Iran Pushed to Drastic Action
• Iranians will no longer accept U.S. dollars for their crude
• Big problems predicted for dollar as global reserve currency
By Pete Papaherakles
The Tehran Times announced that as of March 20 the Iranian oil bourse will start trading oil in currencies other than the U.S. dollar. The decision passed by Iran’s parliament and carried out by President Mahmoud Ahmadinejad comes as retaliation for U.S. sanctions placed on Iran’s Central Bank, which will punish any country that buys Iranian oil after July 1.
“The dispute over Iran’s nuclear program is nothing more than a convenient excuse for the U.S. to use threats to protect the ‘reserve currency’ status of the dollar,” reported the Times.
This is a major provocation against the U.S., whose economy depends on ensuring that the dollar is the only currency used to purchase oil around the world. In 1973 the orchestrated “energy crisis” swept the United States. The dollar, which was taken off the gold standard in 1971, now became based on oil production. It became the world’s reserve currency, meaning that, the world over, oil could only be purchased in dollars. This has fostered U.S. spending sprees, allowing the federal government to rack up an enormous mountain of debt. The illusion of solvency is kept intact only as long as all countries are forced to use dollars for the purchase of oil.
In the past, nations that decided to sell their oil in currencies other than the dollar have suffered dire consequences. Libya’s Muammar Qadaffi and Iraq’s Saddam Hussein were the last two world leaders to do it. Like Iran, they too had vast oil reserves and central banks that under Islamic law banned interest charges.
Iran has the third-largest oil reserves in the world. Eighty percent of its export revenue comes from oil, which it produces at a rate of 4 million barrels per day. As the EU, which buys 18 percent of Iran’s oil, caved to U.S. pressure and announced it would comply with the sanctions by July, Iran decided it would preemptively stop selling oil to European countries. It stopped all sales to Britain and France immediately. A week later a Greek tanker, which arrived in Iran to pick up 500,000 barrels of crude, was forced to return to Greece empty.
Analysts contend that the EU is going to have a harder time finding new suppliers than Iran will have finding new markets in Asia. Iran’s biggest customer, China, gobbles up 20 percent of Iran’s total oil sales. The Chinese government has said it will keep buying Iranian oil as will India, which accounts for another significant portion of total sales. India has already said it will buy Iranian oil using rupees or gold.
As a result of escalating tensions over Iran’s nuclear program, oil prices have risen 14 percent since the beginning of 2012. Some estimates say that if Iran moves to close the Strait of Hormuz, oil prices could rise by 50 percent. That will be a bonanza for Big Oil and Wall Street, both of whom have a huge influence in politics. Key announcements about hostilities can be timed to maximize huge profits for insiders.
Peter Papaherakles, a U.S. citizen since 1986, was born in Greece. He is AFP’s outreach director. If you would like to see AFP speakers at your rally, contact Pete at 202-544-5977.