Reply #4: Related Paper

[Strelnikov_]

Sanctions supposedly intended to counter a 'rogue' nuclear program can have impacts on other 'undesirable' behavior.

From:

Hysteria Over Iran and a New Cold War with Russia:
Peak Oil, Petrocurrencies and the Emerging Multi-Polar World
By William Clark
December 10, 2006


From the Iranian perspective, the US attempts to cut-off financial transactions utilizing the dollar, euro, yen and pound sterling may have pushed Iran to make the unusual decision to offer oil sales in its own domestic currency. The long-anticipated petroeuro option is far more attractive from a monetary and international trade perspective, since the money supply and liquidity of the Iranian rial is rather limited. On the other hand, from Tehran’s perspective there is logic to this decision, as Iran is trying to circumvent the US dollar and associated banking apparatus. Using the rial as a petrocurrency is likely a purposeful strategy designed to insulate Iran from US attempts to seize its oil revenue by clandestine efforts outside the legal framework of the UN Security Council.

Washington is now attempting to counter this stratagem by blacklisting Iran’s largest bank, Bank Saderat. Washington claims this is necessary to prevent Iran from “abusing” the global banking system, including providing financial support to Hezbollah and Hamas. In a recent interview, US Deputy Secretary of the Treasury Robert Kimmitt (pictured) was interviewed by Der Speigel, where he warned European banks to “Be very, very careful with Iran.” <97> The inherent difficulty of Washington’s ongoing strategy was acknowledged in the Der Speigel article with a quote by the president of the Association of German Banks, Klaus-Peter Muller, who stated: “one can hardly expect banks to terminate long-cultivated business relationships based on vague-suspicions.”

The hypocrisy of Washington’s strategy is that the main financiers of Osama bin Laden/Al Qaeda sponsored terrorism have long been wealthy members of the Saudi elite, including former leading Saudi banker Khalid bin Mahfouz. Notably, the Bush administration has not engaged, at least publicly, in any punitive policies towards Osama bin Laden’s powerful Saudi-based financiers. It is too early to know if this smart sanctions plan will work, but it should be noted that futures exchanges assume a free flow of capital across national borders, and this may not be possible if Iran is put under sanctions or the threat thereof. Of course, the US may also wish to create the impression of a looming war against Iran, therefore hindering Iran’s ability to attract foreign capital or promote foreign participation on its oil exchange. In addition, futures exchanges require an efficient banking system. The Iranian currency is not fully convertible, and the establishment of an exchange
that trades international contracts would likely require that the rial become fully convertible.

. . .

Summarizing, if Iran’s oil bourse becomes even moderately successful, Iran and other oil exporting nations will be able to circumvent the petrodollar system that props up US deficit spending. Moreover, if they can set their own price via a Persian Gulf oil marker, they could potentially undercut oil prices set by London and/or New York. Lastly, by offering oil trades in a more valuable and stable currency such as the euro, Iran could siphon off customers from the New York and London exchanges and make them far less powerful in the global political economy. Although not discussed by the US corporate media, as the world’s spare oil capacity evaporates before the onset of Peak Oil, the economic bargaining power of the major oil and gas exporters is inexorably increasing, opening the door to yet other non-dollar petrocurrencies. Russia is actively pursuing this option.