Iraq war could wreck global financial system

Walter Lippmann walterlx at
Fri Mar 21 10:42:52 MST 2003

March 20, 2003

War on Iraq could cause chaos
in the monetary system

UNITED NATIONS, (EFE, March 20).- The war on Iraq could
be highly damaging to the stability of the U.S. dollar and
cause chaos in the global financial system due to the
vulnerability of the U.S. economy at the present time.

Arjun Makhijani, president of the Energy and Environment
Research Institute, today presented a report on the
consequences of the war on Iraq for the oil market, as well
as for the world monetary system, where the dollar could
lose its supremacy to the benefit of the euro.

Makhijani stated that the U.S. strategy of invading Iraq
responds to its need to maintain the strength of its money
via the control of oil in the Middle East, the source of two
thirds of the crude oil in the world.

"U.S. motives for initiating a war on Iraq are not merely
for the benefit of its oil companies - they go further than
that - towards control of Chinese and Western European oil
sources, as well as to ensure that international
transactions continue to be nominated in dollars," he

In his opinion, another reason for the United States
undertaking military action against Iraq is to contain the
strength of the euro as an international exchange currency,
especially after Baghdad decided in 2000 to charge in euros
for its exports of crude under the UN humanitarian Oil for
Food program.

"Since the end of the first Gulf War, U.S. foreign policy
has been aimed at checking the emergence of a potential
economic rival such as Europe," he noted.

The value of the euro has increased 18% in relation to the
dollar since 2002 and economic activity in the so-called
euro zone is comparable to that in the United States.

According to Makhijani, the euro is not the only threat to
the dollar's supremacy, given that factors such as the
exorbitant U.S. trade deficit, which rose to almost $400
billion USD in 2002, could contribute to its collapse.

Moreover, the U.S. trade deficit is expected to increase
even more in 2003, and its national debt to grow by more
than $6 trillion USD, or 60% of the country's GDP, Makhijani
's report indicates.

"Although it has military might, those making policy in
Washington do not realize the weak economic position
of the United States at this point," the report highlights.

For the United States - a country that imports 60% of the
crude it consumes - its dependency on oil is a negative
factor in terms of the strength of its economy and,
therefore, its currency.

"The objective in controlling Iraq, a nation with the
second-largest oil reserves in the world, is a response to
the Saudi Arabian refusal to retain the presence of U.S.
troops on its territory," he explained.

Even so, the nations within the Organization of Petroleum
Exporting Countries (OPEC) could decide to trade their oil
products in euros, as discussions between Iran and Russia

Makhijani added that the collapse of the dollar could
likewise depend on the extent of the alliance recently
demonstrated between France, Germany and Russia
in the search for a peaceful solution to the Iraqi crisis.

"The European Union could decide to adopt a firm policy
of expansion via the euro into which Russia could be
integrated, which would have a huge effect on U.S.
 currency," he argued.

Nevertheless, Makhijani, who advocates changes in the
monetary system to make it more equitable, affirmed that a
collapse of the dollar and the current monetary system would
not be convenient.

"What is needed is another Bretton Woods conference that
includes a world central bank that could act as a
compensation agency for international transactions effected
in a common currency," he explained.

March 20, 2003

Unjust war breaks out

Special AIN service

THE war has begun. Falling on Iraq are E-bombs, which
annihilate technical and radio-electric services; cluster
bombs, which mutilate people; delayed detonation ones that
explode when least expected and "bunker-busters" that
destroy shelters. They are falling on the Iraqi people.

It did appear that humanity had learned its lesson after the
second world conflagration from 1939 to 1945, the Gulf War
of 1991, or Yugoslavia in 1999, to mention only the most
recent conflicts.

Despite this sad news, men and women throughout the world
are not giving up in their attempt to condemn injustice and
halt this irrational course of action that demonstrates a
growing incapacity for solving political crisis peacefully.

Facts once again corroborate the words pronounced by Cuban
leader Fidel Castro, when he referred to the ungovernability
of the world, to which should be added attempts at its
government by a few.

The United States, at the head of other imperial powers, is
squandering its technological domination on the dubious art
of killing other human beings. Today the victim is Iraq.

Never mind the country's destruction over the past decade,
or the heavy punishment its people have been subjected to by
the same country now attacking it, formerly acting under the
sponsorship of the United Nations.

It is likewise evident that dialogue and the designated
inspectors and observers have failed, and that the
disposition to discuss was always conditioned by one of the
parties, the United States, constantly entrenching itself in
its intransigence (prior to doing so in the Iraqi desert).

The President of the U.S. administration, George W. Bush,
has tried to present to the world a panorama in which he is
fighting a dangerous dynasty, thus attempting to conceal his
unilateral modus operandi, which in its turn will lead to
the carving up of that Arab nation.

The paraphernalia of war and prepotency inculcated in
politics and in the troops, the wasting of intelligence in
function of the destruction of "evil" and the distortion of
events taking and to take place there are all causes for
anger. And the senseless death of thousands of people
is a further one.

The Iraqis battled bravely to the end to avert the war,
maintaining relative control in the face of disrespect
toward their nation, but for the United States, the first
offense leading to its retreat from dialogue was the
resistance to its designs.

During the development of events in the next few days,
and as in former conflicts, the figures will begin to mount,
primarily those of human losses and material damage on
Iraqi soil.

The United States has always been at a distance from
warfare, apart from in the 1940s and during the aggression
against Viet Nam, when it felt some of its rigors. However,
in real terms, it has little experience of it.

The most hardened military strategists that believe that
those who have really experienced war are the principle
defenders of peace.

This is an unjust war, because the United States created the
pretexts and the guilty party and decided it for the rest of
humanity. (AIN)

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