Petrodollar Warfare: Oil, Iraq, and the Future of the Dollar

by William R. Clark

review by E.B.Klassen
What drove Amerika into Iraq? William R. Clark, in his book Petrodollar Warfare: Oil, Iraq, and the future of the Dollar suggests (and makes a pretty solid case, too) that Amerikan criminality is based on the fear of losing its pre-eminent status as the world’s last remaining superpower. The problem is that the foundation of Amerika’s status is merely some awfully thin ice—ice made thinner by the fascists currently in office.
This is about more than oil—although oil is essential to Amerikan hegemony. Oil is bought and paid for in Amerikan dollars, and those Amerikan dollars are the world’s currency of last resort. If everything falls apart, the $US is supposed to remain standing, and the Federal Reserve said back in the early eighties that if all else fails, they will just keep printing dollars until everything is paid off—all Amerikan international debt, all debt denominated in Amerikan dollars.
Because right now Amerika is living in a massive debt bubble—China alone holds over $1.7 trillion in Federal debt instruments and could crash the whole system simply by converting the lot over to euros. The dollar has declined over the last four years—seen here in Canada as the rise in the Canadian dollar against the Amerikan, and the euro has strengthened. But worldwide we have far too much productive capability, and not enough ability to consume, and this overhang is starting to scare the crap out of the holders of real money.
The current system is (almost) holding together. Oil sales denominated in Amerikan dollars and held by Amerikan financial institutions have managed to support Amerikan consumption. But then Saddam Hussein gets snarly; under the oil for food program, he requests that payment no longer be made in the dollar of the Great Satan, but be denominated in euros. Turns out to be a great financial idea made for political reasons. By denominating in the euro, Iraq sees a couple of hundred million dollars extra—free money just for using the euro. And don’t think this isn’t noticed by the rest of the region; the Saudi’s know all about this, but have made their own separate peace with the Great Satan, and are funnelling their excess dollars back into the Amerikan economy (70% of Saudi Arabia’s petrodollar wealth is invested in the US). But for this and other crimes (like having Amerikan oil inconveniently under their country and making deals to sell it to Russia and European countries rather than the Amerikan ones), the Iranians pay a heavy price; they suffer the extension of Amerikan hegemony.
But Iran notices; they announce a new oil bourse (a stock exchange for securities trading) in 2002 to be up and running by 2005 that will offer an oil marker denominated in euros—just like the $US-denominated marker of West Texas crude. Funny how they are now in the crosshairs, isn’t it?
William Clark doesn’t claim that what currency petrodollars are denominated in is the sole reason behind the illegal invasion of Iraq; but he does make a strong case that this was a significant reason behind it. Some writers, most recently Gwynne Dyer, don’t buy it. A recent Dyer article basically says that this Amerikan administration is simply too stupid to pay attention to esoteric financial concerns, and makes a strong case for this view. But this administration’s partners, this cabal of the super-rich, this loose affiliation of millionaires and billionaires that rely on the dominance of the Amerikan dollar, they notice. And they have both a confluence of desire and the world’s largest and best equipped mercenary force at their disposal. And what the hell, they’ve been using it for just this kind of bullshit since forever, so what’s one more country destroyed to serve their interests? The rest, we say, is history.