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UN Allows Iraq To Sell Oil For Euros
Tuesday, October 31, 2000
The UN sanctions committee on Iraq yesterday approved Baghdad's request to receive oil-export payments in euros instead of dollars. Iraq has described US dollars as being the currency of an "enemy state."
Adopting euros will cost Iraq at least $270 million, in part because the euro will accrue lower interest, UN Treasurer Suzanne Bishopric reported Friday. Iraq's UN Ambassador Saeed Hasan dismissed Bishopric's report as "highly exaggerated" and provided a detailed critique of her analysis (Reuters/CNN.com, 30 Oct).
The United States and the United Kingdom, who are members of the sanctions committee, were uneasy about caving in to the demands of Iraqi President Saddam Hussein (Carola Hoyos, Financial Times, 31 Oct).
But the committee, composed of the 15 Security Council members, decided it had no legal basis to block Iraq's request. Earlier yesterday, Iraq told the committee it would extend until 6 November its 1 November deadline to create the euro account.
Countries buying oil from Iraq pay into an account held in escrow by the UN. Under the UN "oil for food" program, Iraq, which is still under sanctions for its 1990 invasion of Kuwait, must use the funds to buy humanitarian goods (Associated Press/MSNBC.com, 30 Oct).
The dollar is the de facto world reserve currency: the US currency accounts for approximately two thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all world exports are denominated in dollars. In addition, all IMF loans are denominated in dollars.
If you don't have oil, you have to buy it. And if you want to buy oil on the international markets, you usually have to have dollars. Until recently all OPEC countries agreed to sell their oil for dollars only. So long as this remained the case, the euro was unlikely to become the major reserve currency: there is not a lot of point in stockpiling euros if every time you need to buy oil you have to change them into dollars. This arrangement also meant that the US effectively part-controlled the entire world oil market: you could only buy oil if you had dollars, and only one country had the right to print dollars - the US.
All of this is bad news for the US economy and the dollar. The fear for Washington will be that not only will the future price of oil not be right, but the currency might not be right either. Which perhaps helps explain why the US is increasingly turning to its second major tool for dominating world affairs: military force.
Iran and Venezuela picked up the cue, demanding euros for their oil. As a result, the value of the dollar registered a steep fall.
Uribe insists the agreement, which allows the presence of 800 US soldiers and 600 civilian contractors of the Pentagon or US security organizations for 10 ...
I spent thirty three years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.
I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents. ~ Smedley Butler