Dollar Hegemony and the Iran Nuclear Issue: The Story behind the Story
By Peter Koenig “International treaties are being held hostage by the west. There has been a lot of interference inside Iran by Washington. The nuclear issue is just an excuse to undermine the Islamic Republic and has very little to do with anything else.” - Interview with RT by Soraya Sepahpour-Ulrich, 6 April 2015.
April 10, 2015 "ICH" - This statement is right on the dot. The artificially created nuclear issue – is just an excuse for regime change… perhaps yes. But there is more to it. While the expressed views on what the recent “Lausanne deal” really brought for Iran and the 5+1 participants may differ widely, one must sense that there is another story behind the story.
A little detail, nobody talks about, and maybe most pundits – even honest ones – are not aware of. In 2007 Iran was about to launch the Iranian Oil Bourse (IOB) – an international hydrocarbon exchange, akin to a stock exchange, where all countries, hydrocarbon producers or not, could trade this (still) chief energy source in euros, as an alternative to the US dollar.
This, of course would have meant the demise of dollar hegemony – the liberation of the world from the dollar stranglehold. This was inadmissible for Washington. It would have meant the end of the dollar as the world’s chief reserve currency, and giving up the instrument of coercing the world into accepting Washington’s dictate, the tool that serves to dish out sanctions left and right – no way!
Hundreds of billions of dollars’ worth of hydrocarbons are traded on a daily basis; huge amounts of dollars that find no justification in the US economy, but – they allow the FED to print money at will – and every new dollar is a dollar of international debt, filling the reserve coffers of nations around the world, thereby also gradually devaluing the US currency, but barely affecting the US economy.As long as petrol and gas are traded in dollars – a ‘negotiated’ imposition on Saudi Arabia by Father Bush, friend of the House of Saud, in the early 70s under the Carter Administration, in return for military protection – and as long as the world needs hydrocarbons to fuel its industries, so long the world will need dollars, insane amounts of dollars. The so-called Quantitative Easing (QE) allowed the US to print hundreds of billions, if not trillions of dollars to finance wars and conflicts around the globe, and to fund the relentless Zionist-Anglo-Saxon lie and propaganda machine. No problem. It’s just debt. Debt – paradoxically carried by the very countries that the empire eventually fights and lies to; countries which hold dollars in their reserves. Hardly anybody knows that the real US debt, consisting of ‘unmet obligations’ has risen in the last 7 years from about 48 trillion to close to 130 trillion dollars in 2014 (GAO – General Accounting Office), about seven and a half times the US GDP. Comparatively speaking, a debt by a multiple higher than that of ‘troika’ (EU-IMF-ECB) badgered and shattered Greece. Allowing a country like Iran destroying the US hegemon’s power base by taking a sovereign decision to abandon the dollar for oil and gas trading – no way. A pretext had to be invented to surmise the country which according to George W. Bush became a link of the axis of evil. What better than the nuclear threat – with the full support of Israel, of course. Bolstered by worldwide media manipulation, Iran became a nuclear menace not only for Israel and the entire region, but also for the US of A. A threat for the empire, some 15,000 km away, when at that time the most powerful Iranian long-range missile had a range capacity of about 2,000 km. This sounds almost like the latest (bad) Obama joke, accusing Venezuela to be an imminent threat to the United States. It would be laughable, if it wouldn’t be so sad, so criminal actually. Because this lie is followed by economic warfare, akin to the one led against Russia – which – eventually backfired punishing the ‘sanctioneers’ themselves, especially the Europeans. When the real impact of the ‘sanctions’ became evident, the MSM were simply silent. People easily forget. Without opening their eyes, they remain gullible for the next lie. The dollar is the ultimate pillar of the empire’s world hegemony. Without it, it is doomed. Washington knows it. You don’t have to look far to find similar examples to that of Iran. When Saddam Hussein announced in the late 1990’s that he would sell Iraq’s petrol in euros, as soon as the embargo would end in 2000, a reason had to be found to invade his country. The WMD menace that never existed was sold around the world, including at the UN Security Council, and – bingo – the western media killing machine had created a motive for invading Iraq and to murder Saddam. As if this wasn’t enough, he was suddenly linked to 9/11 – and big miracle, Americans bought even this lie. Muammar Gadhafi was another victim for asserting his country’s sovereignty. He announced a new hard currency for Africa, the Gold Dinar, backed by Libyan gold. Libyan and African hydrocarbons could henceforth be traded in an alternative currency to the dollar, the Gold Dinar. Gadhafi also intended to free Africans from the western predatory telephone giants, by introducing a Libya sponsored low-price mobile network throughout Africa. Gadhafi was atrociously murdered by CIA handlers on 20 October 2011. Libya today is a hotbed of civil unrest and murder. Iran’s case is a bit more complicated. Iran has Russia and China backing. Nevertheless, with the propaganda machine painting a nuclear danger to the world, Iran could be brought to her knees, no problem. No matter what logic said and still says, no matter that the 15 US key intelligence agencies assured the then Bush Administration that Iran has no plans of manufacturing a nuclear bomb, that Iran was genuine in using its enriched uranium for power generation and for medical purposes. No matter that Iran’s enrichment process reached a mere 20% purity, enough for medical purposes, but far from the 97% required for a nuclear bomb, Iran had to be oppressed and under a web of lies made a pariah state, a risk for the world. That’s what the average American and European today believes. It’s a shame. Nobody openly dares talking about the only nuclear threat in the Middle East, Israel. That is another shame.
No matter what the Lausanne deal is today, or next June, after three more months of intense, but useless negotiations, no matter what a UN resolution would say about the deal, about the lifting of sanctions – Washington will always find a pretext to keep the stranglehold on Iran. As Soraya Sepahpour-Ulrich said, “International treaties are being held hostage by the west”- there is no international compact or law that prevents the only rogue state in the world, the atrociously criminal US empire from crushing its way to satisfy its abject greed.
Always – that is, as long as empire survives. And yes, the economic survival is only a question of time. Fifteen years ago some 90% of worldwide reserve holdings were kept in US dollars, or dollar denominated securities. In 2010 the ratio shrunk to about 60%; today it is approaching 50%. When it sinks below 50%, governments around the globe may gradually lose confidence in the greenback, seeing it as what it is and has been for the last 100 years, nothing else but a fraudulent Mickey-Mouse currency at the service of a Zionist dominated western financial system, not worth the paper it’s printed on; a currency that has been abusing and impoverishing the ‘non-aligned’ world at will.Iran knows it, Russia knows it – without direct confrontation, the empire’s grip may not hold as long as the Iran deal is planned to last, some 20 to 30 years. Therefore, the large concessions that Iran had to make for ‘peace’ – to reduce its enrichment process to 3.37% just enough to fuel power plants, and to sell or transfer its stock of 20% enriched medical-grade uranium abroad – these concessions to reach this ‘glorious’ interim agreement, are unimportant. It is a winner for Iran, as announced by Iran’s Foreign Minister, Mohammad Javad Zarif, as well as Russia’s Sergei Lavrov. Even if Washington derails the agreement within the next three months, or at any time at will, as is likely, Iran has won a battle of credibility worldwide, as she is ready to adhere to a signed agreement, no matter how far its sets her back.
In fact, the rotten palaces of empire are crumbling as these lines are going to print. Two new international Asian based development and investment banks have been created within the last two years. The BRICS Development Bank was signed into existence in Brazil in July 2014 by the leaders of the 5 BRICS countries – Brazil, Russia, India, China and South Africa. Earlier this year sponsored by China and 20 other countries, the Asian Investment and Infrastructure Bank – AIIB, located in Shanghai, was created. Iran is a founding member of the AIIB.
Ecuador’s Foreign Minister has also just announced that the Venezuela sponsored Banco del Sur – development bank for the Latin American hemisphere – will become operational in the course of 2015. These three banks are direct challenges to the Washington dominated IMF, World Bank and IDB (Inter-American Development Bank). Guess which ones are the most notorious ‘allies’ of Washington and which against the will of the White House, are joining AIIB’s forty-some membership? – They include the epitome of neoliberal Europeans – UK, France, Germany, Italy and Switzerland.Washington’s seemingly blind and preposterous arrogance drives the closest allies into the ‘adversary’s camp. The FED (Federal Reserve Bank) announced on 2 April 2015 that it fined the German Commerzbank with 1.7 billion US dollars for dealing with Cuba, Sudan and Iran – Washington sanctioned countries.
This can only happen as long as all international banking transactions have to be channeled through US banks and controlled by the Rothschild dominated BIS – Bank for International Settlement. Russia, China and other SCO (Shanghai Cooperation Organization) aligned countries have already broken away from the dollar system for international contracts and money transfers, including hydrocarbon trading. They are about to launch an alternative to the western ruled privately owned SWIFT transfer systems. The new system could be joined by any country wanting to break loose from the predatory dollar claws.
When even the staunchest stooges of empire seek alliances in the East, the writing is on the wall, that the economic winds are shifting, that a tectonic sea-change is in the offing and that the Iran nuclear deal, one way or another, doesn’t really matter in the foreseeable future.
Peter Koenig is an economist and geopolitical analyst. He is also a former World Bank staff and worked extensively around the world in the fields of environment and water resources. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe.Soraya Sepahpour Ulrich interview with RT International |
A man feeds pigeons in central Athens, Greece, February 9, 2015. Leading German politicians saw the "bailout of Greece" as an opportunity to serve their big-bank supporters with a second but indirect bailout that was disguised as "for Greece." (Photo: Angelos Tzortzinis/The New York Times)
As economic crises, declines and dislocations increasingly hurt or threaten people around the globe, they provoke questions. How are we to understand the forces that produced the 2008 crisis, the crisis itself, with its quick bailouts and stimulus programs, and now the debts, austerity policies and deepening economic inequalities that do not go away? Economies this troubled force people to think and react. Some resign themselves to "hard times" as if they were natural events. Some pursue individual strategies trying to escape the troubles. Some mobilize to fight whoever they blame for it all. Many are drawn to scapegoating, usually encouraged by politicians and parties seeking electoral advantages.
Leading German politicians saw the "bailout of Greece" as an opportunity to serve their big-bank supporters.
For example, Germany's recent history has featured reduced wages (especially via increasing part-time jobs), fewer social welfare protections, major bank bailouts in the crisis of 2008, rising inequality of income and wealth, austerity policies and so on. Its leaders around Merkel have responded by carefully rescripting their recent financial maneuvers as "Europe's bailout of Greece" in a classic exercise in scapegoat economics. Three institutions (the "troika" of the European Central Bank, the European Commission and the International Monetary Fund) lent the Greek government money since 2010. Those loans were used chiefly to pay off the Greek government's accumulated debts to private European banks (including especially German, French and Greek banks). The "bailout of Greece" was thus really an indirect bailout of those private banks.
Without that indirect bailout, those private banks would have suffered the usual losses that come when banks make loans that cannot be repaid. Those losses would have been costly for shareholders in those banks. The major shareholders among them include some of Germany's richest and biggest capitalists. With their usual political power, they might have gotten the German government to bail them out directly again (since the German government had already done that directly a few years earlier in the 2008/2009 crisis). But such a second direct bank bailout would have been wildly unpopular with German voters and therefore politically dangerous for Germany's top politicians.
Leading German politicians saw the "bailout of Greece" as an opportunity to serve their big-bank supporters with a second but indirect bailout that was disguised as "for Greece." This gambit protected their political careers from voters' wrath while getting all of Europe to share the cost of loans to Greece. German leaders then took the lead in insisting loudly that Greeks pay dearly for Europe's loans. Merkel imposed a crushing austerity regime - with the cooperation of Greece's two mainstream political parties - that shifted massive resources away from Greece's public services for use instead to secure interest on and repayment of the troika's loans.
The opportunism of German leaders was also an exercise in scapegoat economics. German bankers and political leaders - supported by many other European leaders - distracted and deflected their own people's resentments over growing economic problems. Instead of popular anger turning against German, French and other European bankers, capitalists, their political servant and the capitalist system itself, it was redirected against Greece and Greeks. German media dutifully led the way in recasting the European loans to Greece (that ended up mostly in private European big banks) as supports for "lazy, overpaid and over-pensioned" Greeks that were unfair and costly burdens for hardworking German and other European taxpayers.
Politicians demonize public employees as lazy, greedy and overpaid - all remarkably similar to German depictions of Greeks.
By means of this heavily staged public "Greek" drama, Germany added international economic scapegoating to the domestic scapegoating already widespread in Europe. It had repeatedly targeted communities of immigrants. Typically, the immigrants first arrived to provide employers (who often encouraged immigration) with lower-paid workers and thus higher profits. Then when the inevitable next capitalist business-cycle downturn arrived, the resulting discontent of unemployed and recession-burdened people was deflected and turned against immigrants. They were blamed as if they "took away jobs" from nonimmigrants rather than unemployment being the periodic burden, for immigrants and nonimmigrants alike, imposed by the profit-driven, fundamentally unstable capitalist system.
The United States has repeatedly displayed the same blame game with immigrants and with ethnic minorities. In the wake of the crisis since 2007, it is extending domestic scapegoating to still others. Governors in the US now increasingly attack state employees, their unions and pensions as if they, rather than the crisis, had suddenly become the economic problem. Mayors across the country do the same to municipal workers. Of course, both state and municipal budget problems since 2007 are primarily the results of high unemployment and reduced consumer spending. In short, it was and remains the crisis since 2007 that played and plays the key role in cutting governments' tax revenues and hurting government budgets. Growing and more effective tax-evasion strategies of business and the rich have had the same effect. Responding to lowered tax collections, politicians fearful of damage to their careers refuse to raise tax rates. Instead they embrace spending cuts that they justify by means of scapegoat economics.
Thus they demonize public employees as lazy, greedy, overpaid, underworked, over-pensioned, etc. - all remarkably similar to German depictions of Greeks. Governors practice scapegoat economics by promising to protect "the public" from tax increases by "not pandering to" public employees and their unions, by "reining in" their pensions, etc. Those politicians act as if public employees and their pensions were suddenly the problem rather than a dysfunctional economic system. They similarly miss the stark reality of the dysfunctional political system they operate: It cuts government help to people in economic crises just when they need it most. Instead, US political leaders, like their German counterparts, use scapegoat economics to justify their selective spending cuts.
Capitalism's relocation deepens economic inequality at both poles.
Scapegoat economics this time also serves capitalism's global relocation. For decades, existing factories, offices and stores have been moving from old capitalist growth centers (western Europe, north America, and Japan) to new centers (China, India, Brazil, etc.). Similarly, enterprises are growing more in the new rather than the old centers. Headquarters sometimes remain in the old centers even as enterprise facilities locate elsewhere. Jet travel, computers and telecommunications make all this manageable. The capitalist competition that impels this relocation also means that the old centers lose many well-paid occupations with ample benefits and job security. Workers in places like Germany and the US are increasingly forced to settle for lower-paid, insecure jobs with fewer benefits. While jobs and wages grow more quickly in the new centers, wages there remain so low that huge profits reinforce capitalism's global relocation.
As capitalists relocate, populations everywhere must adjust to and accommodate all the usually attendant frictions, sufferings and costs. In the old centers, unemployment and lower-paid jobs undermine governments' tax revenues. Given resistance to tax increases, governments turn increasingly to expenditure cuts in their accommodation to capitalism's relocation. This often worsens unemployment and wage rates. More importantly it further depresses mass standards of living. Consumption, household finances and relationships, marriage and career decisions: All are caught up painfully in the adjustment process. The same applies, likely more traumatically, to capitalism's new centers. There, formerly agricultural and rural people are transformed quickly into industrial and urban populations living in extremely overcrowded and poorly provisioned slums.
A new politics organized around scapegoat economics appeals to voters by promising to "protect" them from austerity policies.
Capitalism's relocation is socially disruptive in yet another basic way. It deepens economic inequality at both poles. Profits rise and wages stagnate in the old centers. Employers distribute the rising profits chiefly to shareholders and top executives and secondarily to upper management and professionals helping them operate corporations. An often spectacular growth in income and wealth inequalities afflicts the old centers. In the new centers, arriving capital needs and makes partnerships with local capitalists and government officials. The latter become extremely wealthy more quickly than local wages rise, and so inequalities of wealth and income deepen in the new centers too.
The gains and losses of relocating capitalism are very unequally distributed in both its old and new centers. This only aggravates the social tensions already emerging from the many adjustments and accommodations people are forced to make. Suffering from personal, financial and community losses, individuals and groups often feel betrayed by "their" political and economic organizations. In the US, for example, many working people believe that the Democratic Party and labor unions had promised to "protect" them but failed to do so, especially in the crisis and debt-funded bailouts since 2007. They have come to fear that now they will be required to absorb the costs of dealing with those debts by being subjected to austerity policies while "others" get protected from those policies. Feeling betrayed or abandoned by their traditional political representatives, many become susceptible to a new politics organized around scapegoat economics.
As exemplified by new Republican governors in the upper mid-West sensing electoral opportunity, this politics appeals to voters by promising to "protect" them from austerity policies (in the US, unlike Europe, "austerity" is not the name used). This means, first and foremost, that voters will be spared tax increases. These are demonized as always and necessarily "bad" economics for everyone. But the Republican Governors now go further and promise to protect voters also from spending cuts by making sure that those cuts focus on "others." Enter scapegoat economics. The governors find "others" to be scapegoated in response to crisis-driven and capitalist relocation-driven declines in tax revenues. First of all, those others are - you guessed it - the traditional targets: those on welfare, in inner cities, immigrants, etc. The often-racist overtones of such appeals are only too well known. Nowadays, the second set of those "others" has come to include public employees, their unions, salaries, pensions, etc. To secure their careers, politicians promise voters to protect them by cutting government spending on both sets of scapegoated others.
When it works, such politics sets one part of the population suffering from capitalist relocation, crisis and austerity policy against another part. This permits big banks, large corporations and the rich, who own and direct them - those with the most responsibility for causing the crisis - to escape paying for it. They escape in part because their wealth and power made sure that they benefited first and most from the government bailouts in 2008 to 2010. They also escape because scapegoat economics enables them and their political friends to shift the burden of paying for the crisis onto certain of its victims while "protecting" other victims from further victimization. Perhaps capitalism inherited scapegoat economics from prior economic systems, but capitalism's crises keep renewing that ugly injustice.
