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Iran Super Thread- Merged

a_majoor said:
I am not familier with these historical examples, care to provide some?

The Cuban Missile Crisis is probably the most important example of the UN being instrumental in the process that resulted in the situation being diffused with the parties saving face. It was by no means the whole story, but played a key role. It is, of course, always harder to prove a negative ("when did someone NOT do something because..."), but the fact that, when the security council appeals for a cease fire and offers peacekeepers, and the (usually losing) side invites this, it is difficult for the other side to continue on fighting. The result is that real estate seldom changes hands in a permanent way as a result of the war. The Arab Israeli and Indo Pakistani conflicts have been relatively short and did not result in a significant change of borders at least in part due to the deterrent value of the Article 51 of the UN Charter and the Security Council's diplomatic intervention. The UN never recognized the annexation of East Timor by India, and after 26 years East Timor was independent again.

The implication is that this possibility makes invading your neighbour a less viable extension of politics (for you Clausewitz fans). It saves face by providing the reason not to fight. I am the first to admit that this only happens when the great powers of the day go along with it (Iraq 1), the war doesn't happen within only one of their spheres of influence, or as in Korea in the 50's, one of them boycotts the security council vote.  My argument is not that the UN is perfect, just that the international law for which it is a repository, which says that sovereign states do not invade each other as its cardinal rule, is the correct way to go. I can't emphasize enough, I am fully aware of the organizations shortcomings.

To extend this, what would the post 9-11 world look like if the US had followed UN rules? I think terrorists routed in Afghanistan with a full UN force sympathetic to the US; Iraq would still be contained, and the US would have more resources to do other (legal) things with its military - maybe act as part of a UN force to stop some future Iranian aggression, who knows? Or force real inspections of Iran with full UN cooperation? Anyway, we can "what if" until the cows come home...

a_majoor said:
Since the UN itself is not acting according to the rule of law (the various scandals surrounding Kofi Annan should be a big clue, and things like "Oil for Food" or Dafar are another indication of which way they are going).

I don't follow the logic. The Liberals broke the law, so Canada is not a country founded on the rule of law?

a_majoor said:
The US was isolationist in the 1900's, and emerged on the world stage under the tutalage of the "Progressives", with President Wilson taking the defining step of entering World War One and remaining engaged in European politics in the aftermath. The true irony is when the US steps aside and alows "multilateralism" to run its course, we see the unravelling of Yugoslavia, the deadlock over North Korea's nuclear program and the absolute failure of diplomacy vs Iran's nuclear ambitions. OF course when the United States steps in and takes action to supress genocide or otherwise enforce the UN charter........

At the risk of misdirecting this thread, these are some very sweeping statements. Can you expand on how "multilateralism" resulted in the unravelling of Yugo, North Korea, and how all diplomatic recourse has been exhausted in Iran, or in the interest of brevity provide cites for further reading? Admittedly, when the US fails to commit resources to the UN and pay its dues, it makes it difficult for the UN to carry out its mandate, but that's part of the problem with going it alone all the time... and we're back to wondering how long the US resources will hold out for them to carry on imposing pax americana...
 
And who is to say what might happen in the future if the American plan for Iraq goes awry?

Or if the American plan goes as they wish.
 
Chummy said:
The Cuban Missile Crisis is probably the most important example of the UN being instrumental in the process that resulted in the situation being diffused with the parties saving face. It was by no means the whole story, but played a key role. It is, of course, always harder to prove a negative ("when did someone NOT do something because..."), but the fact that, when the security council appeals for a cease fire and offers peacekeepers, and the (usually losing) side invites this, it is difficult for the other side to continue on fighting. The result is that real estate seldom changes hands in a permanent way as a result of the war. The Arab Israeli and Indo Pakistani conflicts have been relatively short and did not result in a significant change of borders at least in part due to the deterrent value of the Article 51 of the UN Charter and the Security Council's diplomatic intervention. The UN never recognized the annexation of East Timor by India, and after 26 years East Timor was independent again.

The Cuban Missile Crisis? The USSR backed down when the US signaled its resolve with the naval blockade of Cuba, and the implicit threat that if things went any farther General Curtis LeMay would be unleashed to turn Cuba, the USSR and probably China into radioactive rubble. (Don't forget the Russians were in Cuba in the first place because they did not have a credible strike force at the time). I will argue the Arab-Israeli wars were short because of the limited objectives of the Israelis, not to mention the limited logistical base of all players (unless their patrons, the USSR and the United States were willing to pour resources into the fight, see the Yom Kippur war), similarly the Indo-Pakistani conflicts. Since there is still a low level state of hostilities in these regions, with outbreaks of active fighting, I don't see where the UN has had any effect. (Palestinian, Iranian and other Arab governments, for the most part, still refuse to recognize Israel, and continue hostilities using a terrorist/insurgency model since that is what they can support). As for East Timor, the UN made comforting noises for 26 years but it was Anglosphere troops that actually came ashore, fought against Indonesian "militias" and troops and helped to secure East Timor as an independent nation.

The ultimate arbitrator in these cases isn't the UN, it is some one nation or group of nations using armed force to get the solution they want.

The implication is that this possibility makes invading your neighbour a less viable extension of politics (for you Clausewitz fans). It saves face by providing the reason not to fight. I am the first to admit that this only happens when the great powers of the day go along with it (Iraq 1), the war doesn't happen within only one of their spheres of influence, or as in Korea in the 50's, one of them boycotts the security council vote.  My argument is not that the UN is perfect, just that the international law for which it is a repository, which says that sovereign states do not invade each other as its cardinal rule, is the correct way to go. I can't emphasize enough, I am fully aware of the organizations shortcomings.

Egypt kicked the UN troops out of the Sinai which was a good signal they were preparig to go to war, and the Croats (and to a lesser extent the Serbs) had no issues rolling over UN "peacekeepers" to reach their objectives in the civil wars of the 1990s. Somali warlords ignored the UN until President George H.W. Bush landed 20,000 Marines, and when they left, it was open season on "peacekeepers" again. I could mention how closely Argentina and the UK followed UN direction in the Falklands. The list of examples is pretty long.....

To extend this, what would the post 9-11 world look like if the US had followed UN rules? I think terrorists routed in Afghanistan with a full UN force sympathetic to the US; Iraq would still be contained, and the US would have more resources to do other (legal) things with its military - maybe act as part of a UN force to stop some future Iranian aggression, who knows? Or force real inspections of Iran with full UN cooperation? Anyway, we can "what if" until the cows come home...

It is easy to demonstrate there was little or no enthusiasm in the UN for any of those projects, but the real giveaway is the little parenthetic inclusion of (legal). The Congress of the United States voted in favor of going to war, so it is as legal as it is going to get. In a more metaphysical sense, self defense is ALWAYS legal, and only a government willing to protect its citizens can be truly thought of as legitimate. In the UN club, just sitting in the capital is legitimacy enough, and no one inside the UN is going to look too closely at the internal conduct of these nations who torture, starve or otherwise abuse the rights of their citizens.

I don't follow the logic. The Liberals broke the law, so Canada is not a country founded on the rule of law?

Founded on the rule of law, but drifting away. If you really want to play "what if", imagine if the Liberals had won this election, and were free to continue looting the public purse without constraint and impose social engineering through the courts without parliamentary challenge or oversight. (The normal chain of events is that parliament legislates, the courts apply the law; this seems to have been turned on its head)

At the risk of misdirecting this thread, these are some very sweeping statements. Can you expand on how "multilateralism" resulted in the unravelling of Yugo, North Korea, and how all diplomatic recourse has been exhausted in Iran, or in the interest of brevity provide cites for further reading?

EU and then UN efforts to stop the Yugoslavian Civil war were ineffective, and the wars only ended when the US finally decided they did "have a dog in this fight" and sent a divisional sized task force to impose order. Notice I was in Bosnia as part of an effort to enforce the "Dayton Accord" (as in Dayton, Ohio, USA) and not the "Montreal" or "Paris" accords. The Kosovo air campaign was entirely a NATO affair, with no UN input. North Korea is essentially a cats paw for the Chinese to alternately threaten or sooth their neighbours, the so called six party talks have amounted to a big zero in the results column. Iran has resisted all efforts to contain its nuclear ambition, breaking the seals and disabling the monitoring of the IAEC and stalling efforts by the EU to stop or divert the program until they either enrich enough uranium to do the deed; or get the Europeans to concede that Iran can develop nuclear weapons.
 
The Washington Post:
http://www.jpost.com/servlet/Satellite?apage=2&cid=1139395531778&pagename=JPost%2FJPArticle%2FShowFull

US to present Iran with 30-day ultimatum


The United States will present a 30-day ultimatum to the UN Security Council this week, the Washington Post reported Saturday, calling on Iran to cease with its nuclear program.

It was reported however, that the US would not request further economic sanctions on Iran.

Iran and the European Union inched toward a compromise Friday that diplomats said would allow Tehran to run a scaled-down version of a uranium enrichment program with potential for misuse to develop atomic weapons.

The development was significant because the Europeans and the United States have for years opposed allowing Iran any kind of enrichment capability - a stance that Russia, China and other influential nations have embraced in recent months.

Top European officials - including the foreign ministers of France and Germany - publicly described talks Friday in Vienna as failing because of Tehran's refusal to reimpose a freeze on enrichment.

"Unfortunately we were not able to reach an agreement," French Foreign Minister Philippe Douste-Blazy told reporters. He said the EU continues to demand "full and complete suspension" of uranium enrichment and related activities that have fed fears that Iran may be pursuing nuclear arms.

Germany's Frank-Walter Steinmeier said the meeting ended, after just over two hours, "without achieving a result."

But diplomats familiar with the talks told The Associated Press that after months of deadlock, the two sides explored possible agreement by discussing plans that essentially would allow Iran small-scale enrichment after reimposing its freeze for an undefined period.

The compromise would serve Iran, the European Union and Russia by allowing all of them to say they had achieved their main goals.

Iran would be able to run a program it insists it has a right to under the Nuclear Nonproliferation Treaty, even if it is only on a research basis instead of the full-scale enrichment.

The Europeans, who since 2004 have negotiated for Iran to scrap enrichment, could tolerate small-scale enrichment if Iran first agrees to their key demand - a freeze to re-establish confidence.

Moscow could benefit diplomatically and economically if Iran accepts its plan to move its enrichment program to Russia - except for activities defined as research and development that all sides agree on under any compromise plan.

One of the diplomats - who demanded anonymity in exchange for divulging the substance of the confidential discussion - said the impetus came from Moscow, which has taken the lead in talking to Iran since talks with the Europeans collapsed late last year.

He said Russian Foreign Minister Sergey Lavrov was to float the compromise plan in Washington on Monday and Tuesday to gauge American reaction.

Consensus on such a compromise by the Russians, Europeans and Iranians could leave the Americans with two unpalatable choices.

If Washington accepts the plan, it essentially leaves Iran in a position to develop technology that it could use to make fissile uranium for warheads.

If it refuses, it again could face diplomatic near-isolation on what to do about Iran after months of building the kind of international consensus that last month led the International Atomic Energy Agency's 35-nation board to put the UN Security Council on alert about Iran's suspect nuclear program.

By depriving the Iranians of domestic control of enrichment, the Russian plan - backed by most in the international community including the US and the Europeans - is meant to eliminate the danger that Tehran might misuse it to make the fissile core of nuclear warheads.

Small-scale enrichment under a compromise would deprive Iran of the chance to run the thousands of centrifuges needed to enrich in sufficient amounts to give them material for multiple weapons. But it would allow them to perfect the methodology, should they later decide to start industrial-scale enrichment.

Iran restarted some enrichment activities last month, two years after voluntarily freezing the program during talks with the Europeans. Those talks unraveled late last year.

A report last week by IAEA head Mohamed ElBaradei showed Iran testing centrifuges - machines that spin uranium gas into enriched uranium.

And just a few months down the road, "commencement of the installation of the first 3,000 ... (centrifuges) is planned for the fourth quarter of 2006," the report said.

Experts estimate that Iran already has enough black-market components in storage to build the 1,500 operating centrifuges it would need to make the 20 kilograms (45 pounds) of highly enriched uranium needed for one crude weapon.

Tehran insists it wants enrichment only to generate electricity and that it does not seek nuclear arms, but a growing number of nations share US fears that that is not the case.

While Russia backed alerting the Security Council to Iran, it remains reluctant to press for tough action against Tehran, an economic and strategic partner. Lavrov said Friday that permanent council members were not united on a course of action.

"There is no collectively discussed and agreed strategy of what we all will be doing in the Security Council if the issue is there," Lavrov told foreign reporters, hinting at his country's opposition to increasing pressure on Tehran.

The IAEA's board is to discuss the Iran issue at a meeting beginning Monday, including the ElBaradei report. The board notified the UN Security Council Feb. 4, after Iran refused to heed requests to maintain a suspension on enrichment.

There had been little hope the Vienna meeting would achieve a breakthrough. Both sides had made clear before that they would not move from their positions; the Europeans demanded Tehran freeze all enrichment activities and Iran insisted it would not.

A Russian nuclear agency official, who spoke Thursday on condition of anonymity because he was not authorized to speak to media, confirmed the Moscow talks remained snagged over the same issue - Iran's refusal to freeze enrichment at home.

Still, Lavrov hinted at the chances of compromise detailed to the AP, saying Friday that a deal with Iran was still possible before the IAEA meeting.

"There always is an opportunity to reach an agreement," the Interfax news agency quoted Lavrov as saying in Moscow.

In Vienna, ElBaradei said he was "hopeful" of a negotiated solution after meeting with Iranian nuclear negotiator Ali Larijani, while the Iranian representative to the IAEA, Ali Asghar Soltanieh, described the talks with the Europeans as "fruitful."


 
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/05/wiran05.xml&sSheet=/portal/2006/03/05/ixportal.html

How we duped the West, by Iran's nuclear negotiator

The man who for two years led Iran's nuclear negotiations has laid out in unprecedented detail how the regime took advantage of talks with Britain, France and Germany to forge ahead with its secret atomic programme.

In a speech to a closed meeting of leading Islamic clerics and academics, Hassan Rowhani, who headed talks with the so-called EU3 until last year, revealed how Teheran played for time and tried to dupe the West after its secret nuclear programme was uncovered by the Iranian opposition in 2002.

He boasted that while talks were taking place in Teheran, Iran was able to complete the installation of equipment for conversion of yellowcake - a key stage in the nuclear fuel process - at its Isfahan plant but at the same time convince European diplomats that nothing was afoot.

"From the outset, the Americans kept telling the Europeans, 'The Iranians are lying and deceiving you and they have not told you everything.' The Europeans used to respond, 'We trust them'," he said.

Revelation of Mr Rowhani's remarks comes at an awkward moment for the Iranian government, ahead of a meeting tomorrow of the United Nations' atomic watchdog, which must make a fresh assessment of Iran's banned nuclear operations.

The judgment of the International Atomic Energy Agency (IAEA) is the final step before Iran's case is passed to the UN Security Council, where sanctions may be considered.

In his address to the Supreme Council of Cultural Revolution, Mr Rowhani appears to have been seeking to rebut criticism from hardliners that he gave too much ground in talks with the European troika. The contents of the speech were published in a regime journal that circulates among the ruling elite.

He told his audience: "When we were negotiating with the Europeans in Teheran we were still installing some of the equipment at the Isfahan site. There was plenty of work to be done to complete the site and finish the work there. In reality, by creating a tame situation, we could finish Isfahan."

America and its European allies believe that Iran is clandestinely developing an atomic bomb but Teheran insists it is merely seeking nuclear energy for peaceful purposes. Iran's negotiating team engaged in a last-ditch attempt last week to head off Security Council involvement. In January the regime removed IAEA seals on sensitive nuclear equipment and last month it resumed banned uranium enrichment.

Iran is trying to win support from Russia, which opposes any UN sanctions, having unsuccessfully tried to persuade European leaders to give them more time. Against this backdrop, Mr Rowhani's surprisingly candid comments on Iran's record of obfuscation and delay are illuminating.

He described the regime's quandary in September 2003 when the IAEA had demanded a "complete picture" of its nuclear activities. "The dilemma was if we offered a complete picture, the picture itself could lead us to the UN Security Council," he said. "And not providing a complete picture would also be a violation of the resolution and we could have been referred to the Security Council for not implementing the resolution."

Mr Rowhani disclosed that on at least two occasions the IAEA obtained information on secret nuclear-related experiments from academic papers published by scientists involved in the work.

The Iranians' biggest setback came when Libya secretly negotiated with America and Britain to close down its nuclear operations. Mr Rowhani said that Iran had bought much of its nuclear-related equipment from "the same dealer" - a reference to the network of A Q Khan, the rogue Pakistani atomic scientist. From information supplied by Libya, it became clear that Iran had bought P2 advanced centrifuges.

In a separate development, the opposition National Council of Resistance of Iran (NCRI) has obtained a copy of a confidential parliamentary report making clear that Iranian MPs were also kept in the dark on the nuclear programme, which was funded secretly, outside the normal budgetary process.

Mohammad Mohaddessin, the NCRI's foreign affairs chief, told the Sunday Telegraph: "Rowhani's remarks show that the mullahs wanted to deceive the international community from the onset of negotiations with EU3 - and that the mullahs were fully aware that if they were transparent, the regime's nuclear file would be referred to the UN immediately."

 
The US wants the UN to issue Iran with a deadline. Later this year Iran will have 3000 centrifuge's enriching uranium.
 
Waiting for the UN to take action on this issue will be like waiting for the Un to take action on Dafur, send aid to the Tsunami victims, find and punish the perpetrators of "Oil for Food"....shall we go on?
 
a_majoor, the problem is, rightly or wrongly, the only way that action can be taken is if a "check list" has been completed.  One of the boxes on that check list reads "UN".

Those people that are in a position to take action - the people of the OECD generally - are not yet convinced that their fear of consequences is outweighed by their need/desire to act. Thus they choose to accept delay and prevarication: anything to allow them to continue in the belief that "it may never happen".  The UN check box allows them to deny a little longer.  It is conceivable that it will take a mighty big shock to convince them of the need to act.

Unfortunately, a smart foe can inflict fatal damage by the continuous application of force at low levels.  These low level applications have the joint advantages of both causing movement and also inuring the target to the application of higher levels of force.  Applying higher levels of force speeds the movement and permits the use of still higher levels of force.  Ultimately the target is eliminated and was never aware of anything other than a generalized sense of discomfort and unease.

The counter may have to be the shocking application of force, in the face of public opinion, or else a longer game played at low levels that generate similar generalized sense of unease, but nothing that the public is sufficiently exercised about to oppose directly.  In the first instance failure or even too high a price can risk alienating the population to such an extent that the government is denied the opportunity to act, even if it is in the long term interest of the population.  In the second case the government may survive long enough to act in a measured fashion.

Thus we end up with a combination of the Cold War and the "Great Game" of the 19th century.  Economics, Politics, Covert work and Policing with only the occasional resort to open clash of arms.  Such long wars, decade and century long struggles for dominance are actually the norm.  The periods of open conflict that punctuate these struggles,  when armies confront armies in open combat, might actually be seen as often being the point at which the long term strategy has failed,  the force has become sufficiently apparent to the population under threat, that it is prepared to support military action through personal sacrifice and through taxes.

This current period in our history looks to me as if it has significant parallels with the struggle between Paris and London that commenced with the arrival of Richelieu in 1624 and didn't really end until the Entente Cordiale of 1904.  And some argue that the struggle continues.
 
Today brought nothing more then new troubles as Iran stated that the USA will feel pain if they cause Iran to feel pain.

I think that Egypt and Syria could be decding factors in this mess.  If Egypt condems Iran then the rest of the major Arab nations will probably follow suit.  If Syria says it wants to stay out of what it sees as purley national interest then the USA, Isreal could have a fairly free hand in dealing with Iran but if the other players don't pipe up then i think you will see (or hear) a lot more of the behind the scenes activities.

MOO
 
Do you ever get the feeling that Iran is just seeing how far they can push this before they get burned?

I mean saying you want to a nation wiped off the face of the earth.

Basically telling the Western powers that you don't care what they think you are going after a nuclear program anyway.

I think they are taking advantage of a overextened US military and a Europe that is as divided now as it has ever been in the past when dealing with rouge nations.

Of course that is just my MOO
 
Look's like the united front so far exhibited by the US and our allies may be causing friction within the Iranian leadership.

http://www.nytimes.com/2006/03/15/international/middleeast/15iran.html?ex=1300078800&en=563a2470b4397d6c&ei=5090&partner=rssuserland&emc=rss
 
Could it be that they are just trying to make a cash grab?  Kim Jong Il has been successful leveraging concessions with his nuclear sabre rattling.  I bet Iran would love some of that kind of leverage.  Maybe they didn't realize how much friction they were going to encounter, but their leader is not really leaving himself too many avenues for retreat.  That's the kind of thing that can lead to a "sudden heart attack"  or a high velocity lead stroke and end up in political change.
 
High velocity lead Stroke, I like that.  I think he has a better chance of being stung by a bunch of lead bees from a parade apperance but that is my MOO.

This guy is well and beyond Kim Jong Il, I mean even Kim did not think he could wipe a nation of people off the face of the earth in public.  I really think this guy lifes in a shell.  It had better be thick cause his whole world could come crashing down around him.

 
This article was posted elsewhere, but I think it deserves a spot on this thread:

http://www.energybulletin.net/12125.html

The Proposed Iranian Oil Bourse
by Krassimir Petrov

I. Economics of Empires

A nation-state taxes its own citizens, while an empire taxes other nation-states. The history of empires, from Greek and Roman, to Ottoman and British, teaches that the economic foundation of every single empire is the taxation of other nations. The imperial ability to tax has always rested on a better and stronger economy, and as a consequence, a better and stronger military. One part of the subject taxes went to improve the living standards of the empire; the other part went to strengthen the military dominance necessary to enforce the collection of those taxes.

Historically, taxing the subject state has been in various forms—usually gold and silver, where those were considered money, but also slaves, soldiers, crops, cattle, or other agricultural and natural resources, whatever economic goods the empire demanded and the subject-state could deliver. Historically, imperial taxation has always been direct: the subject state handed over the economic goods directly to the empire.

For the first time in history, in the twentieth century, America was able to tax the world indirectly, through inflation. It did not enforce the direct payment of taxes like all of its predecessor empires did, but distributed instead its own fiat currency, the U.S. Dollar, to other nations in exchange for goods with the intended consequence of inflating and devaluing those dollars and paying back later each dollar with less economic goods—the difference capturing the U.S. imperial tax. Here is how this happened.

Early in the 20th century, the U.S. economy began to dominate the world economy. The U.S. dollar was tied to gold, so that the value of the dollar neither increased, nor decreased, but remained the same amount of gold. The Great Depression, with its preceding inflation from 1921 to 1929 and its subsequent ballooning government deficits, had substantially increased the amount of currency in circulation, and thus rendered the backing of U.S. dollars by gold impossible. This led Roosevelt to decouple the dollar from gold in 1932. Up to this point, the U.S. may have well dominated the world economy, but from an economic point of view, it was not an empire. The fixed value of the dollar did not allow the Americans to extract economic benefits from other countries by supplying them with dollars convertible to gold.

Economically, the American Empire was born with Bretton Woods in 1945. The U.S. dollar was not fully convertible to gold, but was made convertible to gold only to foreign governments. This established the dollar as the reserve currency of the world. It was possible, because during WWII, the United States had supplied its allies with provisions, demanding gold as payment, thus accumulating significant portion of the world’s gold. An Empire would not have been possible if, following the Bretton Woods arrangement, the dollar supply was kept limited and within the availability of gold, so as to fully exchange back dollars for gold. However, the guns-and-butter policy of the 1960’s was an imperial one: the dollar supply was relentlessly increased to finance Vietnam and LBJ’s Great Society. Most of those dollars were handed over to foreigners in exchange for economic goods, without the prospect of buying them back at the same value. The increase in dollar holdings of foreigners via persistent U.S. trade deficits was tantamount to a tax—the classical inflation tax that a country imposes on its own citizens, this time around an inflation tax that U.S. imposed on rest of the world.

When in 1970-1971 foreigners demanded payment for their dollars in gold, The U.S. Government defaulted on its payment on August 15, 1971. While the popular spin told the story of “severing the link between the dollar and gold”, in reality the denial to pay back in gold was an act of bankruptcy by the U.S. Government. Essentially, the U.S. declared itself an Empire. It had extracted an enormous amount of economic goods from the rest of the world, with no intention or ability to return those goods, and the world was powerless to respond— the world was taxed and it could not do anything about it.

From that point on, to sustain the American Empire and to continue to tax the rest of the world, the United States had to force the world to continue to accept ever-depreciating dollars in exchange for economic goods and to have the world hold more and more of those depreciating dollars. It had to give the world an economic reason to hold them, and that reason was oil.

In 1971, as it became clearer and clearer that the U.S Government would not be able to buy back its dollars in gold, it made in 1972-73 an iron-clad arrangement with Saudi Arabia to support the power of the House of Saud in exchange for accepting only U.S. dollars for its oil. The rest of OPEC was to follow suit and also accept only dollars. Because the world had to buy oil from the Arab oil countries, it had the reason to hold dollars as payment for oil. Because the world needed ever increasing quantities of oil at ever increasing oil prices, the world’s demand for dollars could only increase. Even though dollars could no longer be exchanged for gold, they were now exchangeable for oil.

The economic essence of this arrangement was that the dollar was now backed by oil.
As long as that was the case, the world had to accumulate increasing amounts of dollars, because they needed those dollars to buy oil. As long as the dollar was the only acceptable payment for oil, its dominance in the world was assured, and the American Empire could continue to tax the rest of the world. If, for any reason, the dollar lost its oil backing, the American Empire would cease to exist. Thus, Imperial survival dictated that oil be sold only for dollars. It also dictated that oil reserves were spread around various sovereign states that weren’t strong enough, politically or militarily, to demand payment for oil in something else. If someone demanded a different payment, he had to be convinced, either by political pressure or military means, to change his mind.

The man that actually did demand Euro for his oil was Saddam Hussein in 2000. At first, his demand was met with ridicule, later with neglect, but as it became clearer that he meant business, political pressure was exerted to change his mind. When other countries, like Iran, wanted payment in other currencies, most notably Euro and Yen, the danger to the dollar was clear and present, and a punitive action was in order. Bush’s Shock-and-Awe in Iraq was not about Saddam’s nuclear capabilities, about defending human rights, about spreading democracy, or even about seizing oil fields; it was about defending the dollar, ergo the American Empire. It was about setting an example that anyone who demanded payment in currencies other than U.S. Dollars would be likewise punished.

Many have criticized Bush for staging the war in Iraq in order to seize Iraqi oil fields. However, those critics can’t explain why Bush would want to seize those fields—he could simply print dollars for nothing and use them to get all the oil in the world that he needs. He must have had some other reason to invade Iraq.

History teaches that an empire should go to war for one of two reasons: (1) to defend itself or (2) benefit from war; if not, as Paul Kennedy illustrates in his magisterial The Rise and Fall of the Great Powers, a military overstretch will drain its economic resources and precipitate its collapse. Economically speaking, in order for an empire to initiate and conduct a war, its benefits must outweigh its military and social costs. Benefits from Iraqi oil fields are hardly worth the long-term, multi-year military cost. Instead, Bush must have went into Iraq to defend his Empire. Indeed, this is the case: two months after the United States invaded Iraq, the Oil for Food Program was terminated, the Iraqi Euro accounts were switched back to dollars, and oil was sold once again only for U.S. dollars. No longer could the world buy oil from Iraq with Euro. Global dollar supremacy was once again restored. Bush descended victoriously from a fighter jet and declared the mission accomplished—he had successfully defended the U.S. dollar, and thus the American Empire.


II. Iranian Oil Bourse

The Iranian government has finally developed the ultimate “nuclear” weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar than Saddam’s, because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether. If so, then it is likely that almost everyone will eagerly adopt this euro oil system:

· The Europeans will not have to buy and hold dollars in order to secure their payment for oil, but would instead pay with their own currencies. The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the European at the expense of the Americans.

· The Chinese and the Japanese will be especially eager to adopt the new exchange, because it will allow them to drastically lower their enormous dollar reserves and diversify with Euros, thus protecting themselves against the depreciation of the dollar. One portion of their dollars they will still want to hold onto; a second portion of their dollar holdings they may decide to dump outright; a third portion of their dollars they will decide to use up for future payments without replenishing those dollar holdings, but building up instead their euro reserves.

· The Russians have inherent economic interest in adopting the Euro – the bulk of their trade is with European countries, with oil-exporting countries, with China, and with Japan. Adoption of the Euro will immediately take care of the first two blocs, and will over time facilitate trade with China and Japan. Also, the Russians seemingly detest holding depreciating dollars, for they have recently found a new religion with gold. Russians have also revived their nationalism, and if embracing the Euro will stab the Americans, they will gladly do it and smugly watch the Americans bleed.

· The Arab oil-exporting countries will eagerly adopt the Euro as a means of diversifying against rising mountains of depreciating dollars. Just like the Russians, their trade is mostly with European countries, and therefore will prefer the European currency both for its stability and for avoiding currency risk, not to mention their jihad against the Infidel Enemy.

Only the British will find themselves between a rock and a hard place. They have had a strategic partnership with the U.S. forever, but have also had their natural pull from Europe. So far, they have had many reasons to stick with the winner. However, when they see their century-old partner falling, will they firmly stand behind him or will they deliver the coup de grace? Still, we should not forget that currently the two leading oil exchanges are the New York’s NYMEX and the London’s International Petroleum Exchange (IPE), even though both of them are effectively owned by the Americans. It seems more likely that the British will have to go down with the sinking ship, for otherwise they will be shooting themselves in the foot by hurting their own London IPE interests. It is here noteworthy that for all the rhetoric about the reasons for the surviving British Pound, the British most likely did not adopt the Euro namely because the Americans must have pressured them not to: otherwise the London IPE would have had to switch to Euros, thus mortally wounding the dollar and their strategic partner.

At any rate, no matter what the British decide, should the Iranian Oil Bourse accelerate, the interests that matter—those of Europeans, Chinese, Japanese, Russians, and Arabs—will eagerly adopt the Euro, thus sealing the fate of the dollar. Americans cannot allow this to happen, and if necessary, will use a vast array of strategies to halt or hobble the operation’s exchange:

· Sabotaging the Exchange—this could be a computer virus, network, communications, or server attack, various server security breaches, or a 9-11-type attack on main and backup facilities.

· Coup d’état—this is by far the best long-term strategy available to the Americans.

· Negotiating Acceptable Terms & Limitations—this is another excellent solution to the Americans. Of course, a government coup is clearly the preferred strategy, for it will ensure that the exchange does not operate at all and does not threaten American interests. However, if an attempted sabotage or coup d’etat fails, then negotiation is clearly the second-best available option.

· Joint U.N. War Resolution—this will be, no doubt, hard to secure given the interests of all other member-states of the Security Council. Feverish rhetoric about Iranians developing nuclear weapons undoubtedly serves to prepare this course of action.

· Unilateral Nuclear Strike—this is a terrible strategic choice for all the reasons associated with the next strategy, the Unilateral Total War. The Americans will likely use Israel to do their dirty nuclear job.

· Unilateral Total War—this is obviously the worst strategic choice. First, the U.S. military resources have been already depleted with two wars. Secondly, the Americans will further alienate other powerful nations. Third, major dollar-holding countries may decide to quietly retaliate by dumping their own mountains of dollars, thus preventing the U.S. from further financing its militant ambitions. Finally, Iran has strategic alliances with other powerful nations that may trigger their involvement in war; Iran reputedly has such alliance with China, India, and Russia, known as the Shanghai Cooperative Group, a.k.a. Shanghai Coop and a separate pact with Syria.

Whatever the strategic choice, from a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between Scylla and Charybdis—between deflation and hyperinflation—it will be forced fast either to take its “classical medicine” by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.

The Austrian theory of money, credit, and business cycles teaches us that there is no in-between Scylla and Charybdis. Sooner or later, the monetary system must swing one way or the other, forcing the Fed to make its choice. No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of the Great Depression and an adept Black Hawk pilot, will choose inflation. Helicopter Ben, oblivious to Rothbard’s America’s Great Depression, has nonetheless mastered the lessons of the Great Depression and the annihilating power of deflations. The Maestro has taught him the panacea of every single financial problem—to inflate, come hell or high water. He has even taught the Japanese his own ingenious unconventional ways to battle the deflationary liquidity trap. Like his mentor, he has dreamed of battling a Kondratieff Winter. To avoid deflation, he will resort to the printing presses; he will recall all helicopters from the 800 overseas U.S. military bases; and, if necessary, he will monetize everything in sight. His ultimate accomplishment will be the hyperinflationary destruction of the American currency and from its ashes will rise the next reserve currency of the world—that barbarous relic called gold.

And to immediately address the question that is going to come up "Well then why are Germany, France, etc. getting involved with the Iran nuclear issue?" I would think that they are very aware of their dependance upon the United States' economic well being.

... just a few notes as well. The date for the opening has been pushed back to mid to late 2006, and it will initially take euros and dollars, with an eventual move to all euros. Further, the european union would have to cooperate by printing massive amounts of euros to keep up with demand. Given the mentioned effect this would have on the US economy, and the Europeans dependance upon it... I don't see that happening.
 
This is a link to the IAEA Report: "Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran". This was recently sent to the Security Council for review.

It is available at http://www.iaea.org/NewsCenter/Focus/IaeaIran/index.shtml

An expert below:

B. Current overall assessment

46. A detailed overall assessment of Iran’s nuclear programme and the Agency’s efforts to verify
Iran’s declarations with respect to that programme was provided by the Director General in November
200422 and again in September 2005.23 As indicated in those reports, Iran has made substantial efforts
over the past two decades to master an independent nuclear fuel cycle, and, to that end, has conducted
experiments to acquire the know-how for almost every aspect of the fuel cycle. Many aspects of Iran’s
nuclear fuel cycle activities and experiments, particularly in the areas of uranium enrichment, uranium
conversion and plutonium research, had not been declared to the Agency in accordance with Iran’s
obligations under its Safeguards Agreement. Iran’s policy of concealment continued until October
2003, and resulted in many breaches of its obligation to comply with that Agreement, as summarized
in the Director General’s report of September 2005.24

47. Since October 2003, Iran has taken corrective actions with respect to those breaches. The Agency
has been able to confirm certain aspects of Iran’s current declarations, in particular in connection with
uranium conversion activities, laser enrichment, fuel fabrication and the heavy water research reactor
programme, which the Agency has been following up as routine implementation matters under Iran’s
Safeguards Agreement and, until 6 February 2006, its Additional Protocol.

48. Two important issues were identified in the Director General’s November 2004 report as relevant
to the Agency’s efforts to provide assurance that there are no undeclared enrichment activities in Iran,
specifically: the origin of LEU and HEU particle contamination found at various locations in Iran; and
the extent of Iran’s efforts to import, manufacture and use centrifuges of both the P-1 and P-2 designs.
49. With respect to the first issue — contamination — as indicated above, based on the information
currently available to the Agency, the results of the environmental sample analysis tend, on balance, to
support Iran’s statement about the foreign origin of most of the observed HEU contamination. It is still
not possible at this time, however, to establish a definitive conclusion with respect to all of the
contamination, particularly the LEU contamination. This underscores the importance of additional
information on the scope and chronology of Iran’s P-1 and P-2 centrifuge programmes, which could
greatly contribute to the resolution of the remaining contamination issues.

50. With respect to the second issue — the P-1 and P-2 centrifuge programmes — although some
progress has been made since November 2004 in the verification of statements by Iran regarding the
chronology of its centrifuge enrichment programme, the Agency has not yet been able to verify the
correctness and completeness of Iran’s statements concerning those programmes. While Iran has
provided further clarifications, and access to additional documentation, concerning the 1987 and mid-
1990s offers related to the P-1 design, the Agency’s investigation of the supply network indicates that
Iran should have additional supporting information that could be useful in this regard. Iran has also
been asked to provide additional details on the process that led to Iran’s decision in 1985 to pursue
centrifuge enrichment and on the steps leading to its acquisition of centrifuge enrichment technology
in 1987. However, Iran maintains that no information, other than that already provided to the Agency,
exists.

51. No additional information or documentation has been provided with respect to Iran’s statement
that it did not pursue any work on the P-2 design between 1995 and 2002. As indicated above, Iran has
been requested to search for more information, and any supporting documentation, relevant to the P-2
programme, in particular with regard to the scope of the original offer in connection with the P-2
centrifuge design and Iran’s acquisition of items linked to that programme. Iran, however, maintains
that no such information exists.

52. The Agency continues to follow up on all information pertaining to Iran’s nuclear programme and
activities. Although absent some nexus to nuclear material the Agency’s legal authority to pursue the
verification of possible nuclear weapons related activity is limited, the Agency has continued to seek
Iran’s cooperation as a matter of transparency in following up on reports related to equipment,
materials and activities which have applications both in the conventional military area and in the
civilian sphere as well as in the nuclear military area. In this regard, Iran has permitted the Agency to
visit defence related sites at Kolahdouz, Lavisan and Parchin. The Agency did not observe any
unusual activities in the buildings visited at Kolahdouz and Parchin, and the results of environmental
sampling did not indicate the presence of nuclear material at those locations. The Agency is still
assessing the available information, and awaiting other additional information, in relation to the
Lavisan site and the PHRC.

53. As indicated to the Board in November 2004, and again in September 2005, all the declared
nuclear material in Iran has been accounted for. Although the Agency has not seen any diversion of
nuclear material to nuclear weapons or other nuclear explosive devices, the Agency is not at this point
in time in a position to conclude that there are no undeclared nuclear materials or activities in Iran.
The process of drawing such a conclusion, under normal circumstances, is a time consuming process
even with an Additional Protocol in force. In the case of Iran, this conclusion can be expected to take
even longer in light of the undeclared nature of Iran’s past nuclear programme, and in particular
because of the inadequacy of information available on its centrifuge enrichment programme, the
existence of a generic document related to the fabrication of nuclear weapon components, and the lack
of clarification about the role of the military in Iran’s nuclear programme, including, as mentioned
above, about recent information available to the Agency concerning alleged weapon studies that could
involve nuclear material.

54. It is regrettable, and a matter of concern, that the above uncertainties related to the scope and
nature of Iran’s nuclear programme have not been clarified after three years of intensive Agency
verification. In order to clarify these uncertainties, Iran’s full transparency is still essential. Without
full transparency that extends beyond the formal legal requirements of the Safeguards Agreement and
Additional Protocol — transparency that could only be achieved through Iran’s active cooperation —
the Agency’s ability to reconstruct the history of Iran’s past programme and to verify the correctness
and completeness of the statements made by Iran, particularly with regard to its centrifuge enrichment
programme, will be limited, and questions about the past and current direction of Iran’s nuclear
programme will continue to be raised. Such transparency should primarily include access to, and
cooperation by, relevant individuals; access to documentation related to procurement and dual use
equipment; and access to certain military owned workshops and R&D locations that the Agency may
need to visit in the future as part of its investigation.

You'll notice that the only thing that Iran can reliably be accused of is possessing documents and materials which could be used to manufacture p-2 centrifuges, and having a non-technical document dating from the 80's about how to form Uranium into hemispheres. The p-2 centrifuges can be easily explained by their want for domestic nuclear energy, however, the document is troubling, though it has been sealed by the IAEA (and is certainly not proof of any wrongdoing).
 
Another interesting article, from the same author who correctly predicted the war in Iraq well before it happened (available at http://www.ratical.org/ratville/CAH/RRiraqWar.html, "Revisited - The Real Reasons for the Upcoming War With Iraq: 
A Macroeconomic and Geostrategic Analysis of the Unspoken Truth")

http://www.energybulletin.net/2913.html

The Real Reasons Why Iran is the Next Target: The Emerging Euro-denominated International Oil Marker
by William Clark

The Iranians are about to commit an "offense" far greater than Saddam Hussein's conversion to the euro of Iraq’s oil exports in the fall of 2000. Numerous articles have revealed Pentagon planning for operations against Iran as early as 2005. While the publicly stated reasons will be over Iran's nuclear ambitions, there are unspoken macroeconomic drivers explaining the Real Reasons regarding the 2nd stage of petrodollar warfare - Iran's upcoming euro-based oil Bourse.
 

In 2005-2006, The Tehran government has a developed a plan to begin competing with New York's NYMEX and London's IPE with respect to international oil trades - using a euro-denominated international oil-trading mechanism. This means that without some form of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project for U.S. global domination, Tehran's objective constitutes an obvious encroachment on U.S. dollar supremacy in the international oil market


"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. War is the parent of armies; from these proceed debts and taxes...known instruments for bringing the many under the domination of the few. . . No nation could preserve its freedom in the midst of continual warfare."

- James Madison, Political Observations, 1795
Madison’s words of wisdom should be carefully considered by the American people and world community. The rapidly deteriorating situation on the ground in Iraq portends an even direr situation for American soldiers and the People of the world community - should the Bush administration pursue their strategy regarding Iran. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian "petroeuro system" for oil trade. Similar to the Iraq war, upcoming operations against Iran relate to the macroeconomics of the `petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.

It is now obvious the invasion of Iraq had less to do with any threat from Saddam’s long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining control over Iraq’s hydrocarbon reserves and in doing so maintaining the U.S. dollar as the monopoly currency for the critical international oil market. Throughout 2004 statements by former administration insiders revealed that the Bush/Cheney administration entered into office with the intention of toppling Saddam Hussein. Indeed, the neoconservative strategy of installing a pro-U.S. government in Baghdad along with multiple U.S. military bases was partly designed to thwart further momentum within OPEC towards a "petroeuro." However, subsequent events show this strategy to be fundamentally flawed, with Iran moving forward towards a petroeuro system for international oil trades, while Russia discusses this option.

Candidly stated, ‘Operation Iraqi Freedom’ was a war designed to install a pro-U.S. puppet in Iraq, establish multiple U.S military bases before the onset of Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency. [1] In 2003 the global community witnessed a combination of petrodollar warfare and oil depletion warfare. The majority of the world’s governments – especially the E.U., Russia and China - were not amused – and neither are the U.S. soldiers who are currently stationed in Iraq.

Indeed, the author’s original pre-war hypothesis was validated shortly after the war in a Financial Times article dated June 5th, 2003, which confirmed Iraqi oil sales returning to the international markets were once again denominated in US dollars, not euros. Not surprisingly, this detail was never mentioned in the five US major media conglomerates who appear to censor this type of information, but confirmation of this vital fact provides insight into one of the crucial - yet overlooked - rationales for 2003 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." [2]
Unfortunately, it has become clear that yet another manufactured war, or some type of ill-advised covert operation is inevitable under President George W. Bush, should he win the 2004 Presidential Election. Numerous news reports over the past several months have revealed that the neoconservatives are quietly - but actively - planning for the second petrodollar war, this time against Iran.


"Deep in the Pentagon, admirals and generals are updating plans for possible U.S. military action in Syria and Iran. The Defense Department unit responsible for military planning for the two troublesome countries is "busier than ever," an administration official says. Some Bush advisers characterize the work as merely an effort to revise routine plans the Pentagon maintains for all contingencies in light of the Iraq war. More skittish bureaucrats say the updates are accompanied by a revived campaign by administration conservatives and neocons for more hard-line U.S. policies toward the countries"…"Even hard-liners acknowledge that given the U.S. military commitment in Iraq, a U.S. attack on either country would be an unlikely last resort; covert action of some kind is the favored route for Washington hard-liners who want regime change in Damascus and Tehran."

"…administration hawks are pinning their hopes on regime change in Tehran - by covert means, preferably, but by force of arms if necessary. Papers on the idea have circulated inside the administration, mostly labeled "draft" or "working draft" to evade congressional subpoena powers and the Freedom of Information Act. Informed sources say the memos echo the administration's abortive Iraq strategy: oust the existing regime, swiftly install a pro-U.S. government in its place (extracting the new regime's promise to renounce any nuclear ambitions) and get out. This daredevil scheme horrifies U.S. military leaders, and there's no evidence that it has won any backers at the cabinet level." [3]
To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ‘marker’ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the spring of 2003, Iran has required payments in the euro currency for its European and Asian/ACU exports - although the oil pricing for trades are still denominated in the dollar. [4]

Therefore, a potentially significant news development was reported in June 2004 announcing Iran’s intentions to create of an Iranian oil Bourse. (The word "bourse" refers to a stock exchange for securities trading, and is derived from the French stock exchange in Paris, the Federation Internationale des Bourses de Valeurs.) This announcement portended competition would arise between the Iranian oil bourse and London’s International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). It should be noted that both the IPE and NYMEX are owned by U.S. corporations.

The macroeconomic implications of a successful Iranian Bourse are noteworthy. Considering that Iran has switched to the euro for its oil payments from E.U. and ACU customers, it would be logical to assume the proposed Iranian Bourse will usher in a fourth crude oil marker – denominated in the euro currency. Such a development would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounts for 45% of imports into the Middle East (2002 data).

Acknowledging that many of the oil contracts for Iran and Saudi Arabia are linked to the United Kingdom’s Brent crude marker, the Iranian bourse could create a significant shift in the flow of international commerce into the Middle East. If Iran’s bourse becomes a successful alternative for oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX), a factor not overlooked in the following article:


"Iran is to launch an oil trading market for Middle East and OPEC producers that could threaten the supremacy of London's International Petroleum Exchange."

"…He [Mr. Asemipour] played down the dangers that the new exchange could eventually pose for the IPE or Nymex, saying he hoped they might be able to cooperate in some way."

"…Some industry experts have warned the Iranians and other OPEC producers that western exchanges are controlled by big financial and oil corporations, which have a vested interest in market volatility.

The IPE, bought in 2001 by a consortium that includes BP, Goldman Sachs and Morgan Stanley, was unwilling to discuss the Iranian move yesterday. "We would not have any comment to make on it at this stage," said an IPE spokeswoman. "[5]
It is unclear at the time of writing, if this project will be successful, or could it prompt overt or covert U.S. interventions - thereby signaling the second phase of petrodollar warfare in the Middle East. News articles in June 2004 revealed the discredited neoconservative sycophant Ahmed Chalabi may have revealed his knowledge to Iran regarding U.S. military planning for operations against that nation.


"The reason for the US breakup with Ahmed Chalabi, the Shiite Iraqi politician, could be his leak of Pentagon plans to invade Iran before Christmas 2005, but the American government has not changed its objective, and the attack could happen earlier if president George W. Bush is re-elected, or later if John Kerry is sworn in."

"….Diplomats said Chalabi was alerted to the Pentagon plans and in the process of trying to learn more to tell the Iranians, he invited suspicions of US officials, who subsequently got the Iraqi police to raid the compound of his Iraqi National Congress on 20 May 2004, leading to a final break up of relations."

"While the US is uncertain how much of the attack plans were leaked to Iran, it could change some of the invasion tactics, but the broad parameters would be kept intact." [6]
Regardless of the potential U.S. response to an Iranian petroeuro system, the emergence of an oil exchange market in the Middle East is not entirely surprising given the domestic peaking and decline of oil exports in the U.S. and U.K, in comparison to the remaining oil reserves in Iran, Iraq and Saudi Arabia. According to Mohammad Javad Asemipour, an advisor to Iran’s oil ministry and the individual responsible for this project, this new oil exchange is scheduled to begin oil trading in March 2005.


"Asemipour said the platform should be trading crude, natural gas and petrochemicals by the start of the new Iranian year, which falls on March 21, 2005.

He said other members of the Organization of Petroleum Exporting Countries - Iran is the producer group's second-largest producer behind Saudi Arabia - as well as oil producers from the Caspian region would eventually participate in the exchange." [7]
(Note: the most recent Iranian news report from October 5, 2004 stated: "Iran's oil bourse will start trading by early 2006" which suggests a delay from the original March 21, 2005 target date). [8] Additionally, according to the following report, Saudi investors may be interested in participating in the Iranian oil exchange market, further illustrating why petrodollar hegemony is becoming unsustainable.


"Chris Cook, who previously worked for the IPE and now offers consultancy services to markets through Partnerships Consulting LLP in London, commented: "Post-9/11, there has also been an interest in the project from the Saudis, who weren't interested in participating before."

"Others familiar with Iran's economy said since 9/11, Saudi Arabian investors are opting to invest in Iran rather than traditional western markets as the kingdom's relations with the U.S. have weakened Iran's oil ministry has made no secret of its eagerness to attract much needed foreign investment in its energy sector and broaden its choice of oil buyers."

"…Along with several other members of OPEC, Iranian oil officials believe crude trading on the New York Mercantile Exchange and the IPE is controlled by the oil majors and big financial companies, who benefit from market volatility."[9]
One of the Federal Reserve’s nightmares may begin to unfold in 2005 or 2006, when it appears international buyers will have a choice of buying a barrel of oil for $50 dollars on the NYMEX and IPE - or purchase a barrel of oil for €37 - €40 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar - and assumes that some sort of "intervention" is not undertaken against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades

During an important speech in April 2002, Mr. Javad Yarjani, an OPEC executive, described three pivotal events that would facilitate an OPEC transition to euros. [10] He stated this would be based on (1) if and when Norway's Brent crude is re-dominated in euros, (2) if and when the U.K. adopts the euro, and (3) whether or not the euro gains parity valuation relative to the dollar, and the EU’s proposed expansion plans were successful. (Note: Both of the later two criteria have transpired: the euro’s valuation has been above the dollar since late 2002, and the euro-based E.U. enlarged in May 2004 from 12 to 22 countries). In the meantime, the United Kingdom remains uncomfortably juxtaposed between the financial interests of the U.S. banking nexus (New York/Washington) and the E.U. financial centers (Paris/Frankfurt).

The implementation of the proposed Iranian oil Bourse (exchange) in 2005/2006 – if successful in utilizing the euro as its oil transaction currency standard – essentially negates the necessity of the previous two criteria as described by Mr. Yarjani regarding the solidification of a "petroeuro" system for international oil trades. [10] It should also be noted that during 2003-2004 Russia and China have both increased their central bank holdings of the euro currency, which appears to be a coordinated move to facilitate the anticipated ascendance of the euro as a second World Reserve currency. [11] [12] In the meantime, the United Kingdom is uncomfortable juxtaposed between the financial interests of the U.S. (New York/Washington) banking nexus and that of the E.U. financial center (Paris/Frankfurt).

The immediate question for Americans? Will the neoconservatives attempt to intervene covertly and/or overtly in Iran during 2005 in an effort to prevent the formation of a euro-denominated crude oil pricing mechanism? Commentators in India are quite correct in their assessment that a U.S. intervention in Iran is likely to prove disastrous for the United States, making matters much worse regarding international terrorism, not to the mention potential effects on the U.S. economy.


"The giving up on the terror war while Iran invasion plans are drawn up makes no sense, especially since the previous invasion and current occupation of Iraq has further fuelled Al-Qaeda terrorism after 9/11."

"…It is obvious that sucked into Iraq, the US has limited military manpower left to combat the Al-Qaeda elsewhere in the Middle East and South Central Asia,"…"and NATO is so seriously cross with America that it hesitates to provides troops in Iraq, and no other country is willing to bail out America outside its immediate allies like Britain, Italy, Australia and Japan."

"….If it [U.S.] intervenes again, it is absolutely certain it will not be able to improve the situation – Iraq shows America has not the depth or patience to create a new civil society – and will only make matters worse."

"There is a better way, as the constructive engagement of Libya’s Colonel Muammar Gaddafi has shown…."Iran is obviously a more complex case than Libya, because power resides in the clergy, and Iran has not been entirely transparent about its nuclear programme, but the sensible way is to take it gently, and nudge it to moderation. Regime change will only worsen global Islamist terror, and in any case, Saudi Arabia is a fitter case for democratic intervention, if at all." [13]
It is abundantly clear that a 2nd Bush term will bring a confrontation and possible war with Iran during 2005. Colin Powell as the Secretary of the State, has moderated neoconservative military designs regarding Iran, but Powell has stated that he will be leaving at the end of Bush’s first term. Of course if John Kerry wins in November, he might pursue a similar military strategy. However, it is my opinion that Kerry is more likely to pursue multilateral negotiations regarding the Iranian issues.

Clearly, there are numerous risks regarding neoconservative strategy towards Iran. First, unlike Iraq, Iran has a robust military capability. Secondly, a repeat of any "Shock and Awe" tactics is not advisable given that Iran has installed sophisticated anti-ship missiles on the Island of Abu Musa, and therefore controls the critical Strait of Hormuz. [14] In the case of a U.S. attack, a shut down of the Strait of Hormuz – where all of the Persian Gulf bound oil tankers must pass – could easily trigger a market panic with oil prices skyrocketing to $100 per barrel or more. World oil production is now flat out, and a major interruption would escalate oil prices to a level that would set off a global Depression. Why are the neoconservatives willing to takes such risks? Simply stated - their goal is U.S. global domination.

A successful Iranian bourse would solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar's hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations. Multilateral compromise with the EU and OPEC regarding oil currency is certainly preferable to an ‘Operation Iranian Freedom,’ or perhaps an attempted CIA-sponsored repeat of the 1953 Iranian coup – operation "Ajax" part II. [15] Indeed, there are very good reasons for U.S. military leaders to be "horrified" at the thought of a second Bush term in which Cheney and the neoconservatives would be unrestrained in their tragic pursuit of U.S. global domination.


"NEWSWEEK has learned that the CIA and DIA have war-gamed the likely consequences of a U.S. pre-emptive strike on Iran's nuclear facilities. No one liked the outcome. As an Air Force source tells it, "The war games were unsuccessful at preventing the conflict from escalating." [16]
Despite the impressive power of the U.S. military and the ability of our intelligence agencies to facilitate "interventions," it would be perilous and possibly ruinous for the U.S to intervene in Iran given the dire situation in Iraq. The Monterey Institute of International Studies provided an extensive analysis of the possible consequences of a preemptive attack on Iran’s nuclear facilities and warned of the following:


"Considering the extensive financial and national policy investment Iran has committed to its nuclear projects, it is almost certain that an attack by Israel or the United States would result in immediate retaliation. A likely scenario includes an immediate Iranian missile counterattack on Israel and U.S. bases in the Gulf, followed by a very serious effort to destabilize Iraq and foment all-out confrontation between the United States and Iraq's Shi'i majority. Iran could also opt to destabilize Saudi Arabia and other Gulf states with a significant Shi'i population, and induce Lebanese Hizbullah to launch a series of rocket attacks on Northern Israel."

"…An attack on Iranian nuclear facilities…could have various adverse effects on U.S. interests in the Middle East and the world. Most important, in the absence of evidence of an Iranian illegal nuclear program, an attack on Iran's nuclear facilities by the U.S. or Israel would be likely to strengthen Iran's international stature and reduce the threat of international sanctions against Iran. Such an event is more likely to embolden and expand Iran's nuclear aspirations and capabilities in the long term"…"one thing is for certain, it would not be just another Osirak. " [17]
Synopsis

Regardless of whatever choice the U.S. electorate makes in the upcoming Presidential Election a military expedition may still go ahead.

This essay was written out of my own patriotic duty in an effort to inform Americans of the challenges that lie ahead. On November 25, 2004, the issues involving Iran's nuclear program will be addressed by the International Atomic Energy Agency (IAEA), and possibly referred to the U.N. Security Council if the results are unsatisfactory. Regardless of the IAEA findings, it appears increasingly likely the U.S. will use the specter of nuclear weapon proliferation as a pretext for an intervention, similar to the fears invoked in the previous WMD campaign regarding Iraq.

Pentagon sources confirm the Bush administration could undertake a desperate military strategy to thwart Iran’s nuclear ambitions while simultaneously attempting to prevent the Iranian oil Bourse from initiating a euro-based system for oil trades. The later would require forced "regime change" and the U.S. occupation of Iran. Obviously this would require a military draft. Objectively speaking, the post-war debacle in Iraq has clearly shown that such Imperial policies will be a catastrophic failure. Alternatively, perhaps a more enlightened U.S. administration could undertake multilateral negotiations with the EU and OPEC regarding a dual oil-currency system, in conjunction with global monetary reform. Either way, U.S. policy makers will soon face two difficult choices: monetary compromise or continued petrodollar warfare.


"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 facts."

- Abraham Lincoln

"Whenever the people are well-informed, they can be trusted with their own government. Whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights."

- Thomas Jefferson

 


References:

[1] "Revisited - The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth," January 2003 (updated January 2004) http://www.ratical.org/ratville/CAH/RRiraqWar.html

[2] Hoyos, Carol & Morrison, Kevin, "Iraq returns to the international oil market," Financial Times, June 5, 2003 http://www.thedossier.ukonline.co.uk/...

[3] "War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike," Newsweek, September 27 issue, 2004. http://www.msnbc.msn.com/id/6039135/site/newsweek/

[4] Shivkumar, C., "Iran offers oil to Asian union on easier terms," The Hindu Business Line (June 16, 2003). http://www.thehindubusinessline.com/bline/2003/06/17/stories/2003061702380500.htm

[5] Macalister, Terry, "Iran takes on west's control of oil trading," The [UK] Guardian, June 16, 2004 http://www.guardian.co.uk/business/story/0,3604,1239644,00.html

[6] "US to invade Iran before 2005 Christmas," News Insight: Public Affairs Magazine, June 9, 2004 http://www.newsinsight.net/nati2.asp?recno=2789

[7] "Iran Eyes Deal on Oil Bourse; IPE Chairman Visits Tehran," Rigzone.com (July 8, 2004) http://www.rigzone.com/news/article.asp?a_id=14588

[8] "Iran's oil bourse expects to start by early 2006," Reuters, October 5, 2004 http://www.iranoilgas.com

[9] "Iran Eyes Deal on Oil Bourse, IPE Chairman Visits Tehran," ibid.

[10] "The Choice of Currency for the Denomination of the Oil Bill," Speech given by Javad Yarjani, Head of OPEC's Petroleum Market Analysis Dept, on The International Role of the Euro (Invited by the Spanish Minister of Economic Affairs during Spain's Presidency of the EU) (April 14, 2002, Oviedo, Spain)
http://www.opec.org/NewsInfo/Speeches/sp2002/spAraqueSpainApr14.htm

[11] Russia shifts to euro as foreign currency reserves soar," AFP, June 9, 2003
http://www.cdi.org/russia/johnson/7214-3.cfm

[12] "China to diversify foreign exchange reserves," China Business Weekly, May 8, 2004 http://www.chinadaily.com.cn/english/doc/2004-05/08/content_328744.htm

[13] "Terror & regime change: Any US invasion of Iran will have terrible consequences," News Insight: Public Affairs Magazine, June 11, 2004 http://www.indiareacts.com/archivedebates/nat2.asp?recno=908&ctg=World

[14] Analysis of Abu Musa Island, www.globalsecurity.org http://www.globalsecurity.org/wmd/world/iran/abu-musa.htm

[15] J.W. Smith, "Destabilizing a Newly-Free Iran," The Institute for Economic Democracy, 2003 http://www.ied.info/books/why/control.html

[16] "War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike," ibid.

[17] Salama, Sammy and Ruster, Karen,"A Preemptive Attack on Iran's Nuclear Facilities: Possible Consequences," Monterry Institute of International Studies, August 12, 2004 (updated September 9, 2004) http://cns.miis.edu/pubs/week/040812.htm

[18] Philips, Peter, "Censored 2004," Project Censored, Seven Stories Press, (2003) http://www.projectcensored.org/

Story #19: U.S. Dollar vs. the Euro: Another Reason for the Invasion of Iraq http://www.projectcensored.org/publications/2004/19.html
 
Heh... and something for my own amusement:

Bush: 2003

The world has waited 12 years for Iraq to disarm. America will not accept a serious and mounting threat to our country, our friends, and our allies.

Bush: 2006

The Iranian government is defying the world with its nuclear ambitions, and the nations of the world must not permit the Iranian regime to gain nuclear weapons

...and again in 2003
And tonight I have a message for the brave and oppressed people of Iraq: Your enemy is not surrounding your country - your enemy is ruling your country. And the day he and his regime are removed from power will be the day of your liberation.

...2006
The same is true of Iran, a nation now held hostage by a small clerical elite that is isolating and repressing its people....America will continue to rally the world to confront these threats.

...2003
Evidence from intelligence sources, secret communications, and statements by people now in custody, reveal that Saddam Hussein aids and protects terrorists, including members of al-Qaida

... and finally 2006
The regime in that [Iran] country sponsors terrorists in the Palestinian territories and in Lebanon -- and that must come to an end.



... hrm...this entire Iran thing seems vaguely familiar for some unknown reason....

 
Actually the entire project has a fatal flaw which was revealed in a single line at the end of the first post: " Further, the european union would have to cooperate by printing massive amounts of euros to keep up with demand."

Since inflation is a monetary phenomena, the EU will rapidly suffer from self induced inflationary pressures, coupled with a large and inefficient regulatory regime. The United States suffered from this in the period between the end of the Gold standard during the Nixon administration and the Carter administration, with the late 1970s being a period of severe economic hardship ("Stagflation") which required rather drastic means to crush at the beginning of the Reagan administration.

I am sceptical the EU has the will to take the same steps to reverse stagflation, and the fact the bulk of their foreign exchange holdings will be under the control of a hostile state (which could threaten to dump Euros if Islamic Sharia law is not enforced in Islamic enclaves in Europe, for example) will simply make it a lot harder for Europe to either disengage from Iran or even chart their own policy path if they go this route. On the other hand, the reflexively anti-American attitude of the EU elite, plus their short sighted, short term gain mentality will probably have them play right into the hands of the Iranians.

As for Couchcommander's last post; I hope it does sound familier, since the end result is also being played out in Iraq and Afghanistan; newly minted consensual governments, emerging structures for the rule of law and the growth of free market economies. Germany and Japan took decades to rebuild, why should we believe that a job of the same magnitude will take any less time in Southwest Asia?
 
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