europe has a devious hand in the Middle East where they used Iraq as a test case to undermine the dollar of its power to purchase oil. Indeed, this was one incredulous economic shot against the United States by the European Union which did not escape the attention of the Bush administration. It is seen by American elites as an attack on the dollar’s worldwide monetary hegemony which the United States has had for decades that could not go unchallenged. It was a risk that France and Germany wanted to take, and never in their wildest dreams did they think that the American response would be to invade and effectively rape the country they hoped would be their foot-hold to the oil rich Mid East. The French and Germans greatly underestimated the Bush clan, but not all is lost, they might have lost this battle, but they will probably win the war between the Euro and the Dollar.

The power play by the Europeans is also another compelling reason that drives the neocons within the Bush clique to get on with it and continue their policy of forced liberation of other targeted Muslim nations. Because if they do not, the future could bring on a gathering of forces that are in opposition to American preponderance in the region that could stop the neocon quest for violent democratization with Iraq being the only country liberated, something that horrifies the neocons tremendously. OPEC nations are under a lot of pressure to do something to curtail American aggression and involvement in the Middle East. One obvious way, potentially extremely damaging for the U.S. economy, is to covert to the Euro as their exchange mechanism for the trade in oil and to establish the Euro as their “Reserve Currency”. The Europeans are very much involved in achieving this end and this is one of the real reasons if not the main reason why Germany and France were opposed to the invasion of Iraq. Iran is officially looking towards the European Union and the Euro as its exchange mechanism for their trade in oil.

What drives the neoconservatives in the Bush administration is a political ideology based on military preponderance, after all, America possesses the most lethal and powerful armed forces mankind has ever seen, and after Sept 11, the illegitimate “casus belli” for the neocon was established and the obvious targets are all enemies of Israel even though it never had anything to do with vital American security to protect. What the Bush regime is showing to the world is that – in the end – military power is more desirable and gets things done more quickly than diplomacy and political consensus, and is the geo-strategic tool to be used above all others in international affairs. This single minded focus could be the downfall for the neocon and their desire for world hegemony, it is quite obvious that the only thing neocons know about diplomacy and economic affairs is how to bully, alienate, lie and deceive on the diplomatic front, and on the economic front, expand government, borrow huge amounts of money and cut taxes.

Military aggression by the Bush government has had very negative repercussions around the world, one being that the Muslim world and old Europe have now something very much in common, opposition to the American policy of preemption, and Europe’s obvious sympathies for the Palestinian cause is to further ingratiate themselves to the Arab world, also, it would be economically prudent for OPEC to change to the Euro; reserves in Euro would be safer in the long run because the European Union does not run up trading deficits like the United States does, and it does not massively borrow from foreign lenders like the United States government. The Europeans and the Muslim world cannot stop the United States military when loosed by Washington, but it might be able to stop American aggression by destabilizing and collapsing the American dollar which would effectively put a halt to Washington’s policy of armed aggression, after all, invading and occupying countries is a very expensive proposition and collapsing the dollar would make it impossible for the United States to finance a military capable of “Shock and Awe“.

This confluence of interests between the European Union and the Arab world is similar to the confluence of interests between the Bush regime and Israel. The war of words emanating between the Bush clan and European diplomats is continuing unabated and it’s highly unlikely the neocons can repair the damage even if they wanted too. OPEC very well knows that most of their oil sales go to Europe and the Orient, and not to the United States. In Saudi Arabia’s case, Saddam Hussein is no longer a threat to contend with and that American military visibility is more of a liability to them than the protection it brings. Riyadh is quickly seeing that the United States and its neocons is their new real threat, much more dangerous than Iraq ever was. The House of Saud needs the Europeans now much more than the Americans.

At this moment the determining factor is American military might, Afghanistan is vanquished, now Iraq has suffered the same fate, and Syria is the next target. Iran, Saudi Arabia, Libya, Egypt, even Pakistan are on the list of the war makers in Washington. Another reaction to American military preponderance is that Berlin, Paris and Brussels are creating a European Union defense system that could lead the way for the dissolution of NATO in Western Europe. The obvious anti-American feeling in Western Europe is forcing the United States to move their NATO bases to the new Europe for now; NATO is on its death bed despite its expansion to the east. The European Union is setting itself up to become a rival to the United States, and in the long run they are better positioned strategically than the United States. Europe is befriending and creating allies in the Middle East that are economically important through benevolent diplomacy while all the United States can do is make war and subjugate the vanquished to keep and augment their position of hegemony.

President Bush and the neocons have made many new enemies, old strategic friends such as France, Germany, and Turkey, are on the road to opposition to everything American, this does not bode well for America’s future. Russia is distancing itself from Washington and forming much closer ties with Berlin and Paris, Saudi Arabia has had enough, which is probably good, but the loss of Turkey is really a stupid foreign policy failure. By treating Turkey like a fifth rate client state the Bush government has pushed Ankara further into the camp of the benevolent Europeans, and the way Ankara refused to be intimidated by the cowboys in Washington did much to curry favor with Berlin and Paris, which will only serve to help Turkey obtain membership to the European Union. The Europeans initial balking at Turkey’s entry to the Union is quickly being seen by European elites as a strategic mistake, with Iraq now subjugated and under American rule, Turkey has become vital for the Europeans to get a foot hold in the Mid East, and Turkey being part of the European Union, the Euro would gain substantial legitimacy in the Arab world. As far as Ankara is concerned their economic and strategic future lies with Brussels not Washington.

One also has to conclude that the Bush government’s insistence that Turkey be allowed into the European Union is extremely short sighted, and that Ankara and Brussels quickly realized that it was nothing other than a manipulative attempt to suck up to Turkey for its support to Bush’s war on Israel’s enemies. US Deputy Defense Secretary Paul Wolfowitz recently criticized Turkey for not doing more to support the United States in its recent war against Iraq and demanded that the Turkish government be on its best behavior, meaning total submission to Washington’s demands concerning the next forced liberations in the region, specifically Syria and Iran. The Bush clan wants Turkey on their side for this coming war, but they have miscalculated, Turkey is in no position economically and politically to support the United States even if they wanted to. The first American war with Iraq and its consequent embargo cost the Turks billions in trade with Iraq and the resulting economic hardship has inflamed the citizenry into a high anti-American pitch, this is a reality the neocons are not interested to see, it does not make it any less real. Anti-Americanism is quickly becoming a world wide phenomenon and consensus, and as long as Bush is president and aligned with his neocon subversives in the administration; it will only get much worse.

The Europeans are gaining support in much of the world through devious diplomacy and are reaping the benefits by befriending nations that are being threatened and alienated with American violence. As for the neocons so called new Europe, meaning former Soviet block nations, their ultimate destiny lies with Brussels, Berlin and Paris, not Washington and Jerusalem. When the time is right, they will drop their support for Washington, even so called ex-communist new Europe that the neocons love so much can see the handwriting on the wall.


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