While this site won’t normally become a political commentary forum, my good friend Adrian has inspired me to put down some of my thoughts about what is really happening in the international world. A lot of people have linked the war in Iraq with oil, WMDs or even to the failure of George Bush Snr in the first Iraq war however I think there is something much more straight forward going on.
As a rule the powerful like to stay powerful and in the modern world that is achieved by two things economic and military might. And while I feel the invasion was to show the world they had the will and the means to invade anyone they don’t like (sending the terrorist a message just like did after the Munich Olympics murders) there is a greater economic reason. Most people are aware that the USA has incredible deficits. The country is only saved from a major financial crisis by the fact everyone else in the world is willing to invest in their country but most importantly buy their dollars.
In November 2000 the Iraq Government decided to stop using the US dollar for it’s international purchases or to sell it’s oil (under the discredited food for oil problem). This decision was mostly made for political reasons however it showed the world that there was an alternative to the US dollar, the European dollar (or euro). This decision actually made the Iraq people a lot of money because as a consequence the US dollar fell (see UK Guardian article).
Unfortunately for the Iraq government just as the US government would later make a military example of them under the same principle the US could not afford to let make an economic example for the rest of the world. This could lead to the new domino effect of other OPEC countries doing the same. The consequences of all OPEC nations suddenly changing to the euro is summed up in this quote: “..the effect of an OPEC switch to the euro would be that oil-consuming nations would have to flush dollars out of their (central bank) reserve funds and replace these with Euros. The dollar would crash anywhere from 20-40% in value and the consequences would be those one could expect from any currency collapse and massive inflation (think Argentina currency crisis, for example). You’d have foreign funds stream out of the U.S. stock markets and dollar denominated assets, there’d surely be a run on the banks much like the 1930s, the current account deficit would become unserviceable, the budget deficit would go into default, and so on. Your basic third world economic crisis scenario.
The United States economy is intimately tied to the dollar’s role as reserve currency. This doesn’t mean that the U.S. couldn’t function otherwise, but that the transition would have to be gradual to avoid such dislocations (and the ultimate result of this would probably be the U.S. and the E.U. switching roles in the global economy).” This quote is included in the excellent essay written by William Clark in January 2003 and revised in March 2003 which I strongly recommend people read to understand the major reasons for interference around the world. By all rights the US should not be able to live the life it currently does, it’s major export is US dollars and it’s citizens current living standards are based on the rest of the world underwriting it. It’s also worth noting that while the US has supported the European Union in the past they did not support the common currency. Any country that could affect trade volumes that tried to move away from the US dollar will face very serious consequences. The moment that Venezuela moves to the Euro this democratically elected government will be removed.
If it was all about WMDs North Korea would have been invaded first. A war is been waged right now and it is very much about economic power and ensuring that the US stays on top. It’s a war that affects all countries including Australia (watch what would happen if we tried to introduce a pacific dollar). If the free market really ruled China and India would now be running the place as they have the most productive goods the rest of the world wants. Other more recent articles on this issue include:
War is Money by Mark Radulich