Tuesday, March 27, 2007

Heinberg on US aggression against Iran

April 2007 -- Richard Heinberg

Iran: We Will Know Soon…

For the past two years or so informed commentators (including Seymour Hersh and Scott Ritter, among others) have been predicting a US air attack on Iran. MuseLetter for March 2005, titled “Onward to Iran,” summarized relevant information available at that time. In recent months concern over America’s intentions has grown even more intense, to the point that it has become the fulcrum of nearly every discussion about the future of world affairs.

As many have pointed out, an attack could have cataclysmic implications for the region, for the world economy, and not least for the oil import-dependent and nearly bankrupt US. Recently Rolling Stone magazine convened a panel of experts to assess the situation in Iraq (“Leaving Iraq: The Grim Truth,” by Tom Dickinson, March 7, www.rollingstone.com/politics/story/13710030/leaving_iraq_the_grim_truth). The panel, which included such policy luminaries as Zbigniew Brzezinski (Jimmy Carter’s national security advisor) and Richard Clarke (counter-terrorism advisor to four presidents), concluded that the war in Iraq is lost. In the course of the discussion, Bob Graham, former chair of the Senate Intelligence Committee, made the following comment: “This administration seems to be getting ready to make—at a much more significant, escalated level—the same mistake we made in Iran that we made in Iraq. If Iraq has been a disaster, this would be multiple times Iraq. The extent to which this could be the horror of the twenty-first century is hard to exaggerate.”

Recent crucial events include the passing of the UN-imposed deadline for Iran to halt uranium enrichment, the stationing by the US of two aircraft carrier battle groups—the Eisenhower and the Stennis—in the Persian Gulf, a meeting in Baghdad attended by delegations from both Iran and the US, and the imposition of toughened economic sanctions by the UN Security Council.

The conjunction of the negotiations in Baghdad over regional issues (the US cannot extricate itself from Iraq without help from Iran and Syria) with the successful drive for increased UN economic sanctions (a drive led, of course, by the US) suggests that conflicting policies are being pursued in Washington. This appearance may result from an intentional effort to pressure the Iranians at the bargaining table. However, another interpretation of the situation is gaining ground among curious observers—that there is no single pilot steering the US ship of state, and that at least two groups are struggling to control the wheel (see Kaveh L Afrasiabi, “US and Iran: Squint-eyed double-dealing,” Asia Times online, March 17, www.atimes.com/atimes/Middle_East/IC17Ak01.html)

On one side of the policy battle are Dick Cheney and the remaining administration neoconservatives, now confined mostly to the vice president’s office. On the other side are the so-called foreign policy realists or pragmatists—Brent Scowcroft, James Baker III, Henry Kissinger, and Zbigniew Brzezinski, among others—many of whom worked for the senior Bush when he was president. Condoleeza Rice appears, at least sometimes, to side more with the latter than with Cheney. The “decider” himself is caught in the middle: upon the recent release of the Iraq Study Group (ISG) report—a salvo from the realists—he appeared to snub its findings. Some analysts see family psychology playing a role here: the younger Bush reportedly hated early life under his father’s shadow and dreads being considered a failure (which he was, in previous careers); hence his resistance to pragmatic suggestions regarding a troop pullout from Iraq may be motivated as much by adolescent psychology as military strategy. George the younger must prove himself—at whatever cost to the nation or the world. If this view of the situation is at all accurate, the fate of the planet may hang upon a family drama whose tragic overtones bridge Macbeth and Dallas.

Recent events suggest that the pragmatists are advancing, even if they have not yet gained the upper hand. Donald Rumsfeld’s departure was a clear indication of this, as was his replacement by ISG member Robert Gates as the new defense secretary. Moreover, several Army generals, incensed by the damage done to the US military’s fighting capacity by the prolonged and poorly managed Iraq campaign, have reportedly threatened to resign if the order comes to attack Iran.

The arguments against such an attack are overwhelming. It would solve nothing strategically: it would not end Iran’s nuclear program and would not result in regime change. While arguably it would be of short-term political benefit to the administration (which could use the event to rally the public, crack down on dissent, and lash out at the political opposition in Congress), in order to actually mount an attack it would be necessary to persuade many outside the president’s and vice president’s offices of the need for such action. Cheney can’t fly the planes himself; indeed, several branches of government would have to participate in—or at least refrain from sabotaging—the attack plans. And to sell those plans to senior officers in the armed forces, as well as high officials in the CIA and the State Department, there would need to be some perceived benefit or threat sufficiently compelling so as to override the general war-weariness and Cheney-wariness that has gripped Washington.

Meanwhile, however, it appears that the preparations for such an attack continue. On this score, Seymour Hersh’s ongoing reportage in The New Yorker is essential reading. His latest, “The Redirection” (March 5, www.newyorker.com/reporting/2007/03/05/070305fa_fact_hersh), details how the Bush administration is now cementing new alliances with radical Sunni organizations in order to undermine Iranian influence in Iraq. Hersh quotes Flynt Leverett, a former Bush administration National Security Council official, as saying, “This is all part of the campaign of provocative steps to increase the pressure on Iran. The idea is that at some point the Iranians will respond and then the Administration will have an open door to strike at them.”

Hersh notes that the US military has arrested and interrogated scores of Iranians within Iraq in an effort to build a case against Tehran. Clandestine US operations are ongoing in Iranian territory, and “a special planning group has been established in the offices of the Joint Chiefs of Staff, charged with creating a contingency bombing plan for Iran that can be implemented, upon orders from the President, within twenty-four hours.” This Iran planning group has recently “been handed a new assignment: to identify targets in Iran that may be involved in supplying or aiding militants in Iraq. Previously, the focus had been on the destruction of Iran’s nuclear facilities and possible regime change.”

Perhaps the most ominous bits of recent news concern Russia: for the past few weeks that nation has been delaying delivery of nuclear fuel to Iran, and is now withdrawing all 2000 of its technicians at the Bushehr nuclear plant. This is predicated on the excuse that Iran is in arrears on payments for Russian fuel and services, despite the fact that 90 percent of the bills have been paid. Speculation is swirling that Russia, anticipating a near-term US or Israeli air bombardment, is moving its trained personnel out of harm’s way, and minimizing nuclear material on site so as to reduce the release of deadly radiation from the attacks.

Iranian president Mahmoud Ahmadinejad’s March 23 cancellation of an anticipated UN speech also suggests that something is up—but what? Is this a response to political problems back home (his continued tenure as president is far from given), or does it have to do with international relations involving the US, the UK, and Iraq—perhaps knowledge of an impending attack?

So, we are faced with three questions: whether a US air attack on Iran will occur; and, if that is now inevitable, how it will be justified and how it will unfold.

On the first question there is a division of opinion among analysts, with Hersh and Ritter contending that an attack is inevitable, and others like Henry C. K. Liu (of Asia Times online) arguing that the US is already beaten in Iraq, that it has nothing to gain from expanding the war to Iran, and that the tough talk and aircraft carrier deployments are intended only to gain a better bargaining position vis-à-vis Tehran when it comes time to decide Iraq’s future.

While the first question is by far the more important, the answer to the second and third will nevertheless be instructive if the Hersh/Ritter analysis is correct. In order for the attack to proceed, a pretext will be necessary, and the nature and strength of the pretext will reveal a great deal about the behind-the-scenes strengths and weaknesses of the various players, and give clues to how events might proceed. Here are the main possibilities:

1. Domestic terrorism. Zbigniew Brzezinski, in remarkable testimony on the first of February to the US Senate Committee on Foreign Relations, said: “A plausible scenario for a military collision with Iran involves Iraqi failure to meet the [UN] benchmarks; followed by accusations of Iranian responsibility for the failure; then by some provocation in Iraq, or a terrorist act in the US blamed on Iran; culminating in a ‘defensive’ US military action against Iran that plunges a lonely America into a spreading and deepening quagmire eventually ranging across Iraq, Iran, Afghanistan, and Pakistan.”

The inclusion by Brzezinski of the phrase “a terrorist act in the US blamed on Iran” caught the attention of many, especially those who believe that the attacks of September 11, 2001 were in some way facilitated by the current administration in order to provide a basis for its “war on terror” and the invasion of Iraq. Clearly, another domestic terrorist incident, this one tied somehow to Iran, would galvanize vociferous domestic support for military action against that nation, thus rendering it the most effective possible pretext for an attack.

However, absent real Iranian terrorist activity within the US, it is a pretext that would require a significant level of secrecy and coordination to arrange. If this pretext materializes, it will likely signify that intelligence units answering directly to the vice president’s office and operating independently of the CIA are still highly capable, and that the ability of the remaining neocon factions to organize internal government support for highly risky secret operations is high. This would be the worst scenario in terms of its impact on the future of Americans’ civil liberties.

2. A (faked?) Iranian attack on a US vessel or other asset in the Middle East. This would likewise constitute a very strong pretext for war, and would likewise be difficult to arrange—though perhaps easier than a major domestic terrorist incident. American vessels would have to provoke Iranian forces into attacking them, or an Iranian attack would have to be staged (like the Tonkin Gulf incident that served as the pretext for the expansion of American military involvement in Vietnam). A somewhat convoluted but intriguing scenario: Israeli warplanes bomb Iranian nuclear research facilities (see pretext number 3 below), then sink an American vessel on their way home; the incident is blamed on the Iranians. The notion of Israel attacking an American military ship might seem farfetched, but there is a precedent: In 1967 Israeli forces attacked the USS Liberty, a reconnaissance vessel, killing 34 US sailors and injuring 172. That incident, possibly an effort to prevent the Liberty from picking up signals that that would have tipped off the US to an Israeli military push into Syria the following day, was promptly covered up by both nations.

In its mildest form, this pretext might consist simply of a seizure by Iranians of British or American sailors—which of course actually occurred on March 23, as well as on an earlier occasion in 2004. Such an action is easy to provoke, but making it the pretext for a large-scale attack would require some effort. The fact that the US has kidnapped several Iranians within Iraqi territory over the past few months (as detailed by Hersh) is of course relevant to the assessment of whether equivalent Iranian behavior constitutes a pretext for war, but it has hardly been noted by most of the Western press.

3. An Israeli attack on Iranian nuclear facilities, with an Iranian military response. This would again be a very strong pretext for US action, and there is the widely discussed historical precedent of Israel’s aerial bombardment of the Osirak nuclear facility near Baghdad in 1981 (in that instance, the French withdrew all of their technicians prior to the bombing—is Russia following the same script today?).

In this case, the Democratic Party leaders in America would not only support a military attack on Iran; they would lead the charge. Never mind if it were a disastrous policy with little support from the public—few if any politicians in Washington would criticize it. (In fact, there is very little Democratic opposition to hostilities with Iran with or without direct Israeli involvement.)

There is support at high levels in Israel for such an attack: following the disastrous campaign against Hezbollah in Lebanon last year, some Israeli policy analysts drew the lesson that the largely Shi’ite organization cannot successfully be countered until its support from Iran is cut off. But Israeli military and intelligence officials are by no means unanimous in backing such an attack: it could easily boomerang, like the campaign in Lebanon, leaving Israel in a much worse strategic position, further isolated within an angry, destabilized Middle East.

There are also diplomatic challenges to the plan: for it to work, Israeli planes would have to over-fly the airspace of Syria, Jordan, Saudi Arabia, Iraq, and/or Turkey. From the viewpoint of the Arab masses, leaders of these nations would be seen as colluding with Israel in its attack if they gave permission or failed to launch anti-aircraft missiles or interceptor jets. Therefore Arab leaders are likely to resist participation in the plan, and US diplomatic efforts would be necessary to overcome such resistance. Saudi Arabia and other Sunni-dominated nations in the region are already lined up against Tehran, partly as a result of US lobbying.

Moreover, in order for the plan to succeed, Iran would have to respond to the attack by firing missiles into Israel or at US warships. This is not a given, as the wisest thing for Tehran to do tactically would be to play the victim and respond only diplomatically. It is useful to remember that it is not hot-headed Ahmedinejad who has final authority over military decisions for the country, but the more moderate-minded supreme guide Ayatollah Khamenei. Nevertheless, Iranian leaders have vowed to respond with force, and options include closing the Strait of Hormuz and lobbing missiles not only at cities in Israel, but also at US military garrisons in Iraq and major oil terminals in Saudi Arabia.

4. Violence in Iraq that can be pinned on Iran. This would be easy enough to arrange, since there is plenty of violence in Iraq on all sides. But it would be a relatively weak pretext, and domestic support within the US for an attack in response would not be a given.

In any case, the situation within Iraq is of vital interest to both the US and Iran, and the interaction of those interests is complex and unstable. It is in many ways to Iran’s advantage to keep the US bogged down by sectarian violence, while simultaneously promoting the maintenance of a unified, Shi’ite-led Iraqi government. Iran seeks to keep Washington in a no-win stalemate, where the latter cannot withdraw its troops yet cannot impose “democracy” without incurring politically and militarily unbearable costs. The end result could be a precipitous decline in American influence, and not only in the Middle East. But this is a risky strategy for Tehran, since overt Iranian intervention in southern Iraq would offer Washington the pretext for attacks on Iranian research and military installations. It is also risky because an overt attempt by Tehran to assert leadership in Shi’ite southern Iraq could, in Henry Liu’s words (in “Iran and the Failed US Iraq Policy,” Asia Times online, March 21, www.atimes.com/atimes/Middle_East/IC21Ak07.html), “cause a backlash and damage the spiritual prestige and theological influence of Tehran and Qom in Shi'ite communities in the wider Arab world, alienating the very elements Iran aims to rally against the US infidel.”

Meanwhile, as noted above, Seymour Hersh in “The Redirection” reports that the US, nervous about growing Iranian power in the region, is increasingly supporting Sunni Islamist groups both in and outside of Iraq, hoping to oppose them against Shia groups aligned with Tehran—a strategy that likewise raises serious long-term risks, since most of the violence currently being directed against the US occupation comes from the Sunni-led resistance. The US could, in other words, merely be funding and arming its own worst enemies.

5. Iranian progress on a nuclear weapon. This would be difficult to prove or disprove, making it the weakest of the available pretexts. However, it might be the easiest to arrange: all that would be necessary would be another presentation before the UN like Colin Powell’s prominent performance prior to the Iraq invasion. Grainy satellite photos could be displayed, with appropriate captions for the benefit of those who cannot immediately tell an underground nuclear weapons laboratory from an ordinary railroad tunnel. Unfortunately, such a presentation, by itself, would likely fail to garner the needed degree of domestic or international support for an attack, given its well-remembered precedent.

6. An accident or misunderstanding. Just by ratcheting up tensions and putting more forces in the region, the US makes a miscalculation on either side more likely. Of course, if either side wants and intends a miscalculation to occur, this becomes much more likely. Once events have proceeded to the level of pretext 2, then they acquire an unstoppable momentum of their own.

Currently events are unfolding very quickly. Things to watch over the days ahead include the resolution of the matter of the seized British sailors; Iran’s response to the new UN sanctions; and the fate of the second round of official discussions, scheduled for early April in Turkey, which is expected to include Secretary of State Condoleezza Rice and her Iranian and Syrian counterparts.

If an attack does ensue, the immediate consequences could be moderate to catastrophic—with the moderate effects being more likely, since everyone has had time to think through the various scenarios and is likely to follow through on scripted actions and responses. The longer-term prognosis is not as favorable, as those scripted responses go only so far. The US, Europe, Russia, China, and India all have vital interests in the region, and a general explosion of Sunni-Shia violence could draw these interested parties into conflict. At the very least, we are likely to see an expansion of the chronic violence in Iraq spreading outward throughout the Middle East and perhaps Central Asia as well, with an arc of chaos extending from Pakistan to Saudi Arabia. The worst case is painful to contemplate. If the US and/or Israel follow through on their implied threats to deal militarily with Iran, this may constitute the most dangerous and fateful international gamble in decades.


No, the Iran Oil Bourse is not a casus belli…

A number of writings have recently appeared with the thesis that the announced plans of the Teheran government to institute a Teheran Oil Bourse, perhaps as early as this month, is the real hidden reason behind the evident march to war on Iran from the Anglo-American powers. The thesis is in our opinion mistaken for many reasons, not the least, that war on Iran has been in planning since the 1990’s, as an integral part of the US Greater Middle East strategy.

More significantly, the Oil Bourse argument is a Red Herring that diverts attention from the real geopolitical grounds behind the march towards war which have been detailed on this website, including my piece, ‘Calculating the Risk of War in Iran’ which was posted on GlobalResearch.ca on January 29, 2006

In 1996, Richard Perle and Douglas Feith, two neo-conservatives later to play an important role in formulation of Bush Administration Pentagon policy in the Middle East, authored a paper for then-newly-elected Israeli Prime Minister, Benjamin Netanyahu. That advisory paper, ‘A Clean Break: a New Strategy for Securing the Realm,’ called on Netanyahu to make a ‘clean break from the peace process.’ They also called on Netanyahu to strengthen Israel’s defenses to better confront Syria and Iraq, and to go after Iran as the prop of Syria.

More than a year before President Bush declared Operation Shock and Awe against Iraq, he made his now infamous January 2002 State of the Union address to Congress in which he labelled Iran, along with Iraq and North Korea, as the ‘Axis of Evil’ trio. This was well before anyone in Teheran was even considering establishing an oil bourse to trade oil in various currencies.

The argument by those who believe that the Teheran Oil Bourse would be the casus belli, the trigger pushing Washington down the road to potential thermonuclear annihilation of Iran, seems to rest on the claim that by openly trading oil to other nations or buyers in Euros, Teheran would set into motion a chain of events in which nation after nation, buyer after buyer, would line up to buy oil no longer in US dollars but in Euros. That in turn, so goes the argument, would lead to a panic selling of dollars on world foreign exchange markets and a collapse of the role of the dollar as reserve currency, one of the ‘pillars of Empire.’ Basta! There goes the American Century down the tubes with the onset of the Teheran Oil Bourse…Reality is a little different.

Some background considerations

That argument fails to convince for a number of reasons. First, in the case of at least one of the Oil Bourse theory writers, their argument is based on a misunderstanding of the process which I described in my book, A Century of War, regarding the creation in 1974 of ‘petrodollar recycling’ in the wake of the orchestrated 400% OPEC oil price hike, a process with which then-US Secretary of State Henry Kissinger was deeply involved.

The dollar then did not become a ‘petrodollar’ although Kissinger spoke about the process of ‘recycling petrodollars.’ Instead what he referred to was the initiation of a new phase of US global hegemony in which the ‘petrodollar’ export earnings of OPEC oil lands would be recycled into the hands of the major New York and London banks and re-lent in form of dollar loans to oil deficit countries like Brazil or Argentina, creating what soon came to be known as he Latin American Debt Crisis.

The dollar at that time had been a fiat currency since August 1971 when President Richard Nixon first abrogated the Bretton Woods Treaty and refused to redeem US dollars held by foreign central banks for gold bullion. The dollar floated against other major currencies, falling more or less until it was revived by the turbo change of the 1973-4 oil price shock.

What the 1973 oil shock achieved for the sagging dollar was a sudden injection of global demand from nations confronted with 400% higher oil import bills. At that time, by postwar convention and convenience, as the dollar was the only reserve currency held around the world other than gold, oil was priced by all OPEC members in dollars as a practical exigency.

With the 400% price rise, nations such as France, Germany, Japan and other importers suddenly found reason to try to buy their oil directly in their own currencies—French Franc, German Deutschemarks or Japanese Yen—in order to lessen the pressure on their rapidly declining reserves of trade dollars. The US Treasury and Pentagon made certain that did not happen, partly with some Kissinger secret diplomacy, bullying threats, and a whopping big US military agreement with the key OPEC producer, Saudi Arabia. At that time it helped that the late Shah of Iran was seen in Washington to be a vassal of Kissinger.

The point was not that the dollar became a ‘petro’ currency. The point was that the reserve status of the dollar, now a paper currency, was bolstered by the 400% increase in world demand for dollars to buy oil. But that was only a part of the dollar story. In 1979, following the accession to power of the Ayatollah Khomeini in Iran, oil prices shot through the roof for the second time in six years. Yet, paradoxically, later that year the dollar began a precipitous free-fall, not rise. It was no ‘petrodollar.’

Foreign dollar holders began dumping their dollars as a protest to the foreign policies of the Jimmy Carter Administration. It was to deal with that dollar crisis that Carter was forced to bring in Paul Volcker to head the Federal Reserve in 1979. In October 1979 Volcker gave the dollar another turbo-charge by allowing interest rates in the US to rise some 300% in weeks, to well over 20%. That in turn forced global interest rates through the roof, triggered a global recession, mass unemployment and misery. It also ‘saved’ the dollar as sole reserve currency. The dollar was not a ‘petrodollar.’ It was the currency of issue of the greatest Superpower, a superpower determined to do what it needed to keep it that way.

The F-16 dollar backing

Since 1979 the US power establishment from Wall Street to Washington has maintained the status of the dollar as unchallenged global reserve currency. The role, however, is not a purely economic one. Reserve currency status is an adjunct of global power, of the US determination to dominate other nations and the global economic process. The US didn’t get reserve currency status by a democratic vote of world central banks, nor did the British Empire in the 19th Century. They fought wars for it.

For that reason, the status of the dollar as reserve currency depends on the status of the United States as the world’s unchallenged military superpower. In a sense, since August 1971 the dollar is no longer backed by gold. Instead, it is backed by F-16’s and MI Abrams battle tanks, operating in some 130 US bases around the world, defending liberty and the dollar.

A Euro challenge?

In order for the Euro to begin to challenge the reserve role of the US dollar a virtual revolution in policy would have to take place in Euroland. First the European Central Bank, the institutionalized, undemocratic institution created by the Maastricht Treaty in order to maintain the power of creditor banks in collecting their debts, would have to surrender power to elected legislators. It would then have to turn on the Euro printing presses and print Euros like there was no tomorrow. That is because the current size of the publicly-traded Euroland government bond market is still tiny in comparison with the huge US Treasury market.

As Michael Hudson explains in his brilliant and too-little studied work, ‘Super Imperialism,’ the peverse genius of the US global dollar hegemony was the realization, in the months after August 1971, that US power under a fiat dollar system was directly tied to the creation of dollar debt. The debt and US trade deficit was not the ‘problem,’ they realized. It was the ‘solution.

The US could print endless quantities of dollars to pay for foreign imports of Toyotas, Hondas, BMW’s or other goods in a system in which the trading partners of the USA, holding paper dollars for their exports feared for a dollar collapse enough to continue to support the dollar by buying US Treasury bonds and bills. In fact in the thirty years since abandoning gold exchange for paper dollars, the US dollars in reserve have risen by a whopping 2,500% and grows at double-digit rates today.

This system continued into the 1980’s and 1990’s unchallenged. US policy was one of crisis management coupled with skilful and coordinated projection of US military power. Japan in the 1980’s, fearful of antagonizing its US nuclear umbrella provider, bought endless volumes of US Treasury debt even though they lost a King’s ransom in the process. It was a political, not an investment decision.

The only potential challenge to the reserve role of the dollar came in the late 1990’s with the European Union decision to create a single currency, the Euro, to be administered by single central bank, the ECB. Europe appeared to be emerging as a unified, independent policy voice of what Chirac then called a multi-polar world. Those multi-polar illusions vanished with the unpublicized decision of the ECB and national central banks not to pool their gold reserves as backing for the new Euro. That decision not to use gold as backing came amid a heated controversy over Nazi gold and alleged wartime abuses by Germany, Switzerland, France and other European countries.

Since the shocks of September 11, 2001 and the ensuing declaration of a US global War on Terror, including a unilateral decision to ignore the United Nations and the community of nations and go to war against a defenceless Iraq, few countries have even dared to challenge the dollar hegemony. The combined defense spending of all nations of the EU today pales by comparison to the total of current US budgeted and unbudgeted defense spending. US defense outlays will reach an official, staggering level of $663 billion in the current Fiscal 2007 year. The combined EU spending amounts to a mere $75 billion, with tendency declining, in part owing to ECB Maastricht deficit pressures on its governments.

So today, at least for the present, there are no signs of Japanese, EU or other dollar holders engaging in dollar asset liquidation. Even China, unhappy as she is with Washington bully politics, seems reluctant to rouse the American dragon to fury.

The Origins of the Oil Bourse

The idea of creating a new trading platform in Iran to trade oil and to create a new oil benchmark crude apparently originated with the former Director of the London International Petroleum Exchange, Chris Cook. In a January 21 article in the Asia Times, Cook explained the background. Describing a letter he had written in 2001 to the Governor of the Iranian Central Bank, Dr Mohsen Nourbakhsh, Cook explained what he advised then:

‘In this letter I pointed out that the structure of global oil markets massively favors intermediary traders and particularly investment banks, and that both consumers and producers such as Iran are adversely affected by this. I recommended that Iran consider as a matter of urgency the creation of a Middle Eastern energy exchange, and particularly a new Persian Gulf benchmark oil price.

’It is therefore with wry amusement that I have seen a myth being widely propagated on the Internet that the genesis of this "Iran bourse" project is a wish to subvert the US dollar by denominating oil pricing in euros.

’As anyone familiar with the Organization of Petroleum Exporting Countries will know, the denomination of oil sales in currencies other than the dollar is not a new subject, and as anyone familiar with economics will tell you, the denomination of oil sales is merely a transactional issue: what matters is in what assets (or, in the case of the United States, liabilities ) these proceeds are then invested.’

A full challenge to the domination of the dollar as world central bank reserve currency entails a de facto declaration of war on the ‘full spectrum dominance’ of the United States today. The mighty members of the European Central Bank Council well know this. The heads of state of every EU country know that. The Chinese leadership as well as Japanese and Indian know that. So does Vladimir Putin.

Until some combination of those Eurasian powers congeal in a cohesive challenge to the unbridled domination of the USA as sole superpower, there will be no Euro or Yen or even Chinese Yuan challenging the role of the dollar. The issue is of enormous importance, as it is vital to understand the true dynamics bringing the world to the brink of possible nuclear catastrophe today.

As a small ending note, a good friend in Oslo recently forwarded me an article from the Norwegian press. At the end of December, Sven Arild Andersen, Director of the Oslo Bourse, announced he was fed up with depending on the London oil bourse trading oil in dollars. Norway, a major oil producer, selling most of its oil into Euro countries in the EU, he said, should set up its own oil bourse and trade its oil in Euros. Will NATO member Norway become the next target for the wrath of the Pentagon?

* F. William Engdahl is a Global Research Contributing Editor and author of the book, ‘A Century of War: Anglo-American Oil Politics and the New World Order,’ Pluto Press Ltd. He may be contacted through his website, www.engdahl.oilgeopolitics.net.

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