One of the big anti-US arguments getting vomited around all the time is that the US ousted Saddam exclusively for cold economic gain (O I L). It keeps coming up - over and over again. Its the big bad brother evil empire conspiracy theory. How does this really hold up under scrutiny?
1. If supporting US business/economic interests is the main goal, and Iraqi oil the main target in this case (not just Iraqi oil, but the strategic resource of oil and how it impacts world markets in terms of price/volume), wouldn't there have been easier ways to get at it?
a. Remove sanctions in early 90's. Let Iraq trade oil, increase supply, and lower prices (no brainer).
b. Leverage US power - economic and military - to support Saddam, get on his good side, and get sweet oil deals "just for us" cause we are his good buddy
c. Develop other areas of cooperation and expand agricultural exports, investment, etc. A big advantage to partnering with dictator is that he is not accountable to people and if we could make it lucrative for him, he could pave the road for US.
Why didn't we do this? This is the obvious road to take if all we wanted was economic gain and Iraqi oil. Isn't it clear that the only reason Saddam stopped liking US is because we stopped liking and supporting him? Its not as if the guy had some ideological grounds. He is just a powerhungry greedy dictator.
2. Are there other examples of US taking policy decisions that hurt us economically regarding volume/price of oil?
a. Libya - didn't the US stop buying oil from Libya and restrict ALL US companies from investing and doing business there?
b. Any other examples folks?
Why on earth would we place any restrictions on the supply of oil if our primary interest was lot's of cheap oil on the market???
Some of this just doesn't make sense in terms of Anti-US premise.
PS - By arguing that US control and theft of Iraqi OIL was not THE reason behind the operation, I realize that OIL was an important consideration in this and other issues/conflicts in Middle East. It is in the interest of US, and most other countries in the world, that there is a free flow of oil into world markets and that no one country or group monopolize this to artificially increase price/decrease supply, or to gain too much control over too much oil that could create risk to supply.
Originally posted by Charles One of the big anti-US arguments getting vomited around all the time is that the US ousted Saddam exclusively for cold economic gain (O I L). It keeps coming up - over and over again. Its the big bad brother evil empire conspiracy theory. How does this really hold up under scrutiny?
1. If supporting US business/economic interests is the main goal, and Iraqi oil the main target in this case (not just Iraqi oil, but the strategic resource of oil and how it impacts world markets in terms of price/volume), wouldn't there have been easier ways to get at it?
a. Remove sanctions in early 90's. Let Iraq trade oil, increase supply, and lower prices (no brainer).
b. Leverage US power - economic and military - to support Saddam, get on his good side, and get sweet oil deals "just for us" cause we are his good buddy
c. Develop other areas of cooperation and expand agricultural exports, investment, etc. A big advantage to partnering with dictator is that he is not accountable to people and if we could make it lucrative for him, he could pave the road for US.
Why didn't we do this? This is the obvious road to take if all we wanted was economic gain and Iraqi oil. Isn't it clear that the only reason Saddam stopped liking US is because we stopped liking and supporting him? Its not as if the guy had some ideological grounds. He is just a powerhungry greedy dictator.
2. Are there other examples of US taking policy decisions that hurt us economically regarding volume/price of oil?
a. Libya - didn't the US stop buying oil from Libya and restrict ALL US companies from investing and doing business there?
b. Any other examples folks?
Why on earth would we place any restrictions on the supply of oil if our primary interest was lot's of cheap oil on the market???
Some of this just doesn't make sense in terms of Anti-US premise.
PS - By arguing that US control and theft of Iraqi OIL was not THE reason behind the operation, I realize that OIL was an important consideration in this and other issues/conflicts in Middle East. It is in the interest of US, and most other countries in the world, that there is a free flow of oil into world markets and that no one country or group monopolize this to artificially increase price/decrease supply, or to gain too much control over too much oil that could create risk to supply.
We shall see.
It's not about theft it's about control. Read the article below. I have read similar articles in newspapers and watched documentaries that explain the same.
"The result is that America can export dollars, which cost nothing to produce, and receive real goods and services in return."
Dr Gavin R. Putland
Brisbane, Australia
March 26, 2003.
From 1944 to 1971, the U.S. dollar was ``backed'' by gold,
meaning that the government agreed to buy and sell gold
for a fixed price in dollars. Other governments did
likewise, leading to fixed exchange rates between their
currencies. In 1971, when U.S. President Nixon abandoned
gold backing, the exchange rate system began to unravel.
Domestically, the U.S. dollar became a ``fiat'' currency,
i.e. a currency whose only ``backing'' is the legal
obligation to accept that currency as final payment of
debts. Internationally, however, there is no such thing
as a fiat currency, and no currency will be accepted as
payment unless it is guaranteed to buy some valuable
commodity.
GOLD TURNS BLACK
In 1973, the Organization of Petroleum Exporting Countries
(OPEC) quadrupled the price of oil but continued to accept
only U.S. dollars in payment, so that the demand for
dollars soared. From then on, the dollar was effectively
backed by oil instead of gold -- and the U.S. government
didn't even have to own the oil!
Because dollars can buy OPEC oil, countries that need to
import oil -- i.e. most developed countries -- will accept
dollars as payment for their exports. Hence everyone who
needs to buy from those exporters will accept dollars as
payment for other things, and so on, so that the dollar is
the preferred global currency. To pay their bills,
importers must have reserves of dollars. To prop up their
currencies against speculative attacks, the central banks
of all countries must have reserves of dollars. To get
capital, poor countries must borrow dollars, and to
service these debts they must export goods to obtain more
dollars. About 2/3 of all currency reserves, more than 4/5
of all currency transactions, more than half of the
world's exports, and all loans from the International
Monetary Fund(IMF) are denominated in dollars. As these
things create demand for the dollar and shore up its
value, OPEC is the more willing to accept payment in
dollars. So the system is self-reinforcing.
The result is that America can export dollars, which cost
nothing to produce, and receive real goods and services in
return. As long as those dollars are spent outside
America, they don't cause domestic inflation. And when
they eventually find their way into foreign reserves, they
can only be invested in American assets. This continuous
flow of foreign investment (on the ``capital account'')
props up the American real-estate market and stock market,
and allows America to run a mammoth trade deficit (on the
``current account'') without devaluing the dollar.
America's imports now exceed its exports by almost 50% (or
5% of GDP) and its foreign debt is 60% of annual GDP.
If OPEC were to abandon the dollar in favour of some other
currency, the whole process would slam into reverse.
America could no longer export paper dollars for real
goods and services. Corporations and central banks would
sell their dollar reserves, causing the value of the
dollar to plummet. The redemption of dollar reserves
would force sales of the assets in which those dollars are
invested, so that the American property and stock markets
would crash. Other investors who have bought American
property and stocks with borrowed money would declare
themselves bankrupt, causing some American banks to
collapse under the weight of bad debts. The newly
liberated dollars could only be spent on American goods
and services, which would begin to flow out of the country
(reducing living standards), while the glut of dollars
chasing these same goods and services would cause massive
domestic inflation. The flow of foreign investment would
dry up, so that America could no longer run a trade
deficit, but would have to export yet more goods and
services to pay for its imports, and to service its
massive foreign debt, and to accumulate reserves of the
new global currency -- whatever that currency might be...
EUROPE STRIKES BACK
In 1999, eleven member states of the European Union (EU)
adopted the euro as a common accounting currency. Greece
joined the Euro Zone a year later. On January 1, 2002,
the twelve countries withdrew their old money from
circulation, completing the biggest currency reform in
history.
The Euro Zone already has a bigger share of world trade
than the USA. In particular, it imports more oil than the
USA and is the main trading partner of the Middle East.
It offers higher interest rates than the USA, but does not
have a huge foreign debt or trade deficit. These things
inspire confidence in the euro. It was perhaps for that
reason that in 2002, China started converting some of its
currency reserves from dollars to euros, while North Korea
abandoned the dollar and started using euros for trade.
The strength of the euro also encourages expansion of the
EU and puts pressure on current members Denmark, Sweden
and the U.K. to join the Euro Zone. In December 2002, ten
new countries were accepted for EU membership with effect
from May 2004. This will create a common market of 450
million people, which will buy more than half of OPEC's
oil.
In summary, the only argument for preferring dollars to
euros is that dollars can buy oil. As that argument does
not affect OPEC, it would make sense for OPEC to convert
its reserves to euros by mid 2004. If OPEC were then to
price its oil in euros, it would increase demand for the
euro, causing a huge increase in the value of its new euro
reserves. These possibilities are not discussed in the
U.S. media.
ROGUE STATES
The first OPEC member to show serious disloyalty to the
dollar was Iran. Since 1999, Iran has been talking about
pricing oil in euros. In January 2002, George W. Bush
named Iran in his ``axis of evil'' although the country is
experimenting with democracy -- something that the USA, if
true to its professed values, would want to reward and
encourage. Undeterred, Iran converted most of its
currency reserves to euros during 2002, and a proposal to
price oil in euros is being considered by the central bank
and the parliament.
Let us see whether the Americans find an excuse to topple
Iran's fledgling democracy and to replace it with a
dictatorship that just happens to prefer dollars to euros.
The second offender was Venezuela. In 2000, Venezuela's
twice elected president Hugo Chavez called a conference on
the future of fossil fuels and renewable energy. The
report of the conference, delivered by Chavez to the OPEC
summit in September 2000, recommended that OPEC set up a
high-tech electronic barter system, so that members could
trade oil for goods and services without the use of
dollars or any other currency. The chief beneficiaries
would be OPEC's poorer customers, who did not have large
currency reserves. Chavez made 13 such deals. In one of
them, Cuba provided health services in Venezuelan
villages.
In April 2002 there was a coup against Chavez. The coup
was welcomed by the Bush administration and by editorials
in numerous American newspapers, but collapsed two days
later, leaving evidence that the U.S. administration was
behind it [1].
The third and most blatant offender was Iraq. In October
2000, Saddam announced that Iraqi oil would be sold for
euros instead of dollars, with effect from November 6.
Soon afterwards, Saddam converted Iraq's entire $10
billion``oil for food'' reserve fund from dollars to
euros. These facts went unreported in the U.S. media.
George W. Bush assures us that Iraq's oil belongs to the
Iraqi people. But any asset priced in dollars is at least
partly an American asset because it adds to the demand for
dollars, allowing America to export more dollars and
receive more goods and services in return. So the test of
America's sincerity will be whether its new regime in Iraq
continues to accept euros for oil.
If the U.S. profits in any form as a result of unseating Saddam, more power to it—it deserves it. That doesn't mean that this is the reason the U.S. ousted the dictator.
______
"All in all, a great day if you believe stopping the proliferation of chemical, biological and nuclear weapons is a good thing. But, it was a very bad day indeed if world security takes a back seat to your personal hatred of George W. Bush."
We will always remember.
We will always be proud.
We will always be prepared
So that we may always be free!
So now its not the oil itself, but the currency nominally used to buy and sell oil? Maybe.
So US survived dropping gold in the early 70's, as well as the oil crisis. Other countries with "hard" currencies that are freely exhanged on the open market have survived even though their currencies don't carry a ben franklin backed by "oil."
Now if the US was forced to accept having to use foreign currency to purchase imported goods, i.e. the dollar collapsed and became a soft currency, then we would have some troubles. But those troubles would lead to decreased import consumption. This would hurt net foreign exporters much more than US. Most goods bought/sold in the US could be made in the US (and were once). There is no reason why they couldn't again. If that happened it might actually be a bit painful, but good for the US. Why would I buy a crap piece of Chinese clothing for x$ if I could get the same US product for x$ ???
So its a balancing act I guess. US is a very lucrative and open market where other countries sell their products. We will buy them with $$$. You will sell them with $$$. If it becomes too expensive for consumers to buy imports because of weak $$$, we will purchase domestic. By the same token, a weak $ makes our goods more competitive on the world market.
I don't see any dramatic shifts any time soon. Financial exchange systems evolve and adapt. The US has a strong and productive economy on the whole (and historically), and the world's economy continues to integrate with ever increasing dependencies.
I will let you know if the sky starts falling.
BTW - what is the overall number for crude oil exports of producing countries/year. Interesting to compare to overall US GNP on the one hand, and combined GNP of top oil consumers on the other.
OK. But that doesn't change the argument. The US has a lot of power and influence in addition to the USMC, and if our policy was guided exclusively by the desire to steal oil, or "control" oil, we could leverage that power to dominate through supposedly peaceful means and never have to resort to war. We would support anyone who would return the favor. Why did we stop supporting Saddam and later kick his butt out of Kuwait? Why won't we let our companies buy oil from Libya? We could squash any competitors if we wanted to. The French beating us in a deal for Saddam's oil? Of course they did give him a few nuclear reactors...Or the Russians? That's funny.
Our problem (it seems) is that we allow our policies, however imperfect they may be, to be influenced by moral principles.
OK The world may get rid of dollars and start buying oil for euros. It does not mean that US dollar or US economy is going to collapse. US economy is self-sufficient, US will always find ways to buy oil, and US goods will be more competitive because they are gonna be much cheaper. Europe on the other hand will boost it's exports, because oil exporters will have euro reserves and thuswhy prefer EU products. It will actually harm USA, and pretty bad. But collapse? No. Maybe 3-5 years of lower standard of living than it was before.
Argument about US invading Iraq and possibly Iran for the sake of controlling oil is wrong. Know why? - because both Iraq and Iran are 'axis of evil' from some point of view or another, and WHATEVER they say about the evil empire that slams democratic governments and installs dictators, Iran is now ruled by islamists that are hated by persians more than Saddam was hated by Iraqis, and Iran and Iraq are not the only countries that have oil. Real reason to add them to so called 'axis of evil' is that these 2 countries are ruled by islamists, Iran supports terrorists, and Iraq would as well if it didnt have santions imposed. Islamic, or better to say muslim, society, and islam itself as a religion is not evil - it's just like any other one. Problems arise when governments are ruled by islamists (buddists, christianists) that hate USA, hate freedom, and want to impose as many limitations and rules as possible. Human nature simply does not accept being oppressed in any way - oppression is the cause of anger, that is smartly directed towards USA. What do you think, arabic men and women that burn 10000 US flags a day, know about currency system, goods and oil exports and imports, and so on? They only know that they live like sh!t, and reason for it is somehow america.
Actually US could start doing something about it now. First of all, move to hydrogen cars, nuclear power plants, more recycling, other measures - to lessen imports of raw materials. Second, US could cut social spendings and foreign aid and use big part of it's yearly budget to pay off foreign debt. Third, US could buy foreign companies - major exporters to the US - thru 3rd parties and move production lines to NAmerica. Or just ban all imports from outside.
Now imagine yourself that oil exporters dont make money because US buys much less oil, EU and Asia lost huge piece of market to sell their products, and 3rd world countries that depent on cheap exports to the USA would just collapse.
'What a beautifull daaaay'
€ and $ in oil trade ....... news dating before the war started ....
Just can't stay away, huh, noworth? I knew it.
______
"All in all, a great day if you believe stopping the proliferation of chemical, biological and nuclear weapons is a good thing. But, it was a very bad day indeed if world security takes a back seat to your personal hatred of George W. Bush."
We will always remember.
We will always be proud.
We will always be prepared
So that we may always be free!
Originally posted by DaveDom
"The result is that America can export dollars, which cost nothing to produce, and receive real goods and services in return."
Talk about oversimplification. If this statement were true, we could take care of the national debt in a matter of weeks, if not days. I'm surpirsed none of the Democratic candidates have proposed this.
DaveDom: Do you really beleive this satement ? Please tell me that you have more intellectual capacity and knowledge of monetary systems than to take this satement at face value. (Get it? Face value?)
Charles,
Your solutions were tried and executed already for the last 30 years. It was France who did exactly what you described. Unfortunately for the Iraqi citizens though. French get richer and Iraqis get poorer. Except of course the Bath Party, they got richer too. Strange bedfellows. Even the French with all their good buddy influence didn't try to stop the Saddam attrocities.
And know they are scrambling to recover the oil deals that have been dropped.
It's know wonder they vetoed.
