End of Dollar Hegemony – Petrodollars and World War Three

Project for the New American Century

Project for the New American Century

Formation 1997

Extinction 2006

Type Public policy think tank

Location Washington, D.C.

Website newamericancentury.org

The Project for the New American Century (PNAC) was an American think tank based in Washington, D.C. established in 1997 as a non-profit educational organization founded by William Kristol and Robert Kagan. The PNAC's stated goal is "to promote American global leadership."[1] Fundamental to the PNAC were the view that "American leadership is both good for America and good for the world" and support for "a Reaganite policy of military strength and moral clarity."[2] With its members in numerous key administrative positions, the PNAC exerted influence on high-level U.S. government officials in the administration of U.S. President George W. Bush and affected the Bush Administration's development of military and foreign policies, especially involving national security and the Iraq War.

Statement of PrinciplesPNAC's first public act was releasing a "Statement of Principles" on June 3, 1997, which was signed by both its members and a variety of other notable conservative politicians and journalists (see Signatories to Statement of Principles). The statement began by framing a series of questions, which the rest of the document proposes to answer:As the 20th century draws to a close, the United States stands as the world's pre-eminent power. Having led the West to victory in the Cold War, America faces an opportunity and a challenge: Does the United States have the vision to build upon the achievements of past decades? Does the United States have the resolve to shape a new century favorable to American principles and interests?[5]

In response to these questions, the PNAC states its aim to "remind America" of "lessons" learned from American history, drawing the following "four consequences" for America in 1997:

we need to increase defense spending significantly if we are to carry out our global responsibilities today and modernize our armed forces for the future;

we need to strengthen our ties to democratic allies and to challenge regimes hostile to our interests and values;

we need to promote the cause of political and economic freedom abroad; [and]

we need to accept responsibility for America's unique role in preserving and extending an international order friendly to our security, our prosperity, and our principles.

While "Such a Reaganite policy of military strength and moral clarity may not be fashionable today," the "Statement of Principles" concludes, "it is necessary if the United States is to build on the successes of this past century and to ensure our security and our greatness in the next."[5]

Calls for regime change in Iraq during Clinton yearsThe goal of regime change in Iraq remained the consistent position of PNAC throughout the Iraq disarmament crisis.[6][7]

Richard Perle, who later became a core member of PNAC, was involved in similar activities to those pursued by PNAC after its formal organization. For instance, in 1996 Perle composed a report that proposed regime changes in order to restructure power in the Middle East. The report was titled A Clean Break: A New Strategy for Securing the Realm and called for removing Saddam Hussein from power, as well as other ideas to bring change to the region. The report was delivered to Israeli Prime Minister Benjamin Netanyahu.[8] Two years later, in 1998, Perle and other core members of the PNAC—Paul Wolfowitz, R. James Woolsey, Elliot Abrams, and John Bolton—"were among the signatories of a letter to President Clinton calling for the removal of Hussein."[8] Clinton did seek regime change in Iraq, and this position was sanctioned by the United Nations[citation needed]. These UN sanctions were considered ineffective by the neoconservative forces driving the PNAC.[9]

The PNAC core members followed up these early efforts with a letter to Republican members of the U.S. Congress Newt Gingrich and Trent Lott,[10] urging Congress to act. The PNAC also supported the Iraq Liberation Act of 1998 (H.R.4655), which President Clinton had signed into law.[11]

On January 16, 1998, following perceived Iraqi unwillingness to co-operate with UN weapons inspections, members of the PNAC, including Donald Rumsfeld, Paul Wolfowitz, and Robert Zoellick drafted an open letter to President Bill Clinton, posted on its website, urging President Clinton to remove Saddam Hussein from power using U.S. diplomatic, political, and military power. The signers argue that Saddam would pose a threat to the United States, its Middle East allies, and oil resources in the region, if he succeeded in maintaining what they asserted was a stockpile of Weapons of Mass Destruction. They also state: "we can no longer depend on our partners in the Gulf War to continue to uphold the sanctions or to punish Saddam when he blocks or evades UN inspections" and "American policy cannot continue to be crippled by a misguided insistence on unanimity in the UN Security Council." They argue that an Iraq war would be justified by Hussein's defiance of UN "containment" policy and his persistent threat to U.S. interests.[12]

On November 16, 1998, citing Iraq's demand for the expulsion of UN weapons inspectors and the removal of Richard Butler as head of the inspections regime, Kristol called again for regime change in an editorial in his online magazine, The Weekly Standard: "... any sustained bombing and missile campaign against Iraq should be part of any overall political-military strategy aimed at removing

Saddam from power."[13] Kristol states that Paul Wolfowitz and others believed that the goal was to create "a 'liberated zone' in southern Iraq that would provide a safe haven where opponents of Saddam could rally and organize a credible alternative to the present regime ... The liberated zone would have to be protected by U.S. military might, both from the air and, if necessary, on the ground."In January 1999, the PNAC circulated a memo that criticized the December 1998 bombing of Iraq in Operation Desert Fox as ineffective, questioned the viability of Iraqi democratic opposition which the U.S. was supporting through the Iraq Liberation Act, and referred to any "containment" policy as an illusion.[14]

Rebuilding America's DefensesIn September 2000, the PNAC published a controversial 90-page report entitled Rebuilding America's Defenses: Strategies, Forces, and Resources For a New Century. The report, which lists as project chairmen Donald Kagan and Gary Schmitt and, as principal author, Thomas Donnelly, quotes from the PNAC's June 1997 "Statement of Principles" and proceeds "from the belief that America should seek to preserve and extend its position of global leadership by maintaining the preeminence of U.S. military forces."[15][16]

The report argues:The American peace has proven itself peaceful, stable, and durable. It has, over the past decade, provided the geopolitical framework for widespread economic growth and the spread of American principles of liberty and democracy. Yet no moment in international politics can be frozen in time; even a global Pax Americana will not preserve itself.[15]

After its title page, the report features a page entitled "About the Project for the New American Century", quoting key passages from its 1997 "Statement of Principles":

“ [What we require is] a military that is strong and ready to meet both present and future challenges; a foreign policy that boldly and purposefully promotes American principles abroad; and national leadership that accepts the United States’ global responsibilities. Of course, the United States must be prudent in how it exercises its power. But we cannot safely avoid the responsibilities of global leadership of the costs that are associated with its exercise. America has a vital role in maintaining peace and security in Europe, Asia, and the Middle East. If we shirk our responsibilities, we invite challenges to our fundamental interests. The history of the 20th century should have taught us that it is important to shape circumstances before crises emerge, and to meet threats before they become dire. The history of the past century should have taught us to embrace the cause of American leadership.[15] ”

In its "Preface", in highlighted boxes, Rebuilding America's Defenses states that it aims to:ESTABLISH FOUR CORE MISSIONS for the U.S. military:

defend the American homeland; fight and decisively win multiple, simultaneous major theater wars;

perform the "constabulary" duties associated with shaping the security environment in critical regions;

transform U.S. forces to exploit the "revolution in military affairs";and thatTo carry out these core missions, we need to provide sufficient force and budgetaryallocations. In particular, the United States must:MAINTAIN NUCLEAR STRATEGIC SUPERIORITY, basing the U.S. deterrent upon a global, nuclear net assessment that weighs the full range of current and emerging threats, not merely the U.S.-Russia balance.RESTORE THE PERSONNEL STRENGTH of today's force to roughly the levels anticipated in the "Base Force" outlined by the Bush Administration, an increase in active-duty strength from 1.4 million to 1.6 million.REPOSITION U.S. FORCES to respond to 21st-century strategic realities by shifting permanently based forces to Southeast Europe and Southeast Asia, and by changing naval deployment patterns to reflect growing U.S. strategic concerns in East Asia. (iv)It specifies the following goals:MODERNIZE CURRENT U.S. FORCES SELECTIVELY, proceeding with the F-22 program while increasing purchases of lift, electronic support and other aircraft; expanding submarine and surface combatant fleets; purchasing Comanche helicopters and medium-weight ground vehicles for the Army, and the V-22 Osprey "tilt-rotor" aircraft for the Marine Corps.CANCEL "ROADBLOCK" PROGRAMS such as the Joint Strike Fighter, CVX aircraft carrier,[17] and Crusader howitzer system that would absorb exorbitant amounts of Pentagon funding while providing limited improvements to current capabilities. Savings from these canceled programs should be used to spur the process of military transformation.DEVELOP AND DEPLOY GLOBAL MISSILE DEFENSES to defend the American homeland and American allies, and to provide a secure basis for U.S. power projection around the world.[18]

CONTROL THE NEW "INTERNATIONAL COMMONS" OF SPACE AND "CYBERSPACE", and pave the way for the creation of a new military service – U.S. Space Forces – with the mission of space control.EXPLOIT THE "REVOLUTION IN MILITARY AFFAIRS" to insure the long-term superiority of U.S. conventional forces. Establish a two-stage transformation process which

maximizes the value of current weapons systems through the application of advanced technologies, and,

produces more profound improvements in military capabilities, encourages competition between single services and joint-service experimentation efforts.

INCREASE DEFENSE SPENDING gradually to a minimum level of 3.5 to 3.8 percent of gross domestic product, adding $15 billion to $20 billion to total defense spending annually. (v)The report emphasizes:Fulfilling these requirements is essential if America is to retain its militarily dominant status for the coming decades. Conversely, the failure to meet any of these needs must result in some form of strategic retreat. At current levels of

defense spending, the only option is to try ineffectually to “manage” increasingly large risks: paying for today's needs by shortchanging tomorrow's; withdrawing from constabulary missions to retain strength for large-scale wars; "choosing" between presence in Europe or presence in Asia; and so on. These are bad choices. They are also false economies. The "savings" from withdrawing from the Balkans, for example, will not free up anywhere near the magnitude of funds needed for military modernization or transformation. But these are false economies in other, more profound ways as well. The true cost of not meeting our defense requirements will be a lessened capacity for American global leadership and, ultimately, the loss of a global security order that is uniquely friendly to American principles and prosperity. (v-vi)In relation to the Persian Gulf, citing particularly Iraq and Iran, Rebuilding America's Defenses states that "while the unresolved conflict in Iraq provides the immediate justification [for U.S. military presence], the need for a substantial American force presence in the [Persian] Gulf transcends the issue of the regime of Saddam Hussein" and "Over the long term, Iran may well prove as large a threat to U.S. interests in the [Persian] Gulf as Iraq has. And even should U.S.–Iranian relations improve, retaining forward-based forces in the region would still be an essential element in U.S. security strategy given the longstanding American interests in the region."[15]

One of the core missions outlined in the 2000 report Rebuilding America's Defenses is "fight and decisively win multiple, simultaneous major theater wars."[4][19]

Post-9/11 call for regime change in IraqOn September 20, 2001 (nine days after the September 11, 2001 attacks), the PNAC sent a letter to President George W. Bush, advocating "a determined effort to remove Saddam Hussein from power in Iraq", or regime change:...even if evidence does not link Iraq directly to the attack, any strategy aiming at the eradication of terrorism and its sponsors must include a determined effort to remove Saddam Hussein from power in Iraq. Failure to undertake such an effort will constitute an early and perhaps decisive surrender in the war on international terrorism.[4][20]

From 2001 through 2002, the co-founders and other members of the PNAC published articles supporting the United States' invasion of Iraq.[21] On its website, the PNAC promoted its point of view that leaving Saddam Hussein in power would be "surrender to terrorism."[22][23][24][25]

In 2003, during the period leading up to the 2003 invasion of Iraq, the PNAC had seven full-time staff members in addition to its board of directors.[1]

Human Rights and the EU Arms EmbargoIn 2005, the European Union considered lifting the arms embargo placed on Beijing. The embargo was put in place after the events at Tiananmen Square in 1989. The PNAC, along with other concerned countries, composed a letter to Javier Solana, asking that the EU not lift the embargo until three conditions were met:

1. A general amnesty of all prisoners of conscience, including those imprisoned in connection to peaceful protest in 1989, and public trials by independent court for those charged with 'criminal' acts.

2. A reversal of the official verdict on the 1989 movement as a 'counter-revolution riot,' allowing an independent 'truth commission' to

investigate and provide a comprehensive account of the killings, torture, and arbitrary detention, and bringing to justice those responsible for the violations of human rights involved.

3. Adoption and implementation of the International Covenant on Civil Political Rights, taking concrete actions to enforce other international human rights conventions and treaties that China has joined.

The justification for these conditions was explained as follows:"Doing away with this sanction without corresponding improvements in human rights ... would send the wrong signal to the Chinese people, including especially those of us who lost loved ones, who are persecuted, and for all Chinese who continue to struggle for the ideal that inspired the 1989 movement."[26]

End of the organizationBy the end of 2006, PNAC was "reduced to a voice-mail box and a ghostly website", with "a single employee" "left to wrap things up", according to the BBC News.[27] According to Tom Barry, "The glory days of the Project for the New American Century (PNAC) quickly passed."[28] In 2006, Gary Schmitt, former executive director of the PNAC, a resident scholar at the American Enterprise Institute and director of its program in Advanced Strategic Studies, stated that PNAC had come to a natural end:When the project started, it was not intended to go forever. That is why we are shutting it down. We would have had to spend too much time raising money for it and it has already done its job. We felt at the time that there were flaws in American foreign policy, that it was neo-isolationist. We tried to resurrect a Reaganite policy. Our view has been adopted. Even during the Clinton administration we had an effect, with Madeleine Albright [then secretary of state] saying that the United States was 'the indispensable nation'. But our ideas have not necessarily dominated. We did not have anyone sitting on Bush's shoulder. So the work now is to see how they are implemented.[27]

ControversiesUS global supremacyAccording to critics, including Paul Reynolds, the neoconconservative PNAC aimed to promote American "hegemony" and "full-spectrum" dominance in its publications.[29][30][31][32]

Ebrahim Afsah, in "Creed, Cabal, or Conspiracy – The Origins of the Current Neo-Conservative Revolution in US Strategic Thinking", published in the German Law Journal, cited Jochen Bölsche's view that the goal of the PNAC was world dominance or global hegemony by the United States.[33][34] According to Bölsche, Rebuilding America's Defenses "was developed by Rumsfeld, Cheney, Wolfowitz and Libby, and is devoted to matters of 'maintaining US pre-eminence, thwarting rival powers and shaping the global security system according to US interests.'"[33][34]

George Monbiot, a political activist from the United Kingdom, stated: "...to pretend that this battle begins and ends in Iraq requires a willful denial of the context in which it occurs. That context is a blunt attempt by the superpower to reshape the world to suit itself."[35]

PNAC co-founder Robert Kagan countered such criticism in his statement during a debate on whether or not "The United States Is, and Should Be, an Empire":

"There is a vital distinction between being powerful--even most powerful in the world--and being an empire. Economic expansion does not equal imperialism, and there is no such thing as "cultural imperialism". If America is an empire, then why was it unable to mobilize its subjects to support the war against Saddam Hussein? America is not an empire, and its power stems from voluntary associations and alliances. American hegemony is relatively well accepted because people all over the world know that U.S. forces will eventually withdraw from the occupied territories.The effect of declaring that the United States is an empire would not only be factually wrong, but strategically catastrophic. Contrary to the exploitative purposes of the British, the American intentions of spreading democracy and individual rights are incompatible with the notion of an empire. The genius of American power is expressed in the movie The Godfather II, where, like Hyman Roth, the United States has always made money for its partners. America has not turned countries in which it intervened into deserts; it enriched them. Even the Russians knew they could surrender after the Cold War without being subjected to occupation."[36]

Excessive focus on military strategies, neglect of diplomatic strategiesJeffrey Record, of the Strategic Studies Institute, in his monograph Bounding the Global War on Terrorism, Gabriel Kolko, research professor emeritus at York University in Toronto, and author of Another Century of War? (The New Press, 2002), in his article published in CounterPunch, and William Rivers Pitt, in Truthout, respectively, argued that the PNAC's goals of military hegemony exaggerated what the military can accomplish, that they failed to recognize "the limits of US power", and that favoring pre-emptive exercise of military might over diplomatic strategies could have "adverse side effects."[37][38][39] (Paul Reynolds and Max Boot have made similar observations.[29][30])The Sydney Morning Herald published an English translation of an article published in German in Der Spiegel summarizing former President Jimmy Carter's position and stating that President Carter:judges the PNAC agenda in the same way. At first, argues Carter, Bush responded to the challenge of September 11 in an effective and intelligent way, "but in the meantime a group of conservatives worked to get approval for their long held ambitions under the mantle of 'the war on terror'."The restrictions on civil rights in the US and at Guantanamo, cancellation of international accords, "contempt for the rest of the world", and finally an attack on Iraq "although there is no threat to the US from Baghdad" - all these things will have devastating consequences, according to Carter."This entire unilateralism", warns the ex-President, "will increasingly isolate the US from those nations that we need in order to do battle with terrorism".[33]

"New Pearl Harbor"Section V of Rebuilding America's Defenses, entitled "Creating Tomorrow's Dominant Force", includes the sentence: "Further, the process of transformation, even if it brings revolutionary change, is likely to be a long one, absent some catastrophic and catalyzing event––like a new Pearl Harbor" (51).[15]

Though not arguing that Bush administration PNAC members were complicit in those attacks, other social critics such as journalist Mark Danner,[40] journalist John Pilger, in New Statesman,[41] and former editor of The San Francisco Chronicle Bernard Weiner, in CounterPunch,[42] all argue that PNAC members

used the events of 9/11 as the "Pearl Harbor" that they needed––that is, as an "opportunity" to "capitalize on" (in Pilger's words), in order to enact long-desired plans.Inexperienced in realities of warFormer US Congressman Lionel Van Deerlin and UK Labour MP and Father of the House of Commons, Tam Dalyell, criticized PNAC members for promoting policies which support an idealized version of war, even though only a handful of PNAC members have served in the military or, if they served, had never seen combat.[43]

As quoted in Paul Reynolds' BBC News report, David Rothkopf stated:Their [The Project for the New American Century's] signal enterprise was the invasion of Iraq and their failure to produce results is clear. Precisely the opposite has happened. The US use of force has been seen as doing wrong and as inflaming a region that has been less than susceptible to democracy. Their plan has fallen on hard times. There were flaws in the conception and horrendously bad execution. The neo-cons have been undone by their own ideas and the incompetence of the Bush administration.[27]

In discussing the PNAC report Rebuilding America's Defenses (2000) , Neil MacKay, investigations editor for the Scottish Sunday Herald, quoted Tam Dalyell: "'This is garbage from right-wing think-tanks stuffed with chicken-hawks -- men who have never seen the horror of war but are in love with the idea of war. Men like Cheney, who were draft-dodgers in the Vietnam war. These are the thought processes of fanaticist Americans who want to control the world.'"[44]

Eliot A. Cohen, a signatory to the PNAC "Statement of Principles", responded in The Washington Post: "There is no evidence that generals as a class make wiser national security policymakers than civilians. George C. Marshall, our greatest soldier statesman after George Washington, opposed shipping arms to Britain in 1940. His boss, Franklin D. Roosevelt, with nary a day in uniform, thought otherwise. Whose judgment looks better?"[45]

PNAC role in promoting invasion of IraqCommentators from divergent parts of the political spectrum––such as Democracy Now! and American Free Press, including Nobel Peace Prize Laureate Jody Williams and former Republican Congressmen Pete McCloskey and Paul Findley––voiced their concerns about the influence of the PNAC on the decision by President George W. Bush to invade Iraq.[46][47] Some have regarded the PNAC's January 16, 1998 letter to President Clinton, which urged him to embrace a plan for "the removal of Saddam Hussein’s regime from power,"[12] and the large number of members of PNAC appointed to the Bush administration as evidence that the 2003 invasion of Iraq was a foregone conclusion.[48]

The television program Frontline, broadcast on PBS, presented the PNAC's letter to President Clinton as a notable event in the leadup to the Iraq war.[49]

Media commentators have found it significant that signatories to the PNAC's January 16, 1998 letter to President Clinton (and some of its other position papers, letters, and reports) included such later Bush administration officials as Donald Rumsfeld, Paul Wolfowitz, Richard Perle, John Bolton, Richard Armitage, and Elliott Abrams.[29][37][40][49]

Future biological weapons that can "target" specific genotypesMain article: Ethnic bioweapon

Critics of the Project for the New American Century, including Austin American-Statesmen book reviewer Kip Keller, highlighted the following quote from PNAC's report "Rebuilding America's Defenses":And advanced forms of biological warfare that can “target” specific genotypes may transform biological warfare from the realm of terror to a politically useful tool.In a review of a book on the history of eugenics in the United States, Keller cited the quote as an example of modern-day thinking that continues the tradition of eugenics, saying that the quote proposed "a sort of 'gene bomb'" and accusing the authors of supporting "the targeted extermination of a specific ethnic group -- i.e., genocide, the ultimate eugenic practice".[50] The Project for a New American Century responded with a letter to the editor calling Keller's accusations "disgusting and utterly false" and stating that the quotation was intended to describe "threats the U. S. military may confront in the future" rather than weapons that the organization advocated developing.[51]

Wikipaedia

The Invasion of Iraq: Dollar vs EuroRe-denominating Iraqi oil in U. S. dollars, instead of the euro

by Sohan Sharma, Sue Tracy, & Surinder Kumar

Z magazine, February 2004 What prompted the U.S. attack on Iraq, a country under sanctions for 12 years (1991-2003), struggling to obtain clean water and basic medicines? A little discussed factor responsible for the invasion was the desire to preserve "dollar imperialism" as this hegemony began to be challenged by the euro.After World War II, most of Europe and Japan lay economically prostrate, their industries in shambles and production, in general, at a minimum level. The U.S. was the only major power to escape the destruction of war, its industries thriving with a high level of productivity. In addition, prior to and during WWII, due to extreme political and economic upheaval, a considerable amount of gold from European countries was transferred to the U.S. Thus, after WWII the U.S. had accumulated 80 percent of the world's gold and 40 percent of the world's production. At the founding of the World Bank (WB) and the International Monetary Fund (IMF) in 1944-45, U.S. predominance was absolute. A fixed exchange currency was established based on gold, the gold-dollar standard, wherein the value of the dollar was pegged to the price of gold-U.S. $35 per ounce of gold. Because gold was combined with U.S. bank notes, the dollar note and gold became equivalent, which then became the international reserve currency.Initially, the U.S. had $30 billion in gold reserves. But the United States spent more than $500 billion on the Vietnam War alone, from 1967-1972. During these years, the U.S. had over 110 military bases across the globe, each costing hundreds of millions of dollars a year. These expenses were paid in paper dollars and the total number given out far exceeded the gold reserve of the U.S treasury. By then (1971-72), the U.S. Treasury was running out of gold and had only $10 billion in gold left. On August 17, 1971, Nixon suspended the U.S. dollar conversion into gold. Thus, the dollar was "floated" in the international monetary market.Also in the early 1970s, U.S. oil production peaked and its energy resources began to deplete. Its own oil production could not keep pace with growing home consumption. Since then, U.S. demand for oil continually increased, and by 2002-2003 the U.S. imported approximately 60 percent of its oil-OPEC (primarily Saudi Arabia) being the main exporter. The U.S. sought to protect its dollar strength and hegemony by ensuring that Saudi Arabia price its oil only in dollars. To achieve this, the U.S. made a deal, some say a secret one, that it would protect the Saudi regime in exchange for their selling oil only in dollars.

Throughout the late 1950s and 1960s the Arab world was in ferment over an emerging Nasser brand of Arab nationalism and the Saudi monarchy began to fear for its own stability. In Iraq, the revolutionary officers corps had taken power with a socialist program. In Libya, military officers with an Islamic socialist ideology took power in 1969 and closed the U.S. Wheelus Air base; in 1971, Libya nationalized the holdings of British Petroleum. There were proposals for uniting several Arab states-Syria, Egypt, and Libya. During 1963-1967, a civil war developed in Yemen between Republicans (anti-monarchy) and Royalist forces along almost the entire southern border of Saudi Arabia. Egyptian forces entered Yemen in support of republican forces, while the Saudis supported the royalist forces to shield its own monarchy. Eventually, the Saudi government-a medieval, Islamic fundamentalist, dynastic monarchy with absolute power-survived the nationalistic upheavals.Saudi Arabia, the largest oil producer with the largest known oil reserves, is the leader of OPEC. It is the only member of the OPEC cartel that does not have an allotted production quota. It is the "swing producer," i.e., it can increase or decrease oil production to bring oil draught or glut in the world market. This enables it more or less to determine prices.Oil can be bought from OPEC only if you have dollars. Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the WB/IMF, which have to be paid back, with interest, in dollars. This creates a great demand for dollars outside the U.S. In contrast, the U.S. only has to print dollar bills in exchange for goods. Even for its own oil imports, the U.S. can print dollar bills without exporting or selling its goods. For instance, in 2003 the current U.S. account deficit and external debt has been running at more than $500 billion. Put in simple terms, the U.S. will receive $500 billion more in goods and services from other countries than it will provide them. The imported goods are paid by printing dollar bills, i.e., "fiat" dollars.Fiat money or currency (usually paper money) is a type of currency whose only value is that a government made a "fiat" (decree) that the money is a legal method of exchange. Unlike commodity money, or representative money, it is not based in any other commodity such as gold or silver and is not covered by a special reserve. Fiat money is a promise to pay by the usurer and does not necessarily have any intrinsic value. Its value lies in the issuer's financial means and creditworthiness.Such fiat dollars are invested or deposited in U.S. banks or the U.S. Treasury by most non-oil producing, underdeveloped countries to protect their currencies and generate oil credit. Today foreigners hold 48 percent of the U.S. Treasury bond market and own 24 percent of the U.S. corporate bond market and 20 percent of all U.S. corporations. In total, foreigners hold $8 trillion of U.S. assets. Nevertheless, the foreign deposited dollars strengthen the U.S. dollar and give the United States enormous power to manipulate the world economy, set rules, and prevail in the international market.

Thus, the U. S. effectively controls the world oil-market as the dollar has become the "fiat" international trading currency. Today U.S. currency accounts for approximately two-thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all the world exports are denominated in dollars and U.S. currency accounts for about two-thirds of all official exchange reserves. The fact that billions of dollars worth of oil is priced in dollars ensures the world domination of the dollar. It allows the U.S. to act as the world's central bank, printing currency acceptable everywhere. The dollar has become an oil-backed, not gold-backed, currency.If OPEC oil could be sold in other currencies, e.g. the euro, then U.S. economic dominance-dollar imperialism or hegemony-would be seriously challenged. More and more oil importing countries would acquire the euro as their "reserve," its value would increase, and a larger amount of trade would be transacted and denominated in euros. In such circumstances, the value of the dollar would most likely go down, some speculate between 20-40 percent.In November 2000, Iraq began selling its oil in euros. Iraq's oil for food account at the UN was also in euros and Iraq later converted its $10 billion reserve fund at the UN to euros. Several other oil producing countries have also agreed to sell oil in euros-Iran, Libya, Venezuela, Russia, Indonesia, and Malaysia (soon to join this group). In July 2003, China announced that it would switch part of its dollar reserves into the world's emerging "reserve currency" (the euro).On January 1, 1999, when 11 European countries formed a monetary union around this currency, Britain and Norway, the major oil producers, were absent. As the U.S. economy began to slow down during mid-2000, Western stock markets began to yield lower dividends. Investors from Gulf Cooperation Council nations lost over $800 million in the stock plunge. As investors sold U.S. assets and reinvested in Europe, which seemed to be better shielded from a recession, the euro began to gain ground against the dollar .After September 11, 2001, Islamic financiers began to repatriate their dollar investments-amounting to billions of dollars-to Arab banks, as they were worried about the possible seizure of their assets under the USA PATRIOT Act. Also, they feared their accounts might be frozen on the suspicion that such accounts fund Islamic terrorists. Iranian sources stated that their banking colleagues felt particularly hassled as Washington heated up its war of words and threats of military intervention. This encouraged Tehran to abandon the dollar payment for oil sales and switch to the euro. Iran also moved the majority of its reserve fund to the euro. (Iran is the latest target of the U.S., which has interfered by stirring up opposition forces, and making covert threats.)

OPEC member countries and the euro-zone have strong trade links, with more than 45 percent of total merchandize imports of OPEC member countries coming from the countries of the euro-zone, while OPEC members are the main suppliers of oil and crude oil products to Europe. The EU has a bigger share of global trade than the U.S. and, while the U.S. has a huge current account deficit, the EU has a more balanced external accounts position. The EU plans to enlarge in May 2004 with ten new members. It will have a population of 450 million; it will have an oil consuming-purchasing population 33 percent larger than the U.S., and over half of OPEC crude oil will be sold to the EU as of mid-2004. In order to reduce currency risks, Europeans will pressure OPEC to trade oil in euros. Countries such as Algeria, Iran, Iraq, and Russia-which export oil and natural gas to European countries and in turn import goods and services from them-will have an interest in reducing their currency risk and hence, pricing oil and gas in euros. Thus momentum is building toward at least the dual use of euro and dollar pricing.The unprovoked "shock and awe" attack on Iraq was to serve several economic purposes: (1) Safeguard the U.S. economy by re-denominating Iraqi oil in U.S. dollars, instead of the euro, to try to lock the world back into dollar oil trading so the U.S. would remain the dominant world power-militarily and economically. (2) Send a clear message to other oil producers as to what will happen to them if they abandon the dollar matrix. (3) Place the second largest oil reserve under direct U.S. control. (4) Create a subject state where the U.S. can maintain a huge force to dominate the Middle East and its oil. (5) Create a severe setback to the European Union and its euro, the only trading block and currency strong enough to attack U.S. dominance of the world through trade. (6) Free its forces (ultimately) so that it can begin operations against those countries that are trying to disengage themselves from U.S. dollar imperialism-such as Venezuela, where the U.S. has supported the attempted overthrow of a democratic government by a junta more friendly to U. S. business/oil interests.The U.S. also wants to create a new oil cartel in the Middle East and Africa to replace OPEC. To this end the U.S. has been pressuring Nigeria to withdraw from OPEC and its strict production quotas by dangling the prospects of generous U.S. aid. Instead the U.S. seeks to promote a "U.S.-Nigeria Alignment," which would place Nigeria as the primary oil exporter to the U.S. Another move by the U.S. is to promote oil production in other African countries-Algeria, Libya, Egypt, and Angola, from where the U.S. imports a significant amount of oil-so that the oil control of OPEC is loosened, if not broken. Furthermore, the U.S. is pressuring non-OPEC producers to flood the oil market and retain denomination in dollars in an effort to weaken OPEC's market control and challenge the leadership of any country switching oil denomination from the dollar to the euro.

To break up OPEC and control the world's oil supply, it is also helpful to control Middle East and central Asiatic oil producing countries through which oil pipelines traverse. The first attack and occupation was of Afghanistan, October 2001, in itself a gas producing country, but primarily a country through which Central Asia and the Caspian Sea oil and gas will be shipped (piped) to energy-starved Pakistan and India. Afghanistan also provided an alternative to previously existing Russian pipelines. Simultaneously, the U.S. acquired military bases-19 of them-in the Central Asian countries of Uzbekistan, Tajikistan, Kyrgyzstan, and Turkmenistan in the Caspian Basin, all of which are potential oil producers. After the invasion and occupation of Afghanistan and Iraq, the U.S. controlled the natural resources of these two countries and, once again, Iraq's oil began to be traded in U.S. dollars. The UN's oil for food production program was scrapped and the U.S. Iaunched its Iraqi Assistance Fund in U.S. dollars. In December 2003, the U.S. (Pentagon) announced that it had barred French, German, and Russian oil and other companies from bidding on Iraq's reconstruction.How would a shift to the euro affect underdeveloped countries, most of which are either non-oil producing or do not produce enough for their home consumption and development? These countries have to import oil. One of the advantages that may accrue to them is that they are likely to earn more euros than dollars since much of their trade is with the European countries. On the other hand, a shift to euro will pose a similar dilemma for them as dollars. They will have to pay for oil in euros, have enough euros deposited-invested in EU treasuries, and borrow euros if they do not have enough for their oil purchases. If, as is projected, the dollar and euro are in a price band (that is, prices will stay within an agreed upon range), they may not have much of a bargaining position.Oil for euros would be far more helpful if oil-importing underdeveloped countries could develop some form of barter arrangement for their goods to obtain oil from OPEC. Venezuela (Chavez) has presented a successful working model of this. Following Venezuela's lead, several underdeveloped countries began bartering their undervalued commodities directly with each other in computerized swaps and counter trade deals, and commodities are now traded among these countries in exchange for Venezuela's oil. President Chavez has linked 13 such barter deals on its oil; e.g., with Cuba in exchange for Cuban doctors and paramedics who are setting up clinics in shanty towns and rural areas. Such arrangements help underdeveloped countries save their hard currencies, lessening indebtedness to international bankers, the World Bank, and IMF, so that money thus saved can be used for internal development. Sohan Sharma is a professor emeritus at California State University in Sacramento. Sue Tracy is a hazardous waste material scientist in Sacramento. Surinder Kumar is professor of economics In Rohtak, Inala.

http://www.thirdworldtraveler.com/Iraq/Iraq_dollar_vs_euro.html

OPEC, Iraq, the euro, and global economics

On November 6th of 2000 Iraq became the first country to receive all of its oil export payments in euros instead of American dollars. This switch was estimated to cost Iraq $270 million dollars, but Iraq had since actually come out on top due to the rise in the value of the euro, which was actually probably influenced by Iraq’s decision to use the euro as its foreign exchange currency. At the time of the switch Iraq was selling over $60 million in crude oil a day so its easy to see that the change to the use of the euro could have a positive effect on the value of the euro.Iraq had also been threatening to stop all of its oil exports, which represented about 5% of the world market. This certainly put Iraq in a position to create a certain amount of economic havoc.This event was reported by CNN in 2000:http://www.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/In April of 2002, Javad Yarjani, Head Market Analyst of OPEC, gave a speech on the matter of which currency to use for the oil bill. This speech was given to the Spanish Minister of Economic affairs.The Choice of Currency for the Denomination of the Oil Bill:http://www.opec.org/NewsInfo/Speeches/sp2002/spAraqueSpainApr14.htmThis speech reveals that members of OPEC have been seriously considering moving to a euro backed petroleum industry as opposed to US dollar backed, and it gives many solid reasons why they have been considering this option, as well as possible results of the option.Because of its importance I’m going to simply quote much of the speech here, but for the full text you will have to use the link.“First of all, let me take the opportunity to congratulate the European Union for its successful transition to the euro, from its twelve different currencies. Everyone was pleasantly surprised at how smooth and swift the switchover took place, considering it involved the largest currency swap undertaken in history. The question that comes to mind is whether the euro will establish itself in world financial markets, thus challenging the supremacy of the US dollar, and consequently trigger a change in the dollar’s dominance in oil markets. As we all know, the mighty dollar has reigned supreme since 1945, and in the last few years has even gained more ground with the economic dominance of the United States, a situation that may not change in the near future. By the late 90s, more than four-fifths of all foreign exchange transactions, and half of all world exports, were denominated in dollars. In addition, the US currency accounts for about two thirds of all official exchange reserves. The world’s dependency on US dollars to pay for trade has seen countries bound to dollar reserves, which are disproportionately higher than America’s share in global output. The share of the dollar in the denomination of world trade is also much higher than the share of the US in world trade. Having said that, it is worthwhile to note that in the long run the euro is not at such a disadvantage versus the dollar when one compares the relative sizes of the economies involved, especially given the EU enlargement plans. Moreover, the euro-zone has a bigger share of global trade than the US and while the US has a huge current account deficit, the euro area has a more, or balanced, external accounts position. One of the more compelling arguments for keeping oil pricing

and payments in dollars has been that the US remains a large importer of oil, despite being a substantial crude producer itself. However, looking at the statistics of crude oil exports, one notes that the euro-zone is an even larger importer of oil and petroleum products than the US.”“It must also be recalled that the links between crude oil and the dollar are deeply embedded in economics, politics and trading traditions.  Naturally, the trading of oil in dollars has served the interests of the US, giving it an immediate advantage over other countries because it carries no currency exchange risk.  For most other oil consumers around the world, the pricing and payment of crude in dollars increases the risk for these countries because of currency fluctuations.  When the dollar rises against other currencies, the price of oil is more expensive for the rest of the world, thus potentially increasing inflation in these countries.”“Despite this, let us examine some of the issues surrounding the denomination of the oil bill, with the euro in mind.  Firstly, it is good to note that oil producers and big crude consumers, and importers from non-dollar areas, like the EU, have common interests.  They are both interested not only in stability of oil prices and a reduction in price volatility but also in the stable currencies.  In other words, they would like to minimize oil price risk and currency risk.  Producers and consumers may differ as to the desired oil price level, although I think they are probably not so far apart on that question, but they would both easily agree that currency risk is undesirable.  From the EU’s point of view, it is clear that Europe would prefer to see payments for oil shift from the dollar to the euro, which effectively removes the currency risk.  It would also increase the demand for the euro and thus help to raise its value.  Moreover,  oil were to shift to the euro, it could provide a boost to the global acceptability of the single currency. There are also very strong trade links between OPEC Member Countries (MCs) and the euro-zone, with more than 45 per cent of total merchandise imports of OPEC MCs coming from the countries of the euro-zone, while OPEC MCs are main suppliers of oil and crude oil products to Europe.”“Of major importance to the ultimate success of the euro, in terms of the oil pricing, will be if Europe's two major oil producers — the United Kingdom and Norway join the single currency.  Naturally, the future integration of these two countries into the euro-zone and Europe will be important considering they are the region’s two major oil producers in the North Sea, which is home to the international crude oil benchmark, Brent.  This might create a momentum to shift the oil pricing system to euros.  However, from today’s perspective, even after the UK joins the single currency, there would seem to be little incentive for London’s International Petroleum Exchange (IPE), where Brent is traded, to switch its Brent crude oil and gas oil contracts to euros, since both are traded internationally and the dollar is at the centre of a complex global oil trading and hedging system.  There is more chance that the IPE will consider changing its natural gas and power contracts to euros.  With respect to petroleum products, it appears that here the euro may make some inroads.  Within the euro-zone, petroleum products to the final consumer are now sold in euros, highlighting the disparity in final product prices within the EU.  At present the only spot market that has adopted the euro is the Hamburg barge market, which previously used Deutschmarks. 

So what is the OPEC position on this critical questions? Can the Organization consider switching its crude oil pricing from dollars to euros? Or will a basket of currencies be used? Because crude oil contracts are currently traded in dollars, and the prices of OPEC crudes are determined by using complex formulas derived from marker crudes, such as Brent and WTI, there is not much the Organization can do unilaterally until, and unless, there is a switch of denomination in these markets. OPEC has no control over the quotations of these marker crudes, whereas, in the past the Organization did set the official selling prices. That has all changed with the introduction of market-related prices which saw the system change from a seller’s to a buyer’s market, or at least where market forces now dictate prices. Moreover, the entire infrastructure of the oil market has been based around the dollar, and that will be hard to displace. However, as previously mentioned, a lot depends on Britain and Norway in determining what their level of EU integration will be, and whether their marker crude, Brent, could be traded in euros.”The added emphasis is mine.For more on this topic I will refer you to an excellent write-up by “W. Clark” on the matter. His write-up on the connections between the euro, OPEC, and the war in Iraq is well done and exhaustive in itself and I see no need for me to simply regurgitate his work here. This link is another must read:http://www.ratical.org/ratville/CAH/RRiraqWar.html

http://www.rationalrevolution.net/war/opec_iraq_euro.htm

China and the US Dollar debt

Gadaffi, Libya and the African currency proposal JFK, President Lincoln Eustace Mullins Project for the New American Century Carlyle Group Skull and Bones China vs US – Africa and Africom

Gas Pipeline Wars: The EU Threatens to Obstruct Gazprom’s South Stream ProjectThe European Commission has indicated it will obstruct the building of a new gas pipeline to bypass Ukraine.By R. TeichmannGlobal Research, June 10, 2014

News Beacon Ireland

Region: Europe, Russia and FSU

Theme: Oil and Energy

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The European Commission has indicated it will obstruct the building of a new gas pipeline to bypass Ukraine. South Stream is a Russian sponsored natural gas pipeline. As planned, the pipeline would run under the Black Sea to Bulgaria, and continue through Serbia with two branches to Bosnia and Herzegovina and to Croatia. From Serbia the pipelines crosses Hungary and Slovenia before reaching Italy. Its planned capacity is 63 billion cubic metres per year. The key partner for Russia’s Gazprom in the South Stream project is Italy’s largest energy company, ENI.Russia signed intergovernmental agreements with Bulgaria, Serbia, Hungary and Greece as far back as 2008 and with Slovenia in 2009 and Croatia and Austria in 2010.Now the EU energy chief, German Gunther Oettinger has claimed to the German media that EU objections to the South Stream project are both political and legal.“With civil war-like conditions in eastern Ukraine and without Moscow’s recognition of the Kiev government, we will certainly not arrive at a political conclusion of our negotiations,” he said.He added that talks in a special EU-Russia “working group” on South Stream can continue, but only if Russia is “ready for constructive co-operation on the basis of our energy law”.The EU’s so-called third energy package forces energy firms to separate production and distribution assets and to allow competitors access to infrastructure.Legal threat against BulgariaThe Commission cannot force member states to abandon the project, but it can obstruct progress by launching legal cases against the contracts which underpin its future. It already threw one spanner in the works this week by launching “infringement proceedings” against Bulgaria on alleged non-compliance with EU public procurement law in its handling of tenders.Last December, the Commission said that all bilateral agreements (IGAs) for the construction of South Stream gas, signed between Russia and Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria, are all in breach of EU law and need to be renegotiated from scratch. Klaus-Dieter Borchardt, director for energy markets at the European Commission, speaking in the European Parliament said the deals were in breach of EU law.“The Commission has looked into these intergovernmental agreements and came to the conclusion that none of the agreements is in compliance with EU law,” Borchardt said.The Commission official highlighted at least three major issues about the deals:First, the EU’s so-called network ownership “unbundling” rules need to be observed, he said. This means that Gazprom, which is both a producer and a supplier of gas, cannot simultaneously own production capacity and its transmission network;Secondly, non-discriminatory access of third parties to the pipeline needs to be ensured. There cannot be an exclusive right for Gazprom to be the only shipper; andThirdly, the tariff structure needed to be addressed.EU challenged over claim that its rules should prevail over international lawRussian deputy minister for energy Anatoly Yankovski, who delivered a speech shortly afterwards made the obvious point that Russia could not accept that EU rules should apply to trans-boundary projects such as pipelines, which are not stationed solely on EU territory. He added that EU law could not prevail in EU-Russia relations, which are governed only by international law. In other words, the

intergovernmental agreements concluded by Russia over South Stream were prevailing over other legal norms, Yankovski said.

Commission President José Manuel Barroso upped the ante by warning Bulgaria that the EU executive would impose infringements on Bulgaria regarding pipeline declaring that its construction is in breach of EU laws.The total value of the construction works on Bulgarian territory will be 3.5 billion Euros, with 20 to 30% of the implementation being sub-contracted to Bulgarian firms.The Commission has objected precisely on the grounds that the Bulgarian-Russian bilateral agreement on South Stream gives preference to companies from Bulgaria and Russia, which is against EU competition rules.Despite the Commission’s position that the IGA violates EU law, Gazprom CEO Alexey Miller confirmed last month that the building of the Bulgarian and Serbian portions of the pipeline will begin in July.In end-April, Russia filed a lawsuit with the World Trade Organisation (WTO) against the European Union over the EU’s Third Energy Package.

http://www.globalresearch.ca/gas-pipeline-wars-the-eu-threatens-to-obstruct-gazproms-south-stream-project/5386475