[Marxism] The IMF's New World Order (The Observer - UK)

Marvin Gandall marvgandall at videotron.ca
Sun Jul 2 04:42:06 MDT 2006

Steve Masterson wrote:

...it is about the threat the new Iran Oil Bourse (due to open shortly), set
to trade oil in euros, which may well precipitate the dollar's collapse.
Read why the US dollar is on the verge of collapse at:


Today's Observer article referred to in the subject line
(http://observer.guardian.co.uk/business/story/0,,1810488,00.html) doesn't
make any allusion to the Internet hokum circulating about the proposed
Iranian oil exchange as a secret weapon which will vaporize the US dollar
and bring the US Empire crashing down. I've seen nothing in other
commentaries to suggest the "Iran oil bourse" will be discussed at IMF and
G8 meetings later this month, or that there is any ruling class concern at
all about it. In particular, you would think if this was the ultimate WMD
posing a dire and immediate threat to American capitalism and US living
standards, the Bush administration would be effortlessly mobilizing public
opinion for an all-out strike on Iran around this issue, rather than
spinning its wheels about the ostensible threat of Iran's nuclear enrichment
program to which most Americans give barely a passing thought.

This subject briefly popped up on the PEN-L list several months ago, and I
posted the following comment:

"Maybe the currency speculators, oil traders, and central bankers just
haven't been paying attention. Plans for the oil bourse were announced two
years ago, but that didn't prevent the dollar from rising over that period.
No one seems to be dumping dollars now in anticipation of the bourse opening
later this month. If the USD does drop, it will have to do more with rising
interest rates and falling US domestic demand than the trade in oil.

"Iran, incidentally, seems to have gotten the idea from Chris Cook, a former
director of the International Petroleum Exchange, who recently wrote in the
Asia Times:

" 'My experience with Iran began four and a half years ago in June 2001
when, through my Iranian business partner, I wrote to the then governor of
the Iranian central bank, Dr Mohsen Nourbakhsh. This letter was written on
the basis of my experience as a former director of the International
Petroleum Exchange and in the aftermath of allegations I made in relation to
market manipulation on the IPE the previous year, which were dismissed by a
commissioner appointed by the exchange. I still regret that I used the
description "systematic" rather than "systemic" of this alleged
manipulation, but that is another story.'

" '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.'

"Full: http://www.atimes.com/atimes/Middle_East/HA21Ak01.html"

Since this was written in March, further incremental interest rate hikes
still haven't appreciably dampened US domestic demand and sent the dollar
sliding, although the prospect has spooked the stock and bond markets. The
USD will collapse only if the US economy tanks and there is much more
widespread panic-dumping of US securities by foreign investors which the
central bankers, acting in concert, wouldn't be able to contain.

In the meantime, the central banks in the US, Europe, China, and Japan are
trying to effect an "orderly readjustment" of global exchange rates to
gradually bring the dollar down against foreign currencies, notably the
yuan, in order to make the US current account and fiscal deficits more
"manageable" and reduce the risk of a meltdown. The G8 and IMF meetings will
continue to discuss dollar depreciation. These periodic readjustments have
happened before, sometimes with dramatic short-run effects on the markets,
but they haven't yet provoked a financial Armegeddon.

In any case, it's not the frequently-postponed launch of the oil bourse
which underlies current exchange rate jitters and G8 pressure on Iran,
including by the Europeans - the presumed beneficiaries of a
euro-denominated oil exchange - but the expansion of Iran's political
influence in the Middle East and its efforts to strengthen its military
deterrent capacity against the US and Israel. That, not the euro, represents
the greater threat to the security of the US oil supply.

I recall progressive economists like Jim Devine, Michael Perelman, and Doug
Henwood also not giving any credence to the "oil bourse theory" when it
appeared on the PEN-L list.

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