War is always about achieving a political end. Even holy wars seek to impose a secular control over the vanquished. At the root of every political conflict, lies the MONEY component. On the scale of greed or fear, international discords can slide up or down. Depending on the circumstances or demands, governments rally domestic populations to accept their foreign interventionist goals. Claims of altruistic liberation are fictitious, when the rhetoric is stripped away and the real substance is exposed. Notwithstanding, variances of emphasis; the motive of money underpins the movements of all military confrontations.

The case that the conquest of Iraq is about appropriating control over oil reserves is well known. The argument that removing Saddam Hussein for a friendly regime change will enhance the adherence of global community policies, secure and annex a ‘greater Israel’ and project the power of the empire into the region, has been circulated widely. The excuses of a “War on Terrorism”, elimination of WMD, combating radical Islamics, fulfilling prophecy and personal grudges between feuding criminal families and former business partners, have been known to all. But the one aspect that seems to elude the scrutiny of most observers is that of the precarious nature of the global economy, which teeters on the fragile requirement that the US Dollar must remain as the world reserve currency.

OPEC always priced oil in US Dollars. In the perceptive essay, The Real Reasons for the Upcoming War With Iraq by W Clark, the thesis that a shift using the EURO as the settlement currency, drives the Bush/Cheney administration hydrocarbons geo-strategy.

"The Federal Reserve's greatest nightmare is that OPEC will switch its international transactions from a dollar standard to a euro standard. Iraq actually made this switch in Nov. 2000 (when the euro was worth around 82 cents), and has actually made off like a bandit considering the dollar's steady depreciation against the euro. (Note: the dollar declined 17% against the euro in 2002.)

"The real reason the Bush administration wants a puppet government in Iraq -- or more importantly, the reason why the corporate-military-industrial network conglomerate wants a puppet government in Iraq -- is so that it will revert back to a dollar standard and stay that way." (While also hoping to veto any wider OPEC momentum towards the euro, especially from Iran -- the 2nd largest OPEC producer who is actively discussing a switch to euros for its oil exports)."

The effect of an OPEC switch to the euro would be that oil-consuming nations would have to flush dollars out of their (central bank) reserve funds and replace these with euros. The dollar would crash anywhere from 20-40% in value and the consequences would be those one could expect from any currency collapse and massive inflation (think Argentina currency crisis, for example). You'd have foreign funds stream out of the U.S. stock markets and dollar denominated assets, there'd surely be a run on the banks much like the 1930s, the current account deficit would become unserviceable, the budget deficit would go into default, and so on. Your basic 3rd world economic crisis scenario.

A U.K. article by Hazel Henderson, is cited that outlines the likely consequences of the displacement of the US Dollar (translate: federal reserve counterfeit species) as the reserve currency.

1. US global over-reach in the `war on terrorism' already leading to deficits as far as the eye can see -- combined with historically-high US trade deficits -- lead to a further run on the dollar. This and the stock market doldrums make the US less attractive to the world's capital.

2. More developing countries follow the lead of Venezuela and China in diversifying their currency reserves away from dollars and balanced with euros. Such a shift in dollar-euro holdings in Latin America and Asia could keep the dollar and euro close to parity.

3. OPEC could act on some of its internal discussions and decide (after concerted buying of euros in the open market) to announce at a future meeting in Vienna that OPEC's oil will be re-denominated in euros, or even a new oil-backed currency of their own. A US attack on Iraq sends oil to  40 (euros) per barrel.

4. The Bush Administration's efforts to control the domestic political agenda backfires. Damage over the intelligence failures prior to 9/11 and warnings of imminent new terrorist attacks precipitate a further stock market slide.

5. All efforts by Democrats and the 57% of the US public to shift energy policy toward renewables, efficiency, standards, higher gas taxes, etc. are blocked by the Bush Administration and its fossil fuel industry supporters. Thus, the USA remains vulnerable to energy supply and price shocks.

6. The EU recognizes its own economic and political power as the euro rises further and becomes the world's other reserve currency. The G-8 pegs the euro and dollar into a trading band -- removing these two powerful currencies from speculators trading screens (a "win-win" for everyone!). Tony Blair persuades Brits of this larger reason for the UK to join the euro.

7. Developing countries lacking dollars or "hard" currencies follow Venezuela's lead and begin bartering their undervalued commodities directly with each other in computerized swaps and counter trade deals. President Chavez has inked 13 such country barter deals on its oil, e.g., with Cuba in exchange for Cuban health paramedics who are setting up clinics in rural Venezuelan villages.

What is missing in this excellent analysis is that the nature of fractional reserve debt created money, requires ever growing liability and increasing deficits. There is a limit when higher taxes become unsustainable. However, the clock never stops on the interest payments needed to retire previous bond obligations and service ever higher levels of future obligations. And just wait when interest rates rise to reflect real market risks! Remember all those projections of imaginary surpluses? This is not a partisan issue between party factions. It is a systemic quandary, created by design.

The box that the world economy has been placed into requires a repudiation of this sham cycle founded upon the viscous and unforgiving disposition of compound interest. The consequences for disciplining rogue countries who dare stray from the dictates of the IMF, World Bank and the WTO, are visible with each explosion of every JDAM bomb. Even in victory, the pyrrhic character of temporary relief, offers but a fleeting reprieve to acquire that villa in Tuscany.

The Clark essay is significant and should not be ignored. Currency speculation and exchange rate conversions, carry with them such huge transactional volume. Entire economies rise or fall on pegging their relative value, against the surreal and contrived evaluations for the US Dollar. Oil paid in the EURO is more of a serious threat to the reign of the dollar than all those mythical WMD that Saddam will use. Nevertheless, don’t be naive and conclude that it is in our own personal best interest to protect the reserve currency status of the dollar. Quite to the contrary, as more Western Hemisphere countries adopt the US Dollar, the adverse impact upon our own net worth, is magnified.

The inevitable fall of the US Dollar is unavoidable, when the charade can no longer be cloaked with smoke and mirrors or tolerable foreign adventures. At that point the calls for a single world currency, administered through a solitary clearing house and autarchic central bank, will be offered as the answer for economic stability. Thus, the ultimate transfer and expropriation of individual wealth will be achieved. The world runs on money, not oil. Those who control it and require legal tender laws, rule the economic and political order. You will come to learn this lesson, no matter what currency you use . . .

SARTRE - April 4, 2003