I was one of the people who the American war against Iraq, especially in light of the absence of any weapons of mass destruction in the country. This caused me to disrespect George Bush because, the decision his administration chose to go into what seemed to be an unecessary war. However, I think I have discovered what seems to be a more genuine reason for the US invasion of Iraq: they do not want OPEC to switch from the dollar to the Euro.

ThirdWorldTraveler: Oil can be bought from OPEC only if you have dollars. Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the WB/IMF, which have to be paid back, with interest, in dollars. This creates a great demand for dollars outside the U.S.

FeastaThe 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.

So the US creates the dollar out of thin air, while other countries (including Nigeria) have to obtain and hold increasing quantities of the dollar by exporting their goods and services to the US. Through this mechanism, the US government has been able to finance many projects by creating more dollars without causing any inflation, which is what would have happened in other countries. As long as the dollar remains in this position, the US will continue to dominate the world economically.

So, the dollar is to the US what oil is to Nigeria - their main export product! If an organization like OPEC, which currently sells oil only in dollars, switches to the Euro, then countries that depend on oil will start converting their dollars into Euros causing a sharp decline in the value of the dollar. This would cause a major disturbance of the US economy.

Iraq, under Saddam Hussein, became the first and the only OPEC country to have dared to switch to selling their oil in Euros. Due to this, other countries like Iran and Venezuela (George Bush's "axis of evil!" and now Russia, have started considering such a move. George Bush, thanks so his advisors, knows how much havoc such a move will wreck on the US economy if copied by other countries. Hence, the US invasion of Iraq.

Now that the US has invaded Iraq:
- The new administration has returned to the policy of selling oil for dollars, not Euros.
- Iran and Venezuela will be wary of possible US military action if they attempt the same move!

Now I understand why George Bush insisted on "liberating" the Iraqis from Saddam, leaving the millions of Africans suffering under harsh dictators, famine, and genocide to fend for themselves. That is why they are happy to keep their forces in Iraq despite the daily d[b]eath toll on American lives[/b] (you know how Americans normally value the lives of their people!)

Sources:
Cóilín Nunan: Oil, Currency and the War on Iraq (please read this before you reply)
It's not about oil or Iraq. It's about the US and Europe going head-to-head on world economic dominance.
Why African Americans Should Oppose The War - By Dr. Sonja Ebron

You know what? If I was in the US President's shoes, and I was committed to advancing the interests of the United States, I think I may have felt compelled take the same decision. What's your opinion?

I'm a bit lazy to give a detailed reply to this... but what I will say is that I believe that the decision of most countries to ask for dollars for oil purchases is down to the perceived stability of the US economy and the consequent belief that dollars will always be accepted wherever you go.

This means that if the US economy were perceived as going downhill tomorrow, oil exporters would switch from asking for dollars to asking for the currency of some other stable country. It wouldn't matter then even if Iraq (as a US friendly country) continued to ask for dollars for its oil.

So what does this mean? It means that if America are interested in maintaining their position as the origin of the world's most convertible and accepted currency, its government would do better to spend its time ensuring that its economy was in good shape (by enabling its businesses to compete and keeping its deficit down) rather than engaging in overseas adventures.

OPEC's oil prices are quoted in dollars, so to buy oil from an OPEC member country, you'll need to convert your Euros to dollars first. There appears to be such an agreement between OPEC and the US. See http://www.opec.org/home/

[list][li]Since worldwide oil sales are denominated in U.S. dollars, changes in the value of the dollar against other world currencies affect OPEC's decisions on how much oil to produce.
http://en.wikipedia.org/wiki/OPEC[/li][/list]

I've recently discovered another article on this same topic: Petrodollar or Petroeuro? A new source of global conflict.
[list][li]"No observer of the lead-up to the war in Iraq and its aftermath could have failed to notice that the level of cooperation between Europe and America was extremely low. France and Germany were very strong opponents of the US/UK invasion and even after the war was declared over, disagreements persisted over the lifting of sanctions and how Iraq should be run. So was this just a one-off tiff or was it a symptom of deeper flaws in the relationship? I believe that the war on Iraq illustrated for the first time that continental Europe, led by France and Germany, no longer wishes to follow the Americans politically, although what has been termed a 'clash of civilisations'1 is probably better viewed as a 'clash of economies'."[/li][/list]

The possible switch from Dollar to Euro may be one of the contributing factors for the war in Iraq, but it is certainly not the main one. The US indeed depends on using the Dollar as default currency for trade in basic resources. This ensures that demand for the Dollar stays high and thus the relative exchange rate as well.

It also basically gives the US a license to print money and really gives them a lot of maneuvering space concerning their fiscal policy as they control supply and demand and the world depends on the Dollar. This allowed the US to artificially prop up their economy, as the world is basically subsidizing US consumption.
The last few years they may have overplayed their hand though: to recover from the dotcom bust and 9/11 they lowered interest rates to ridiculous levels and made consumer credit extremely easy to obtain, resulting in sustained consumption and a real estate boom. Add to that the government debt and tax cuts and you're in a very volatile situation.

Right now the Asian economies are maintaining this pattern by their continued reliance on US government bonds. This way the US consumers keep spending on consumer goods produced in south-east Asia (and especially China). The moment these countries don't need the US consumption that much anymore because of internal market growth and export to other regions, the US may be in for a rude awakening and find out that most of their assets are owned by the Chinese

Anyway, it is only because of heavy pressure by the US that the OPEC is not switching to the Euro. The Euro is much more stable and the debt levels in Europe are way lower than in the US. Some non-OPEC oil-producing countries are already trading their oil in Euro (e.g. Russia). The most serious problem with the Euro though is that the growth levels and the dynamism of the EU economies is much lower, but that was a reasoned choice by the European countries: trade in some raw purchasing power for a higher quality of life (welfare state, longer and more holidays, universal cheap healthcare)

This might be part of the reason, though i feel presonal vendetta also played a part.

On the economic side, opec countries like nigeria sell their oil in dollars which is part of the reason y the fluctuations and the increase in output of oil cannot do anything to help the value of the naira, even if the current level of output is doubled. the same goes 4 lending from international financial institutions. Its just a way that the U.S maintains their grip on world power and economy.

Building up an inter regional trading bloc that produces everything the region needs can counterbalance the weight of the US. The EU managed to do that. Now we only need to fix that default currency thing

Seriously, Nigeria should invest much more energy in ECOWAS

This is an interesting thread. I didnt know much about this angle, but it makes a lot of sense. I think oil and geographic location played a part, but swtiching to the EURO, pespecilly with an organisatio like OPEC could set an example for other groups to do the same.

I just wonder if any of them are still planning to switch to the euro

nferyn, i agree. I think africa could challenge the west. If ECOWAS got thier systems working together, it'd shift power. Perhaps the next leader will focus on making ecowas work. obasanjo has done a good job bringing stability

obong:

nferyn, i agree. I think africa could challenge the west. If ECOWAS got their systems working together, it'd shift power. Perhaps the next leader will focus on making ecowas work. obasanjo has done a good job bringing stability

It shouldn't really be about challenging the west, but by creating your own opportunities.

In the EU about 90% of all trade is internal. Wealth is created within the region and the richer countries are helping out the poorer ones to come up to the same level (e.g. if you compare poverty levels in Spain and Ireland prior the EU to where they are today, you will notice the difference - and that didn't happen at the expense of the other member states)

Now if only they could completely and utterly destroy the CAP (common agricultural policy). It is only helping a very small segment of the population and at the same time destroying the agriculture in the developing countries. I'll keep on dreaming

Stability, transparency, rule of law and security: all that is needed for development. One down, three to go. Let's hope the other elements will be in place soon as well

This thread lends credence to the present 'war' between the US and China over the exchange rate of the yuan and the regulation of imports from China. The Chinese are proving to be the liberators of the world from US economic domination and the US ain't finding that funny.

In the past when most goods were manufactured in the US and they dominated world trade, they claimed it was comparative advantage, now why can't they allow other countries to take advantage of that equally?

You're right once again nferyn. But i do think internal trade would challenge the west because the UK and especially france rely on africa trading with them. Franch wouuld go to war to stop nigeria from taking its place in west africa

at any rate, if ecowas can adopt policies like a common currency, tarrifs and transporation and ocmmunication networks, we'd go very far. for instance, I wonder how much it cots to mail a letter from lagos to dakar. Tings liek that should be reduced to the bare minimum to encourage more internal trade

obong:

You're right once again nferyn. But i do think internal trade would challenge the west because the UK and especially france rely on africa trading with them. Franch wouuld go to war to stop nigeria from taking its place in west africa

at any rate, if ecowas can adopt policies like a common currency, tarrifs and transporation and ocmmunication networks, we'd go very far. for instance, I wonder how much it cots to mail a letter from lagos to dakar. Tings liek that should be reduced to the bare minimum to encourage more internal trade

No I don't think you're right here. Some companies would not be happy, but they do not really represent much in terms of GDP in France (or other western countries). They would be worried though if the supply of some raw materials (e.g. oil from Nigeria, coltan from the DRC) would stop. That might be a casus belli.

On the other hand, these countries wouldn't really lift a finger to change the current situation, because it's in their interest and real investment in West-Africa gives too uncertain returns.
If the ECOWAS really chose to go on the path the EU took, I don't think they would interfere all that much as long as no trade barriers are imposed on the EU or the US. But even imposing trade barriers is not really necessary, apart from agricultural products that really undermine the internal markets.

Frankly, the Western countries really don't give a damn whether or not development takes place in Africa as long as it's not negatively impacting them. The matter of the fact is that those western countries government are not really evil, ready and willing to undermine Africa (at least not anymore), but a small group of companies is (e.g. the Forrester Group in the DRC, Executive Outcome in Sierra Leone) and their governments don't do anything to stop them.

It's way too early for a common currency though. Start with removing all trade barriers, especially import tarriffs and normalize the legislations of the different countries, so that you don't have crazy things like the import of second hand cars to Nigeria through the Cotonou seaport because Nigeria doesn't allow cars of a certain age. Then you could connect infrastructure over the country borders an eliminate border controls. Anyway, I don't know enough about the situation in the field to have a real informed opinion on how exactly to do things

I don’t believe the US attacked Iraq because of OPEC intention to switch to the Euro.

The Iraq war is solely meant to profit some well connected people/multinationals like Halliburton, Carlyle group(the 11 biggest military contractor), Zapata and a host of others.

Since the Vietnam and cold war era the US has not been spending heavily on the forces, but some people deem it fit to create some situations in which there will be a need to arm the US to the teeth. It first started with the Missile Defense System.

There are lots of people that are just not too comfortable with the report on the 911 saga, some have also been coming up with loads of conspiracy theories. “Or what do you think about the jumbo jet that crashed to the Pentagon”.

The world today is controlled by the following club/group, Bohemian Grove, Bildegberg group etc. The IMF/World Bank is just a plain front for these organizations or what do you think about the rotation of head of these bodies between European nations and US..

The Western nations are only doing all these to protect their own selfish interest, is that what you think; No sir/ma they are not.. If we are to look at it from another perspective, these people get together to protect their own economy; this translates into a better life for their citizens. But our leaders here in Naijaland only get together to talk about how they will get the choice property in Ikoyi and mansions in US and London, all with State money.

I like the western nations leaders, they practice what i call a win-win form of politics, they chop, their citizens chop, but here na win-lose politics, they chop the masses die in penury


Before it's opium then steel now it's oil, i will be glad if anyone can tell me the next resource.

I think you're wrong about these countries not wanting to undermine development in africa. Don't you realize that if africa, the most resource rich continent, develops that it will raise the price of basic commodities? Look at what china and india are doing to the price of oil, and add africa to that. that will directly impact negaively on the west's standard of living. Price of cocoa, tea, coffee, oil, coltane, rubber, and various minerals will become more expensive to acquire.

I don't think you know the extent of france's interests in Africa, if you think its limited to a few companies. France's cultural history is also tied to africa, as well as its military, economic and political might. If you have a chance, read the article below.

http://www.irinnews.org/report.asp?ReportID=49310&SelectRegion=West_Africa

In Round 2, It’s the Dollar vs. Euro
"In fact, the dispute isn’t about WMDs at all. It’s about something else entirely: who gets to sell—and buy—Iraqi oil, and what form of currency will be used to denominate the value of the sales."
http://www.msnbc.msn.com/id/3068336/site/newsweek/

For comprehensive coverage of this issue, use Google search:
http://www.google.com/search?q=allintitle%3Adollar+euro+iraq

Economic Reason for the Iraqi Invasion ( from http://zmagsite.zmag.org/Feb2004/sharma0204.html ):
---------
(1) Safeguard the U.S. economy by re-denominating Iraqi oil in U.S. dollars, instead of the euro, to try to lock the world back into dollar oil trading so the U.S. would remain the dominant world power—militarily and economically.

(2) Send a clear message to other oil producers as to what will happen to them if they abandon the dollar matrix.

(3) Place the second largest oil reserve under direct U.S. control.

(4) Create a subject state where the U.S. can maintain a huge force to dominate the Middle East and its oil.

(5) Create a severe setback to the European Union and its euro, the only trading block and currency strong enough to attack U.S. dominance of the world through trade.

(6) Free its forces (ultimately) so that it can begin operations against those countries that are trying to disengage themselves from U.S. dollar imperialism—such as Venezuela, where the U.S. has supported the attempted overthrow of a democratic government by a junta more friendly to U.S. business/oil interests.
---------
I'm sorry I'm being so obsessed with this topic!

Seun,

In the mid to long term, this is a losing battle for the US anyway.

* they are running into gigantic debts
* their trade balance is horrible
* they're going to have to pay the piper once those countries investing in US bonds are going to sell off their US investments
* they're military overstretched, entangled in wars that only deepen the hatred for the US. true, only the US is military capable of waging offensive wars, but they are not capable of invading or challenging either the EU, China or Russia without creating a nuclear wasteland, something they'll never do
* by using the Dollar in a loose fiscal policy to the US advantage, they're undermining confidence in the dollar, the strict anti-inflatory policies of the EU central bank (stability pact) maker the Euro a much safer bet
* the reliance on services in the US is much higher than in the EU. The strict laissez-faire capitalist attitude is undermining their production capacity (less production and manufacturing is shipped from the EU than from the US). This only lasts as long as the economy is growing steadily. Once the real-estate bubble bursts in the US a lot of people are going to get hurt
* Infrastructure is less diversified and less well maintained in the US than in the EU. Urban sprawl in the US is making them very dependent on cheap oil. The EU is more capable of adapting to permanently high oil prices
* there's some more arguments I can come up with, but I'm too tired. Going to hit the sack

Anyway, point of comparison: late British Empire, late Roman empire - Imperial overstretch is the name. Not that the US would become a nation of beggars, far from it, but the dominance of world affairs will soon be over

am still studying the write - ups. i do know that in the last days the US will be isolated because of internal problems.

obong:

I think you're wrong about these countries not wanting to undermine development in africa. Don't you realize that if africa, the most resource rich continent, develops that it will raise the price of basic commodities? Look at what china and india are doing to the price of oil, and add africa to that. that will directly impact negaively on the west's standard of living. Price of cocoa, tea, coffee, oil, coltane, rubber, and various minerals will become more expensive to acquire.

I don't think you know the extent of france's interests in Africa, if you think its limited to a few companies. France's cultural history is also tied to africa, as well as its military, economic and political might. If you have a chance, read the article below.

http://www.irinnews.org/report.asp?ReportID=49310&SelectRegion=West_Africa

I'm very well aware of the unique position of France in that regard. Their colonisation of Africa has been anything except a rational thing (compared to the British) and that still shows in their current interference in the affairs of their ex-colonies.

Now concerning the price of resource, there will indeed be an effect, but you're probably overstating the importance of the cost of basis resources in the pricing of commodities. The main impact would be felt in energy resources (oil, natural gas, hydro electricity). I do not think it will impact the standard of living in the west - except maybe in the US where they turn wasting natural resources into a national sport

I would certainly see a push for a more conservationist approach to development, which is a good thing, but it does not need to have a huge effect on the standard of living (except if you would call the ability to buy Ethiopian strawberries in the middle of the winter at rock bottom prices a major impact on the standard of living )