[Marxism] A worthless piece of paper
lnp3 at panix.com
Mon Nov 19 07:17:46 MST 2007
The Huffington Post
SEBASTIAN ABBOT | November 18, 2007 06:46 PM EST | AP
RIYADH, Saudi Arabia — Iranian President Mahmoud Ahmadinejad said Sunday
that OPEC's members have expressed interest in converting their cash
reserves into a currency other than the depreciating U.S. dollar, which
he called a "worthless piece of paper."
His comments at the end of a rare summit of OPEC heads of state exposed
fissures within the 13-member cartel _ especially after U.S. ally Saudi
Arabia was reluctant to mention concerns about the falling dollar in the
summit's final declaration.
The hardline Iranian leader's comments also highlighted the growing
challenge that Saudi Arabia, the world's largest oil producer, faces
from Iran and its ally Venezuela within the Organization of Petroleum
"They get our oil and give us a worthless piece of paper," Ahmadinejad
told reporters after the close of the summit in the Saudi capital of
Riyadh. He blamed U.S. President George W. Bush's policies for the
decline of the dollar and its negative effect on other countries.
Oil is priced in U.S. dollars on the world market, and the currency's
depreciation has concerned oil producers because it has contributed to
rising crude prices and has eroded the value of their dollar reserves.
"All participating leaders showed an interest in changing their hard
currency reserves to a credible hard currency," Ahmadinejad said. "Some
said producing countries should designate a single hard currency aside
from the U.S. dollar ... to form the basis of our oil trade."
Venezuelan President Hugo Chavez echoed this sentiment Sunday on the
sidelines of the summit, saying "the empire of the dollar has to end."
"Don't you see how the dollar has been in free-fall without a
parachute?" Chavez said, calling the euro a better option.
Saudi Arabia's King Abdullah had tried to direct the focus of the summit
toward studying the effect of the oil industry on the environment, but
he continuously faced challenges from Ahmadinejad and Chavez.
Iran and Venezuela have proposed trading oil in a basket of currencies
to replace the historic link to the dollar, but they had not been able
to generate support from enough fellow OPEC members _ many of whom,
including Saudi Arabia, are staunch U.S. allies.
Both Iran and Venezuela have antagonistic relationships with the U.S.,
suggesting their proposals may have a political motivation as well.
While Tehran has been in a standoff with Washington over its nuclear
program, left-wing Chavez is a bitter antagonist of Bush. U.S. sanctions
on Iran also have made it increasingly difficult for the country to do
business in dollars.
During Chavez's opening address to the summit on Saturday, the
Venezuelan leader said OPEC should "assert itself as an active political
agent." But Abdullah appeared to distance himself from Chavez's
comments, saying OPEC always acted moderately and wisely.
A day earlier, Saudi Arabia opposed a move by Iran on Friday to have
OPEC include concerns over the falling dollar included in the summit's
closing statement after the weekend meeting. Saudi Arabia's foreign
minister even warned that even talking publicly about the currency's
decline could further hurt its value.
But by Sunday, it appeared that Saudi Arabia had compromised. Though the
final declaration delivered Sunday did not specifically mention concern
over the weak dollar, the organization directed its finance ministers to
study the issue.
OPEC will "study ways and means of enhancing financial cooperation among
OPEC ... including proposals by some of the heads of state and
governments in their statements to the summit," OPEC Secretary General
Abdalla Salem el-Badri said, reading the statement.
Iran's oil minister went a step further and said OPEC will form a
committee to study the dollar's affect on oil prices and investigate the
possibility of a currency basket.
"We have agreed to set up a committee consisting of oil and finance
ministers from OPEC countries to study the impact of the dollar on oil
prices," Gholam Hussein Nozari told Dow Jones Newswires.
Iraqi Oil Minister Hussein al-Shahristani said the committee would
"submit to OPEC its recommendation on a basket of currencies that OPEC
members will deal with." He did not give a timeline for the recommendation.
The meeting in Riyadh, with heads of states and delegates from 13 of the
world's biggest oil-producing nations, was the third full OPEC summit
since the organization was created in 1960.
Abdullah tried to take the focus off the dollar debate, announcing the
donation of $300 million to set up a program to study the effect of the
oil industry on the environment. Kuwait, Qatar and the United Arab
Emirates also agreed to donate $150 million each to the fund, Prince
Saud Al-Faisal, Saudi Arabia's foreign minister, said Sunday.
The run-up to the meeting was dominated by speculation over whether OPEC
would raise production following recent oil price increases that have
approached $100. But cartel officials have resisted pressure to increase
oil production and said they will hold off any decision until the group
meets next month in Abu Dhabi, United Arab Emirates.
They have also cast doubt on the effect any output hike would have on
oil prices, saying the recent rise has been driven by the falling dollar
and financial speculation by investment funds rather than any supply
During his final remarks, el-Badri stressed he was committed to supply _
but did not mention changing oil outputs.
"We affirm our commitment ... to continue providing adequate, timely,
efficient, economic and reliable petroleum supplies to the world
market," he said.
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