It’s bad enough that the Middle East has us over a barrel of oil thanks to our continued dependency on access to its huge reservoirs of crude, but largely unknown to most Americans, the Organization of Islamic Conference (OIC) and the Islamic Development Bank have a long-term goal of replacing the U.S. dollar as the reserve currency for world trade.
It’s bad enough that the Middle East has us over a barrel of oil thanks to our continued dependency on access to its huge reservoirs of crude, but largely unknown to most Americans, the Organization of Islamic Conference (OIC) and the Islamic Development Bank have a long-term goal of replacing the U.S. dollar as the reserve currency for world trade.
In March the Iranians will open an Iran Oil Bourse that will trade oil and products in the Euro, not the dollar. They will not be alone in pegging their nation’s currency to the Euro. Syria already does and Venezuela, another major oil producer, has announced plans to do so as well.
As David J. Jonsson, the author of “Clash of Ideologies”, pointed out in a recent article, the United States “relies on approximately 70 percent of all foreign-exchange currency to be held in dollars because we sell Treasury debt into that foreign-exchange market.” A flight of foreign-exchange reserves away from the dollar would depress its value and, conversely potentially increase the value of the Euro by 20 to 40 percent.
This is extremely bad news for the United States and for the West in general. While Americans focus on the shooting war in Iraq, we are in an even more serious economic war with an axis that spreads from South America to the Middle East. Bear in mind that many South American nations have been electing Socialist governments and that some Middle Eastern nations have flirted with socialism for decades. The Baathist Party in Saddam’s Iraq is an example of this.
Calls for oil independence in the U.S. have been largely ignored for the three decades we have known about the vast reserves in Alaska’s ANWR or those trapped in shale in Utah and Colorado. Congress has blocked ANWR drilling and in known offshore reserves despite the increasingly volatile Middle Eastern situation.
The economy of the United States is, in many ways, quite fragile. Just how broke is America?
A new book, “Empire of Debt: The Rise of an Epic Financial Crisis”, by Addison Wiggin and Bill Bonner, answers that question saying, “It is deeply unpleasant to consider the fact that the U.S. continues to rack up another $80 million of debt every hour, or that our trade deficit has hit an all time high of $725.8 billion.” That represents a significant vulnerability. The authors note that, “The renowned Levy Institute estimates that the United States will owe foreigners $8 trillion by 2008, a breathtaking 60 percent of our gross domestic product.“
That level of financial vulnerability is frightening enough, but key elements of our economy are also vulnerable. As Jonsson points out, the high cost of natural gas, the key component in the production of ammonia and urea, the “fertilizers that drive the agricultural sector of the United States and the rest of the Western nations”, has caused the shutdown of ammonia production here and seen it move to nations with lower costs such as those in the Middle East. Today, more than half of the urea used for U.S. agricultural production is imported.
In the United Kingdom, nearly a third of its power generation depends on natural gas. In 15 years, the UK will be dependent on Russia for 90 percent of its imported gas. Japan is almost totally dependent on imported energy sources and is heavily invested in Iran’s Azadegan oil field. China has major investments in Iran, importing 13.6 percent of its oil requirements from that nation and, overall, 45 percent of its oil imports from the Middle East. China is also investing in Canadian tar sands projects.
At present, three-quarters of China’s currency reserves are invested in U.S. Treasury bills and other dollar-dominated assets. If the U.S. dollar begins to slip in value versus the Euro, guess where China’s money will go. Currently, its reserves “are growing at an average rate of $15 billion every month.”
The strategy is there for anyone to see. Control the oil and eliminate the U.S. dollar as the world’s currency of choice. The Islamic-Socialist coalition is well on its way to putting a choke-hold in the New York Mercantile Exchange and London’s International Petroleum Exchange, currently the world’s leading commodity markets for energy. Jonsson calls it “the currency bomb.”
About the only good news is that such efforts have been tried in the past and failed. This time, though, European nations will, thanks to the Iranian Oil Bourse, not have to buy and hold U.S. dollars to secure the payment for oil.
Right now, thanks to the indebtedness of the U.S., many in the financial world are anticipating a devaluation of the dollar. Jonsson believes it could fall as much as 40 percent or more, if that occurs.
If the United States does not embark on an aggressive program to find and develop its own energy sources, and to develop its own production of liquid fuels, natural gas, and fertilizers, it is going to find itself in deep trouble. The good news is that we have centuries of coal and still untapped oil, and gas hydrates. We could accelerate the building of more nuclear energy facilities.
We could do much to insure a greater degree of energy independence if we have the will and foresight to do so. However, the federal budget for fiscal 2007 “cuts overall funding for natural gas research” in order get the independent oil and natural gas companies to pick up the tab. “President Bush is proposing to zero out the entire natural gas technology program, which includes gas hydrates.” This is the same President who told the nation that America is “addicted to oil.”
America is at a critical crossroads for its financial and energy policies and, so far, it appears to be making some very bad choices. It seems to this observer that it is depending heavily on its military strength to threaten and/or transform the Middle East. That option may prove to be an illusion if Iran is permitted to become a nuclear power.
Ultimately, as Jonsson points out, “If regimes like those in Iran, Venezuela, Syria, Burma, Sudan and Nigeria have the benefit of $60 oil for ten years, the democratic process, which occurred in post-Cold War years, will end. The totalitarian regimes with the most repressive governments will control the energy infrastructure and the access to freedom and liberty.”
The American Empire is running out of cheap energy and easily borrowed money.
Alan Caruba passed on June 15, 2015. His keen wit, intellect, and desire to see that "right" be done will be missed by all who his life touched. His archives will remain available online at this site.
Alan Caruba was the founder of The National Anxiety Center, a clearinghouse for information about media-driven scare campaigns designed to influence public opinion and policy. A veteran public relations counselor and professional writer, Caruba emerged as a conservative voice through his weekly column, "Warning Signs", posted on the Center's Internet site (www.anxietycenter.com) and widely excerpted on leading sites including this one.
A member of the Society of Professional Journalists, the American Society of Journalists and Authors, and a charter member of the National Book Critics Circle, Caruba applied a wide-ranging knowledge of business, science, history and other topics to his examination of issues that included protecting our national sovereignty, environment and immigration, education and international affairs.
Caruba resided in New Jersey and had served in the US Army, had been an advisor to corporations, trade associations, universities, and others who used his public relations skills for many years. He maintained a business site at www.caruba.com.
Caruba performed many reviews of both fiction and non-fiction at Bookviews.Com, a popular site for news about books of merit that do not necessarily make it to the mainstream bestseller lists.
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