The Reasoned Review

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Iran and the Dollar

with 4 comments


America and Iran are now engaging in high-level talks with the reported aim of inducing Iran to abandon its nuclear ambitions. This development comes at a point of extra ammunition for US negotiators, having just revealed their knowledge of a secret enrichment facility in Qom.

But wait a minute. The US Government admits it has known about the Qom facility for at least three years. Why should they choose this particular moment to show their hand? Given that these high-level meetings occur literally on the heels of their Qom revelation, a sort of bargain using the facility as leverage isn’t difficult to imagine. But what do we want from the Iranians?

Administration officials claim the main goal of these talks is to persuade Iran to give up its claims to a bomb, but recent events would suggest that is only a secondary objective. Primarily, our policy planners wish to ensure Iran’s cooperation with the dollar.

Last week, mere days before the US government made public the nuclear facility in Qom, Iran began shifting its foreign currency reserves from the Dollar to the Euro. This comes well after Iran created its own oil exchange, The Iran Oil Bourse, and began trading a majority of its oil in Euros or Yen. It cannot be a coincidence that the US decided to reveal its knowledge of a secret facility and ramp up its vilification campaign immediately after Iran undertook this decision.

Much has been made of the similarities between our current stance toward Iran and our statements regarding Iraq immediately before we invaded (the hysteria over “weapons of mass destruction”, the demonization of their leaders,the open threats, etc.), but to those we can add one more example: Both countries threatened to liquidate their dollar holdings shortly before the melodrama over their “weapons programs” materialized. On October 4, 2000, on the eve of President Bush’s election, Iraq decided to begin selling its oil in Euros, the only OPEC country at the time who dared to do so. The quickening drumbeat in favor of war in Iraq began soon after.

Written by pavanvan

October 1, 2009 at 10:36 pm

4 Responses

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  1. That is an interesting perspective. But don’t you think that, if it were about political economy, the US would be more keen to give in to its corporate lobby and trade with Iran, rather than imposing sanctions that hurt American business?


    February 12, 2010 at 11:25 am

    • Again, I think it goes back to the Iran Oil Bourse. Trading with Iran in Euros or Yen would significantly weaken the already-floundering dollar. I think whatever benefits our multinationals would get by trading with Iran would be offset by the currency disparity. Ultimately, I think our goal is to get Iran to start accepting dollars once again for its oil – something which our policy-planners, in their infinite wisdom, have decided sanctions would best accomplish.

      If we were really pissed at Iran for its nuclear ambitions, why aren’t we saying anything to Russia and China, who supply the majority of Iran’s centrifuges and technical assistance?


      February 12, 2010 at 11:29 am

  2. Well, I think it is mostly because of the American Israel Lobby. Right wing Jews in the US and Israel want to eliminate all of Israel’s potential threats, no matter how many of the people in those places have to suffer. Russia and China, after all, are not threatening Israel.


    February 13, 2010 at 10:57 am

  3. Oh yeah, I definitely agree that the Israel lobby is a big reason for America’s bellicosity towards Iran. Another reason is that once Iran gets N-weapons, we can no longer bully them. Also, Iran going nuclear would likely spark a regional arms race, wherein Saudi Arabia, Egypt, and maybe someone like Syria or something decides they also want N-weapons. So there are a lot of reasons.


    February 14, 2010 at 9:53 am

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