The Invasion of Iraq: Dollar vs Euro

[zagijimzoo 0]

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

http://www.worldpress.org/Mideast/2314.cfm

http://www.pressbox.co.uk/detailed/International/BEHIND_THE_MAD_RUSH_TO_BOMB_IRAN_-_Teheran_s_Euro-Based_Oil_Exchange_Spells_Doom_for_Dollar_-_Interv_50885.html

http://www.infowars.com/articles/economy/iranian_oil_bourse_opens_for_business.htm

[kallend 2,150]

www.dropzone.com/cgi-bin/forum/gforum.cgi?post=382972#382972

...

The only sure way to survive a canopy collision is not to have one.

[ExAFO 0]

http://www.weebls-stuff.com/toons/mango/

Illinois needs a CCW Law. NOW.

[ErricoMalatesta 0]

Control of the world's fast depleting number 1 energy resource?!
Preventing Iran from selling in Euros and destroying the U.S dollar as reserve currency?
Not for freedom, democracy or stopping nukes after all?

I’m astonished

[philh 0]

I think a simpler explanation is
1 Saddam Hussein ordered an assasination attempt on GWB father, that ticked him off
2 Right wing Neo Cons thought it would be easy to bring democracy and capitalism to Middle East and the example of Iraq would lead to it spreading.
3 The adminsitration was too stupid to see the difference between the threat of new foe: Aq and the threat of an old foe , Iraq.
4 The Adminstration does not have the core value of needing evidence to believe things; they believe what they want to believe. So the lack of evidence of WMD's did not stop them, they wanted to believe it so they did.

If you read materials from those have had good access to those in the administration (both critics and supporters alike) you will find these were the motivations.

[vortexring 0]

I still believe the fundamental reason was a change - oil for Euro's rather than Dollar's. Economically America would be quite simply f'ed.

'for it's Tommy this, an' Tommy that, an' "chuck 'im out, the brute!" But it's "saviour of 'is country" when the guns begin to shoot.'

[ErricoMalatesta 0]

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2 Right wing Neo Cons thought it would be easy to bring democracy and capitalism to Middle East and the example of Iraq would lead to it spreading.

There is no way that is one of the reasons unless you mean "democracy" in terms of the "democracy" the U.S have always tried spreading.

Also given that the U.S has always suppressed democracy in the middle east

[philh 0]

"There is no way that is one of the reasons unless you mean "democracy" in terms of the "democracy" the U.S have always tried spreading. "

Sorry Im not really sure what you mean. The US stated aim was to install a democratic government in Iraq and they did have democratic elections in Iraq, they also got the chaos that is todays situation which was something of an unitended conseuqence.

[JackC 0]

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I think a simpler explanation is
1 Saddam Hussein ordered an assasination attempt on GWB father, that ticked him off
2 Right wing Neo Cons thought it would be easy to bring democracy and capitalism to Middle East and the example of Iraq would lead to it spreading.
3 The adminsitration was too stupid to see the difference between the threat of new foe: Aq and the threat of an old foe , Iraq.
4 The Adminstration does not have the core value of needing evidence to believe things; they believe what they want to believe. So the lack of evidence of WMD's did not stop them, they wanted to believe it so they did.

If you read materials from those have had good access to those in the administration (both critics and supporters alike) you will find these were the motivations.

Nah, I don't think so. I think GWB and his cronies were pissed at Iraq for several reasons. After the US backed SH against Iran he was supposed to be the US's guy in the Middle East but he didn't tow the line. Most notably by invading Kuwait. The assassination attempt on Bush Sr didn't help and threatening to sell oil in euro's instead of dollars generally meant he was being a real pain in the ass. Add to that the unfinished business of Gulf War 1, the oil for food debacle and SH thumbing his nose at the international comunity, and the US decided they needed an excuse to get rid of him. But they couldn't start anything without looking like the bad guys.

Along came 9/11 and the US saw an oportunity to lump Iraq and Al Queda together. WMD's were just the final political excuse needed to get rid of SH once and for all. It had nothing to do with democracy in the middle east, that was just a handy sales tactic. They needed to mix up old and new foes and ignore the evidence in order to get the war started which is why they needed to get going before Hans Blix had finished his inspections. It was a simple case that an opportunity arose to fuck SH up and they took it.

[philh 0]

Well I agree that there was a sense of finishing the job of Gulf War 1, but the whole Euro denomination thing I dont buy at all. Since the Euro was introduced a lot of institutions have been shifting into euros for their reserves and denomiating transactions in Euros. This is an inevitibale process of launching such a large currency. That is one of (although not the only ) reason the Euroa has appreciated against the USD since its lows shortly after the launch (when it was worth less than 1USd, now 1.356 USd). I see no evidence the Euro denomination issue played any role whatsover. There are many accounts of the road to war written by those on the inside, many of those insiders are critical of Bush's position but I dont know of one of them that mentions this as being considered. If you could poitn to some evidence I would be very inetrested to see it.
I am and always have been a huge opponent of the war in Iraq but I have yet to see any strong evidence that this sort of Economics was a primary or even secondary motivation.

[JackC 0]

I don't necessarily think the Euro thing was the major motivating factor but it is likely to be a contributor. Oil is traditionally traded in dollars. In fact, the dollar is the de facto world reserve currency which means that the US economy is artificially inflated by the demand for dollars being paid for in goods and services to the US. If the oil market suddenly went to euros it would have repercussions that wouldn't benefit the US at all. The US would quite obviously try to protect their position.

[philh 0]

"In fact, the dollar is the de facto world reserve currency which means that the US economy is artificially inflated by the demand for dollars "

This is not so clear cut as you make out. That the US$ is the world currency has some advantages for the US and some disadvantages.It increases the liquidity for US$ denominated assets and therefore gives cheaper cost of funds to US borrowers. But on the other hand by definition if we have as you say "artifically inflated demand for dollars" then the price of dollars will be artifically high, this will make it harder for US firms to export their good and services and compete in global markets. Economic systems are much more complex than your simple analysis would imply.

But even if Im completley wrong about the above Im still waiting for any actual evidence that any of this was a motivation. So far Ive seen none, but I will happily change my opinion if good evidence is presented. So i await it eagerly.

[philh 0]

In fact at the time and in the aftermath of the invasion of Iraq the US$ declined against the Euro. If the US government wants people to not hold Euro denominated assets it could intervene in the FX market and sell Euro's. In fact this is what was requested of it , read here in the Guardian in 2004 :
http://www.guardian.co.uk/usa/story/0,12271,1352886,00.html

"European leaders yesterday appealed to the United States to rein in its gaping current account and budget deficits and prevent the dollar falling further against the euro - but there was little sign the US was listening."

I would have thought it would be a lot easier to intervene in the FX market (especially when when other central banks were asking for co operation), than it would be to start a war, maybe this just wasnt a motivation?


"

[JackC 0]

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But on the other hand by definition if we have as you say "artifically inflated demand for dollars" then the price of dollars will be artifically high, this will make it harder for US firms to export their good and services and compete in global markets. Economic systems are much more complex than your simple analysis would imply.

True, economic systems are incredibly complex. However, the price of dollars wouldn't need to be artificially high like you suggest. In essence, all the US needs to do is print more dollars and the supply of dollars increases and the price drops. The reserve/oil currency has been set up for so long that it acts like an extension of the US economy and has come to a kind of balance.

However, if the world suddenly stopped using dollars to trade oil and instead used euros, the world would be awash with dollars that would be next to useless because there would be nothing to buy with them. This would put the value of the dollar into freefall and severely affect the US economy.

It's not the fact that the world does or does not use dollars as it's currency that matters so much as the upset that would be caused if we all suddenly changed. That's what Iraq did, Iran are threatening and so is Venezuela. What do you think the US would say if OPEC declared their market to be in euros? I doubt they'd be all smiles and happiness.

There are plenty of articles on the web about this mechanism because it's just the economics of supply and demand but I can't imagine the US government is actually going to get up and say that the war was all about the currency used for buying oil, they're not that stupid. I don't even know if this was the major factor, but it certainly could have been a factor. Probably the best you can do is get a bit of background on global economics and try to put the peices together yourself. Of course your milage may vary.

http://observer.guardian.co.uk/business/story/0,6903,900867,00.html

[NCclimber 0]

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However, if the world suddenly stopped using dollars to trade oil and instead used euros, the world would be awash with dollars that would be next to useless because there would be nothing to buy with them. This would put the value of the dollar into freefall and severely affect the US economy.

Considering the US consumes 25% of worldwide consumption, I doubt most oil exporters are interested in tanking the the dollar.

[ErricoMalatesta 0]

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Sorry Im not really sure what you mean. The US stated aim was to install a democratic government in Iraq

The U.S stated aim in Iraq was to stop the production or possession of nukes, when there were no nukes it quickly switched to this new, and just as bullshit, goal.

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and they did have democratic elections in Iraq

Much like the “democratic elections” the U.S install in other countries… they weren’t democratic elections.

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they also got the chaos that is todays situation which was something of an unitended conseuqence.

This chaos wasn’t unexpected by most people if mass global protests are anything to go by, nor was it unexpected by most intelligence agencies.

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Essentially the energy business is a dollar business - oil is priced in dollars and traded in dollars, and so long as the dollar substantially underpins international trade then foreign government currency reserves must be backed up with dollar purchases; in addition currency has the added advantage of earning interest, so financial bonds and treasury instruments are purchased by foreign governments in dollars to further leverage their 'investments'.
This is all well and good for US currency: the world lends while the American people lavishly spend. But in the end this dollar system is fraught with weakness for even a small percentage conversion of world energy business into Euro's would certainly cause a run on US dollars; and a first-ever Euro oil currency conversion had already occurred - in Saddam's Iraq!
Indeed, this is the very threat that Iraq posed to the United States: Iraq had already brokered a deal to trade oil for Euro-dollars with Russia and Iraq was in process of brokering similar currency deals with France and Germany. Of course the ruling US elite could not allow any major change to occur in the currency in which oil is bought and sold. Any move to trading oil in Euros was a major threat to the US currency base, and now Iraq and its oil appeared at the very heart of this threat.

[JackC 0]

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Considering the US consumes 25% of worldwide consumption, I doubt most oil exporters are interested in tanking the the dollar.

Iraq did and got changed back after the invasion. Iran have done, Venezuela have done and Russia and OPEC have considered it.

[philh 0]

"all the US needs to do is print more dollars and the supply of dollars increases and the price drops"

This would lead to massive inflation not somehting that would be in US interests. Why would they do this?
BTw I read you article in the Observer it narrowly focuses on the debt financing side of a low US$ and ignores the trade deficit side. Basically if the USD falls in value yet it will be harder to finance its deficit but its more likely that its deficit will be samller so the net effect is not clear.
Your analysis assume they want the dollar higher against the euro yet you ignore the facts and that is the ECb wanted the US to intervene to help them stop the decline in the dollar and the Americans refused. This is what really happened, in order to overturn this you need to present some counter eivdence so far Ive seen nothing.

[Andrewwhyte 1]

Petroleum products are just one of the major commodity groups traded in $US. The other biggie is narcotics. The US $100.00 bill has long been the standard currency for drug deals. The $1000.00 is traceable and not acceptable. Lately however, there has been a strong trend toward the 500.00 Euro note. At a value equivalent to almost $700.00 US it just makes sense.
This is, I suppose, the inevitable result of the US losing the war on drugs.

BTW Does anyone know where the Euro symbol key is on a US based keyboard in OS10?

[philh 0]

"The U.S stated aim in Iraq was to stop the production or possession of nukes, when there were no nukes it quickly switched to this new, and just as bullshit, goal. "
That was not their only stated aim, that was their rationale for the war which I agree was BS. The Operation was called Iraqi Freedom not Operation get rid of the WMDs, that implies that they at least had the idea of deomcracy at the itme and not just invented it later.
"Much like the “democratic elections” the U.S install in other countries… they weren’t democratic elections. "
Well thats not what the UN thought,
http://www.npr.org/templates/story/story.php?storyId=4471997
"Ashraf Qazi, U.N. special representative for Iraq, talks about Sunday's election in Iraq. Qazi says the Iraqi election process, despite a difficult security situation, appears to have been held in a transparent manner"

"This chaos wasn’t unexpected by most people if mass global protests are anything to go by, nor was it unexpected by most intelligence agencies. "
I agree with you, I merely point out that Bush adminsitration didnt expect it, not that others didnt.
Again on the issue of Euro denomination , if the US was so concerned why not simply interven in the FX market?

[JackC 0]

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"all the US needs to do is print more dollars and the supply of dollars increases and the price drops"

This would lead to massive inflation not somehting that would be in US interests. Why would they do this?

Only if you do it all at once. Remember the dollar has been the currency of choice for nearly a century. It's had time to adapt and balance out.

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BTw I read you article in the Observer it narrowly focuses on the debt financing side of a low US$ and ignores the trade deficit side. Basically if the USD falls in value yet it will be harder to finance its deficit but its more likely that its deficit will be samller so the net effect is not clear.
Your analysis assume they want the dollar higher against the euro yet you ignore the facts and that is the ECb wanted the US to intervene to help them stop the decline in the dollar and the Americans refused. This is what really happened, in order to overturn this you need to present some counter eivdence so far Ive seen nothing.

You lost me. And with it, my interest. Adios.

[philh 0]

"Only if you do it all at once."(on the negative effects on an expansion in the money supply)

No economic data is scrutinised by financial markets and other agents in tremendous detail. I dont think you could get away with a gradual increase in the money supply without increasing inflation and at the same time reducing the demand for Treasuries and other debt securities. it would be a disaster whether gradual or not.

"You lost me. And with it, my interest. Adios. "
Well in case anyone else is interested I will explain it in simple language. The whole thesis assumes that US dont want the Euros to overtake fromt he dollars thus reducing the demand for US$. But there is no evidence for this infact the evidence is the opposite as they consistently refuse attmepts to support the value of the US$.

In summary the war in Iraq should never have happened and it was a stupid decision. But I see no evidence it had naything to do with the Euro$ FX rate.

[ErricoMalatesta 0]

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The U.S stated aim in Iraq was to stop the production or possession of nukes, when there were no nukes it quickly switched to this new, and just as bullshit, goal.

That was not their only stated aim, that was their rationale for the war which I agree was BS. The Operation was called Iraqi Freedom not Operation get rid of the WMDs, that implies that they at least had the idea of deomcracy at the itme and not just invented it later.

Its in the public record go back and have a look.

Months and months of war build up, invasion, and occupation over specifically finding the WMD's THEN once they were no where in sight they bring "democracy" to the foreground. I havn't looked at it in a while and don't have it on hand but there is actually a 6-8 week period where you can see it dramatically change

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"Much like the “democratic elections” the U.S install in other countries… they weren’t democratic elections. "

Well thats not what the UN thought,
http://www.npr.org/templates/story/story.php?storyId=4471997

"Appeared Fair, Transparent" within the bounds aloud by the U.S.

The U.S are there to setup a client state to retain control of the oil, so its a democracy to the extent the outcome ends up how they want it, again much like all other democracies they have bought to the people of other countries in the past.

[misaltas 0]

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They needed to mix up old and new foes and ignore the evidence in order to get the war started which is why they needed to get going before Hans Blix had finished his inspections.

The sudden rush to finish the inspections only occurred after the US surprised the world and physically moved toward invasion. Why wouldn't Bush wait another 30 days? Because it was another in a long line of delays. If we concluded in less than two years there were no WMDs, surely SH could have allowed the UN to take less than 12 years to do the same thing right? Because SH's heel dragging was specifically intended to tell the world he still had a WMD program and he could do whatever he wanted. He succeeded. The world was convinced. Only Bush did something about it.

This war is SH's fault, no one else's.

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It was a simple case that an opportunity arose to fuck SH up and they took it.

Yes, but only half the story. SH's intent since the end of GWI was to fuck the US up. Bush was the only world leader with the guts to do something about it before any Americans suffered the same fate as the Kurds, or worse. Remember them? The ones killed by SH's WMDs that he never proved he got rid of?

But of course politically, it's easy to second guess someone who's trying to prevent a catastrophe, rather than respond to one. And the democrats were smart enought to seize that opportunity. If the US fails, they win, so that's what they strive for. Sad.

The neo-cons are evil, as well as their intent to spread western democracies to places which don't want it, and can't handle it. But from a defensive preventative posture, holding SH accountable was the right thing to do in the long run.

Ohne Liebe sind wir nichts

[philh 0]

"Its in the public record go back and have a look.
Months and months of war build up, invasion, and occupation over specifically finding the WMD's THEN once they were no where in sight they bring "democracy" to the foreground. I havn't looked at it in a while and don't have it on hand but there is actually a 6-8 week period where you can see it dramatically change "

I am not disputing for one second that the emphasis for justifying the war was changed from finding WMDs to bringing democracy. I am only disputing the diea that bringing democracy was not a goal before the invasion as GWB said in his state of the Union address Jan 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. (Applause.) And the day he and his regime are removed from power will be the day of your liberation. (Applause.) "

The idea of liberating the Iraqi people was there before the failure to find WMD's allthoguh of course I agree it was not the primamry aim.

""Appeared Fair, Transparent" within the bounds aloud by the U.S. ..."
If you have evidence that trhe US government rigged the elections please present it and if it stands up I'll be the first to agree with you. As I understand it the elections were considered fair by the UN.

The U.S are there to setup a client state to retain control of the oil, so its a democracy to the extent the outcome ends up how they want it, again much like all other democracies they have bought to the people of other countries in the past. "

If control of oil was their primary aim why did they invade Afghanistan which has no oil? Why not invade Saudi Arabia which has more oil and more links with Aq?
they invaded becuase they were stupid not because they were greedy (although I dont doubt they are that too).