A war with Iran to save the US Dollar?

Mike Whitney, writing over on Dissident Voice, senses logic in Bush’s recent trip to the Middle East, locating the visit in an issue covered by this blog some time ago – Iran’s desire to set up an oil bourse.

Witney suggests, as most of us have, that the trip had sod all to do with Middle East peace, as the White House claimed, noting how “three days after Bush left Jerusalem, Israel stepped-up its military operations in the occupied territories and resumed its merciless blockade of food, water and medicine to the 1.5 million people of the Gaza Strip. Bush must have green-lighted Israel’s aggression or it would have been seen as an insult to the President of the United States.” Rather, the trip was all about the US trying to restore Middle East confidence in the falling dollar, which seems to have worked for the moment. Indeed, as Reuters reported:

“After a flurry of public disagreements over currency reform last year, Gulf central bankers are trying to close ranks, talking up the pegs as a source of stability and playing down the dollar’s weakness as a temporary phenomenon.”

Gulf states have watched the economic woes in the US closely, not least because the petro-dollar props up the US economy, as it does in the Middle East oil states, and because they are having their own economic anguish. In Saudi Arabia and neighbouring Oman inflation has reached a 16-year high and is at a 19-year peak in th UAE. Currency traders anticipate another 8% rise in the dirham and riyal by April. Gulf policymakers are intervening directly in loans, property and commodity markets to offset rate cuts. Property prices has rocketed in the Gulf; doubled in the UAE in the last year. Gulf states regularly provide food subsidies and employers grant pay increases of up to 70%. In Dubai, workers have rioted, demanding a living wage. It is expected that throughout the Gulf interest rates will compel Central bankers to covert to either the euro or a basket of regional currencies. For the moment, the loyal Saudi princes have, their fingers crossed, continued their support for the dollar.

Whitney posits, convincingly in my opinion, that Bush’s trips to the Middle East, all this sabre-rattling, and supplying of arms to Israel and Saudi Arabia, is all down to Iran’s belated plans to launch an oil bourse – this week!!

Whitney writes:

So, how important is it that oil continues to be denominated in dollars? Would the United States really wage war to defend the dollar’s status as the world’s “reserve currency”?

The answer to this question could come as early as this week, since the long-awaited Iranian Oil Bourse is scheduled to open between February 1-11. According to Iran’s Finance Minister Davoud Danesh-Jafari “All preparations have been made to launch the bourse; it will open during the 10-day Dawn (the ceremonies marking the victory of the 1979 Islamic Revolution in Iran). The bourse is considered a direct threat to the continued global dominance of the dollar because it will require that Iranian “oil, petrochemicals and gas” be traded in “non-dollar currencies”. (Press TV, Iran)

The petrodollar system is no different than the gold standard. Today’s currency is simply underwritten by the one vital source of energy upon which every industrialized society depends—oil. If the dollar is de-linked from oil; it will no longer serve as the de-facto international currency and the US will be forced to reduce its massive trade deficits, rebuild its manufacturing capacity, and become an export nation again. The only alternative is to create a network of client regimes who repress the collective aspirations of their people so they can faithfully follow directives from Washington.

As to whether the Bush administration would start a war to defend dollar hegemony; that’s a question that should be asked of Saddam Hussein. Iraq was invaded just six months after Saddam converted to the euro. The message is clear; the Empire will defend its currency.

Iran switched from the dollar in 2007 and has insisted that Japan pay its enormous energy bills in yen. The “conversion” infuriated the Bush administration and has moved Iran to the top of the White House’s target list. In fact, even though 16 US Intelligence agencies issued a report (NIE) saying that Iran was not developing nuclear weapons; and even though the UN’s nuclear watchdog, the IAEA, found that Iran was in compliance with its obligations under the Nuclear Nonproliferation (NPT) Treaty; a preemptive US-led attack on Iran still appears likely.

And, although the western media now minimizes the prospects of another war in the region; Israel is taking the precautions that suggest that the idea is not so far-fetched. “Israel calls for shelter rooms to be set up in a bid to prepare the public for yet another war, this time, one of raining missiles.” (Press TV, Iran)

“The next war will see a massive use of ballistic weapons against the whole of Israeli territory,” claimed retired general Udi Shani.

Russia also sees a growing probability of hostilities breaking out in the Gulf and has responded by sending a naval task force into the Mediterranean Sea and the North Atlantic.

According to an article on the Global Research site: “The flagship of Russia’s Black Sea Fleet, the Moskva guided missile cruiser, joined up with Russian naval warships in the Mediterranean on January 18 to participate in the current maneuvers….The current operation is the first large-scale Russian Navy exercise in the Atlantic in 15 years. All combat ships and aircraft involved carry full combat ammunition loads.

France is also planning military maneuvers in the Straits of Hormuz. Operation “Gulf Shield 01,” will take place off the coast of Iran and will employ thousands of personnel in combined arms operations that will include simulated attacks on oil platforms.”

Exercises are scheduled to take place from Feb. 23 to March 5, and will involve 1,500 French, 2,500 Emirate, and 1,300 Qatari personnel operating on land, at sea and in the air, the ministry said…Around a half-dozen warships, 40 aircraft and dozens of armoured vehicles will be in the war games, Fusalba said.

The Jerusalem Post reports: “An American missile ship set to dock at Haifa port on Monday is equipped with anti-missile defence system that could be deployed in the region in the event of an Iranian missile attack against Israel….The US San Jacinto is an Aegis Cruiser in the Ticonderoga Class …It carries the most advanced underwater surveillance system available today and is equipped with the Aegis Missile System to protect against aircraft and missiles. The ship will remain in Haifa for three days.”

Also, within the last week, three of the main underwater cables which carry Internet traffic to the region have been cut in the Persian Gulf. As a result, three-quarters of the international communications between Europe and the Middle East have been lost. Large parts of the Middle East have been plunged into darkness.

Is this merely a coincidence or is it part of a broader military operation?

Ian Brockwell, of the American Chronicle said:

On the assumption that the cables cut were no accident, we must ask ourselves who would do such a thing and why. Clearly Iran, who were most affected, would gain nothing from such an action and are perhaps the target of those responsible?…Maybe this is a prelude to an attack, or perhaps a test run for a future one?

Communication has always been an important factor in military action, and cutting these cables might affect Iran´s ability to defend itself.

Despite the lack of media coverage, the build-up for war in the Gulf has continued and the probability of a US-led attack on Iran is quite high. Bush is convinced that if he doesn’t confront Iran, then no one will. He also believes that if he doesn’t militarily defend the dollar, then America’s days as “the world’s only superpower” will soon be over. The question is whether Bush will realize that America is already bogged-down in two “unwinnable” conflicts or if he will “go with his gut” once again and lead us into a ruinous region-wide conflagration.

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