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 Monday February 24, 2003 11:03 by Coilin Nunan - FEASTA: The Foundation for the Economics of Sustainability feasta at anu dot ie
 In November 2000, Saddam Hussein made a momentous decision: he decided that henceforth Iraq would sell its oil on the international market for euros rather than dollars. In doing so, Baghdad branded the dollar a tool of US hegemony. Is there in fact some validity in this claim and could Iraq’s decision help explain the current policy divisions between the US and Eurozone countries, France and Germany, on Iraq? At present, the dollar is the de facto world reserve currency, giving the US an inherent economic advantage by allowing it to import far more than it exports. The need for dollars outside the US to buy oil, repay IMF debts and carry out international trade means that foreign countries must supply the US with extra goods and services to acquire dollars which the US issues at virtually no cost. It is the demand for dollars which enables the US to live beyond its means, currently importing nearly 50% more than it exports. The euro, however, now provides a credible alternative to the dollar. But even if the dollar only had to share the status of world reserve currency with the euro, the economic consequences for the US would be extremely serious, including large dollar and stock-market devaluations. There is one major obstacle to this happening: oil. For many oil-importing countries like Japan, there is no point in converting their huge dollar reserves to euros if the only currency that can be used to buy oil is the dollar. Maintaining international oil trade in dollars is therefore crucial to US economic health. But ‘axis of evil’ member and major oil exporter Iran not only welcomed Iraq’s euro move, but is considering doing likewise. OPEC member Venezuela also welcomed Baghdad’s move and has established barter deals for trading its oil with 13 different countries and encouraged OPEC to set up systems of electronic barter. Even major oil producer Russia welcomed the Iraqi move and OPEC itself has said it is considering the benefits of selling its oil for euros. If part of the motivation for the proposed war against Iraq and the coup attempt in Venezuela is a power struggle between two competing currencies, then this underlines the importance of Feasta’s proposals for reforming the international monetary system and introducing a neutral world currency for all international trade. Further reading: http://www.feasta.org/documents/papers/oil1.htm |
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Comments (6 of 6)
Jump To Comment: 1 2 3 4 5 6"No matter what political reasons are given for war, the underlying reason is ALWAYS economic."
-- A.J.P.Taylor, British Historian
If there is a war, and if the US wins, it will be so interesting to see if Iraq's oil will continue to be sold in euro.
Is this issue a central factor in the argument between EU (France/Germany) & US?
Is this issue the most important point in the whole war story?
Simplify the story and inform the masses.
Any political parties reading this article - take note of it - ask Ahern in the Dail - does he support the sale of oil in dollars only?
Just draw attention to this matter as much as possible.
you are working hard on these ideas, but just one thing I dont think you have given enough thought to and for establishing a "global" currency it is one you must consider.
There is an unknown quantity of faked dollars and sterling on the global markets. You have as economists done lost of work with money as a "credit-system"- But you have ignored as does the USA try to, the amount of forgeries in circulation. This has long proved a difficulty to proposing the use of the "€" as a global currency. I think therefore for the moment establishing "€" as a global currency is wishful thinking. And till you clarify your thoughts on other monetatry union systems and their effects on poverty I will continue to draw attention to the support given by European fascists to a global "euro" system.
You have never answer that question.
European revisionist Fascists support the "€" for Africa and Oil. Africa uses a franc /€ tied currency and no real benefits have been shown the peoples of those countries.
Feasta thus appears to be making a mistaken anaylsis of how global money works and proposing the kind of "indicator tinkering" that one expects from the Progressive Democrats or indeed has seen from the Austrian rightwing in the form of Haider.
In fact your policy is near indentical.
why?
Foreign countries MUST supply goods to the US market? No there is no compulsion, they are quite happy to do so. Gaining access to the US market is the hope of every country in the world. The euro as an alternative currency? Not until the European economies match the performance of the US. Europe's strongest economy, Germany, has 4 million unemployed. What % of world trade is denominated in euros? as opposed to the dollar?
I've recently read that the rest of the world(us) supports the US(them) to the tune of $4,000,000,000 per day in interest payments and other wealth transfers. Petro-dollars may be an important part of Americas economic survival but the debt-dollars issued by the IMF and WB are where the real monies extorted (not to confuse the issue ;-).
So anyway Al, maybe this could be why some countries will work their people to death for dollars, just like Ireland of 1847, you have to pay the landlord in currency of his choosing or starve to death trying.
Feasta does not support a global 'euro' system. Nor does Feasta want to encourage African nations to use the euro in their transactions. If poor countries were to sell their exports for euros rather than dollars and build up euro reserves to replace their dollar reserves, then poor countries would be subsidising the Eurozone rather than the US. This is not what Feasta wishes to see.
The Feasta monetary proposals (and others like it) would not replace one reserve currency (dollar) with another (euro), but would do away with the iniquitous system of reserve currencies.
Feasta's proposal for introducing a debt-free international currency for international transactions (which would not replace national currencies for national transactions) would be of great benefit to poor countries as they could participate in world trade without the need to subsidise anyone.
Cóilín.
FEASTA’s Proposals for Global Monetary Reform
http://www.earthsummit-ireland.org/FEASTA.htm
so you are not "haider types" then.
How long do you think it would take to establish a "debt-free international currency"?
Can you also theorise a "development/health" currency as well?
(It seemed in more than a few "dinero gratis" discussions that money for the 3rd world is different from "money for my packet of cigarettes").oh and we have an estimated 39 trillion € global GDP. It did reach 40.9 trillion$ in 1999.