Adamant: Hardest metal
Saturday, April 5, 2003

Defending the dollar

The Natal Witness DUNCAN DU BOIS Writing in the Sunday Times on March 30, Judge Richard Goldstone stated that there were only two lawful ways in which the U.S. could use military force against Iraq. One was if the UN Security Council sanctioned it; the other was in the case of "dire self-defence". The U.S. war against Iraq is in dire defence of dollar imperialism against the threat of the euro. Put another way, the war is about world economic dominance. That, according to Australian analyst Geoffrey Heard, is the reason for the Bush Administration's determination to oust Saddam Hussein's regime, because his policy of selling oil in euros is threatening U.S. global hegemony. The origin of Establishment America's problem with Iraq goes back to 1999 when Iraq broke ranks among the oil producers and began to trade its oil in euros instead of U.S. dollars. As Heard notes, under an Opec agreement all oil has been traded in greenbacks since 1971. America's monopoly of the oil business has premised the U.S. dollar's supremacy among world currencies. Initially the U.S. scoffed at Iraq's move to the euro but by 2001 disdain had turned to alarm. Iran indicated an interest in changing to euros while Russia has been seeking to increase its oil production aimed at European sales - in euros, of course. Venezuela, the world's fourth largest producer, has been cutting out the dollar in its dealings and bartering with various countries, including Cuba. The net result of these developments meant that the dollar's stranglehold on oil was slipping and with it America's dominance of world trade. With Iraq having the world's second largest oil reserves, the American Establishment, which is sodden in oil investments, simply had to act against Saddam - even if it meant going to war. The alternative was the meltdown of the U.S. economy. America was in serious trouble long before the Al-Qaeda attacks of September 11, 2001. Its real threat came not from the Middle East so much as from the EU with its new currency, the euro. Commanding 40% of world trade, the EU poses a major challenge to continued U.S. dominance. If only a few Opec members switched to euros, argues Heard, that would hurt the U.S. in two critical ways: it would result in a stronger euro and an increase in the "eurozone" and it would trigger dollar dumping and depress the greenback's value. With the dollar facing bleak times, the only thing left for the Bush administration as the proxy of Establishment America (Al Gore would have had to have done the same) was to come out fighting. In one respect, Bush has been very frank about the purpose of this war. He has said it is to protect the American way of life. Indeed. And that means ensuring the reign of dollar imperialism. The war against Iraq is, therefore, a war both to defend and to assert dollar dominance. Heard sees four objectives for the U.S. in this war:

  • return Iraq's oil reserves to the dollar circle;
  • send a clear message to other oil producers as to what will happen to them if they try to leave the dollar zone;
  • deal a setback to the EU and its euro;
  • use the war as a cover to get Venezuela's oil back into the dollar circle by means of covert CIA action. The cost of the war is not measured in terms of the images shown on our television screens. In fact, in Uncle Sam's view the cost of going to war is negligible compared to the cost of not going to war. The possible loss of U.S. power and the end of dollar imperialism, as far as Washington is concerned, far exceeds all other considerations. The final aspects of Heard's analysis provide insight as to the positions of Australia and the UK. Having significant U.S. dollar reserves and strong trade links with the U.S., it is in Australia's interests to support the U.S. and to see to it that the ascendancy of the euro is checked. Britain, which has yet to adopt the euro as its currency, stands to gain time and room to manoeuvre by siding with the U.S. A U.S. victory would also, in effect, give the EU principals, France and Germany, bloody noses and place the UK in a position either to demand a better deal from the EU for adopting the euro or to distance itself from Europe and to align with America. A weakened and divided EU is a U.S. policy strategy. Whose side should South Africa be on? It's really a case of Hobson's choice. When the U.S. economy went concave in 1929, the whole world was sucked in to its depression. Only the mad mullahs would want a repetition of that. Which is why the anti-U.S. rhetoric of the ANC government, compounded by Nelson Mandela's virulent anti-Bush remarks, is shortsighted. It would have been far better to have adopted a neutral stance, particularly since an election is due in a year's time. In 1999 the ANC's election expenses enjoyed considerable American and Middle Eastern funding. Given the physical and political costs of the war, the chances of a repeat of such funding in 2004 must range from uncertain to unlikely. Nonetheless, the aftershocks of the war on Iraq may cost the ANC dearly.
  • Duncan du Bois is a DA Durban Metro ward councillor. He writes in his personal capacity.

Publish Date: 4 April 2003

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