Iran to replace dollar with euro in foreign deals
Mon Dec 18, 2006 22:44

Iran to replace dollar with euro in foreign deals
Dec 18 4:51 AM US/Eastern


The Iranian government said it has ordered the central bank to transform the state's dollar-denominated assets held abroad into euros and use the European currency for foreign transactions.

"The government has ordered the central bank to replace the dollar with the euro to limit the problems of the executive organs in commercial transactions," government spokesman Gholam Hossein Elham told reporters Monday.

"We will also employ this change for Iranian assets (in dollars) held abroad."

The move comes amid mounting pressure from the United States for the UN Security Council to agree sanctions against Iran over its controversial nuclear programme.

Elham added that Iran's budget would in future be calculated according to euros.

"Until now the budget has been calculated according to revenues in dollars but this calculation will now change."






Europe's dream of promoting the euro as a competitor
to the U.S. dollar may get a boost from SADDAM HUSSEIN.
Iraq says that from now on, it wants payments for its
oil in euros, despite the fact that the battered
European currency unit, which use to be worth quite
a bit more than $1, has dropped to about 82 cents.
Iraq says it will no longer accept dollars for oil
because it does not want to deal "in currency of the

The switch to euros would cost the U.N. a small
fortune in accounting paperwork changes. It would also
reduce the interest earnings and reparations payments
that Iraq is making for damage it caused during the Gulf War,
a shortfall the Iraqis would have to make up.

The move hurts Iraq, the U.N. and the countries receiving
reparations. So why is Saddam doing it? Diplomatic
sources say switching to the euro will favor European
suppliers over U.S. ones in competing for Iraqi contracts,
and the p.r. boost that Baghdad would probably get in
Europe would be another plus.

-By William Dowell/ New York City


Saddam Turns His Back on Greenbacks
By WILLIAM DOWELL/NEW YORK CITY,10987,998512,00.html


The Euro And The War On Iraq
By Amir Butler

As Mark Twain once noted, prophecy is always difficult, particularly
with regards to the future. However, it is a safe bet that as soon as
Saddam is toppled one of the first tasks of the America-backed regime
will be to restore the US dollar as the nation's oil currency.

In November 2000, Iraq began selling its oil for euros, moving away from
the post-World War II standard of the US dollar as the currency of
international trade. Whilst seen by many at the time as a bizarre act of
political defiance, it has proved beneficial for Iraq, with the euro
gaining almost 25% against the dollar during 2001. It now costs around
USD$1.05 to buy one Euro.

Iraq's move towards the euro is indicative of a growing trend. Iran has
already converted the majority of its central bank reserve funds to the
euro, and has hinted at adopting the euro for all oil sales. On December
7th, 2002, the third member of the axis of evil, North Korea, officially
dropped the dollar and began using euros for trade. Venezuela, not a
member of the axis of evil yet, but a large oil producer nonetheless, is
also considering a switch to the euro. More importantly, at its April
14th, 2002 meeting in Spain, OPEC expressed an interest in leaving the
dollar in favour of the euro.

If OPEC were to switch to the euro as the standard for oil transactions,
it would have serious ramifications for the US economy. Oil-consuming
economies would have to flush the dollars out of their central bank
holdings and convert them to euros. Some economists estimate that with
the market flooded, the US dollar could drop up to 40% in value. As the
currency falls, there would be a monetary evacuation by foreign
investors abandoning the US stock markets and dollar-denominated assets.
Imported products would cost Americans a lot more, and the trade deficit
would be magnified.

It is foreign demand for the US dollar that funds the US federal budget
deficits. Foreign investors flush with dollars typically look to US
treasury securities as a means of secure investment. With a large
reduction in such investment, the country could potentially go into
default. Things could turn very bad, very quickly.

In May 2004 an additional 10 member nations will join the European
Union. At that point, the EU will represent an oil consumer 33% larger
than the United States. In order to mitigate currency risks, the
Europeans will increasingly pressure OPEC to trade in euros, and with
the EU at that stage buying over half of OPEC oil production, such a
change seems likely.

This is a scenario that America cannot afford to see eventuate. The US
will go to any length to fend off an attempt by OPEC to dump greenbacks
as its reserve currency. Attacking Iraq and installing a client regime
in Baghdad may have a preventative effect. It will certainly ensure that
Iraq returns to using dollars and provide a violent example to any other
nation in the region contemplating a migration to the euro.

An American-backed junta in Iraq would also enable the US to smash
OPEC's hold over oil prices. The US or its client regime could increase
Iraqi oil production to levels well beyond OPEC quotas, driving prices
down worldwide and weakening the economies of the oil producing nations,
thus lessening their likelihood of abandoning the dollar. It would have
the short term effect of reducing the profits of domestic oil companies,
but the long term effect of securing America's economic hegemony.

The frequently offered canard of the Left that this war is being fought
to secure oil revenues for American oil companies may have some truth to
it. However, a more plausible explanation may be that the Bush
administration is waging war to protect the dollar and smash the OPEC
hold over international oil prices. It's a war whose purpose is bigger
than Halliburton or Exxon: it's a war being fought to maintain America's
position in the world.

Attending the 1992 Earth Summit in Rio, George Bush Senior told the
world that, "the American way of life is not negotiable". As cruise
missiles rain on Iraq, we are learning just how 'non-negotiable' that
way of life really is.

Amir Butler is executive director of the Australian Muslim Public
Affairs Committee (AMPAC), and writes for He can be
contacted at .


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