Dear Friends and Colleagues,

Whatever your political persuasion I urge you to read the attached article by

Geoffrey Heard, a political comentator in Australia. Rarely has the economic
basis for any war been outlined so clearly. This is relatively common
knowledge in the rest of the world. It is also obvious why it is not being
made apparent here.
The attached file is a PDF. It is not long (<32 KB), but if you are pressed
for time, please just read at least the first 4 pages - it will take no more
than a few minutes, and to facilitate that I have inserted the text below. If
you would like a Word file of the whole document, please let me know.
There is very little time. If you know of any possible outlets for this
article or a synopsis, in the "mainstream" media, please use them. Otherwise
please send this on to everyone you know. Some double or triple hits will be
minor nuisances compared to the impact to come.
Best wishes,
Colin

-------------------------------------

*** It's not about oil or Iraq. It's about the US and Europe going
head-to-head on world economic dominance. ***

Geoffrey Heard © 2003.

Summary: Why is George Bush so hell bent on war with Iraq? Why does his
administration reject every positive Iraqi move? It all makes sense when you
consider the economic implications for the USA of not going to war with Iraq.
The war in Iraq is actually the US and Europe going head to head on economic
leadership of the world.

America's Bush administration has been caught in outright lies, gross
exaggerations and incredible inaccuracies as it trotted out its litany of
paper thin excuses for making war on Iraq. Along with its two supporters,
Britain and Australia, it has shifted its ground and reversed its position
with a barefaced contempt for its audience. It has manipulated information,
deceived by commission and omission and frantically "bought" UN votes with
billion dollar bribes.

Faced with the failure of gaining UN Security Council support for invading
Iraq, the USA has threatened to invade without authorisation. It would act in
breach of the UN's very constitution to allegedly enforced UN resolutions.

It is plain bizarre. Where does this desperation for war come from?

There are many things driving President Bush and his administration to invade
Iraq, unseat Saddam Hussein and take over the country. But the biggest one is
hidden and very, very simple. It is about the currency used to trade oil and
consequently, who will dominate the world economically, in the foreseeable
future -- the USA or the European Union.

Iraq is a European Union beachhead in that confrontation. America had a
monopoly on the oil trade, with the US dollar being the fiat currency, but
Iraq broke ranks in 1999, started to trade oil in the EU's euros, and
profited. If America invades Iraq and takes over, it will hurl the EU and its
euro back into the sea and make America's position as the dominant economic
power in the world all but impregnable.

It is the biggest grab for world power in modern times.

America's allies in the invasion, Britain and Australia, are betting America
will win and that they will get some trickle-down benefits for jumping on to
the US bandwagon.

France and Germany are the spearhead of the European force -- Russia would
like to go European but possibly can still be bought off.

Presumably, China would like to see the Europeans build a share of
international trade currency ownership at this point while it continues to
grow its international trading presence to the point where it, too, can share
the leadership rewards.

DEBATE BUILDING ON THE INTERNET

Oddly, little or nothing is appearing in the general media about this issue,
although key people are becoming aware of it -- note the recent slide in the
value of the US dollar. Are traders afraid of war? They are more likely to be
afraid there will not be war.

But despite the silence in the general media, a major world discussion is
developing around this issue, particularly on the internet. Among the many
articles: Henry Liu, in the 'Asia Times' last June, it has been a hot topic 
on
the Feasta forum, an Irish-based group exploring sustainable economics, and 
W.
Clark's "The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and
Geostrategic Analysis of the Unspoken Truth" has been published by the 
'Sierra
Times', 'Indymedia.org', and 'ratical.org'.

This debate is not about whether America would suffer from losing the US
dollar monopoly on oil trading -- that is a given -- rather it is about
exactly how hard the USA would be hit. The smart money seems to be saying the
impact would be in the range from severe to catastrophic. The USA could
collapse economically.

OIL DOLLARS

The key to it all is the fiat currency for trading oil.

Under an OPEC agreement, all oil has been traded in US dollars since 1971
(after the dropping of the gold standard) which makes the US dollar the de
facto major international trading currency. If other nations have to hoard
dollars to buy oil, then they want to use that hoard for other trading too.
This fact gives America a huge trading advantage and helps make it the
dominant economy in the world.

As an economic bloc, the European Union is the only challenger to the USA's
economic position, and it created the euro to challenge the dollar in
international markets. However, the EU is not yet united behind the euro --
there is a lot of jingoistic national politics involved, not least in Britain
-- and in any case, so long as nations throughout the world must hoard 
dollars
to buy oil, the euro can make only very limited inroads into the dollar's
dominance.

In 1999, Iraq, with the world's second largest oil reserves, switched to
trading its oil in euros. American analysts fell about laughing; Iraq had 
just
made a mistake that was going to beggar the nation. But two years on, alarm
bells were sounding; the euro was rising against the dollar, Iraq had given
itself a huge economic free kick by switching.

Iran started thinking about switching too; Venezuela, the 4th largest oil
producer, began looking at it and has been cutting out the dollar by 
bartering
oil with several nations including America's bete noir, Cuba. Russia is
seeking to ramp up oil production with Europe (trading in euros) an obvious
market.

The greenback's grip on oil trading and consequently on world trade in
general, was under serious threat. If America did not stamp on this
immediately, this economic brushfire could rapidly be fanned into a wildfire
capable of consuming the US's economy and its dominance of world trade.

HOW DOES THE US GET ITS DOLLAR ADVANTAGE?

Imagine this: you are deep in debt but every day you write cheques for
millions of dollars you don't have -- another luxury car, a holiday home at
the beach, the world trip of a lifetime.

Your cheques should be worthless but they keep buying stuff because those
cheques you write never reach the bank! You have an agreement with the owners
of one thing everyone wants, call it petrol/gas, that they will accept only
your cheques as payment. This means everyone must hoard your cheques so they
can buy petrol/gas. Since they have to keep a stock of your cheques, they use
them to buy other stuff too. You write a cheque to buy a TV, the TV shop 
owner
swaps your cheque for petrol/gas, that seller buys some vegetables at the
fruit shop, the fruiterer passes it on to buy bread, the baker buys some 
flour
with it, and on it goes, round and round -- but never back to the bank.

You have a debt on your books, but so long as your cheque never reaches the
bank, you don't have to pay. In effect, you have received your TV free.

This is the position the USA has enjoyed for 30 years -- it has been getting 
a
free world trade ride for all that time. It has been receiving a huge subsidy
from everyone else in the world. As it debt has been growing, it has printed
more money (written more cheques) to keep trading. No wonder it is an 
economic
powerhouse!

Then one day, one petrol seller says he is going to accept another person's
cheques, a couple of others think that might be a good idea. If this spreads,
people are going to stop hoarding your cheques and they will come flying home
to the bank. Since you don't have enough in the bank to cover all the 
cheques,
very nasty stuff is going to hit the fan!

But you are big, tough and very aggressive. You don't scare the other guy who
can write cheques, he's pretty big too, but given a 'legitimate' excuse, you
can beat the tripes out of the lone gas seller and scare him and his mates
into submission.

And that, in a nutshell, is what the USA is doing right now with Iraq.

AMERICA'S PRECARIOUS ECONOMIC POSITION

America is so eager to attack Iraq now because of the speed with which the
euro fire could spread. If Iran, Venezuela and Russia join Iraq and sell 
large
quantities of oil for euros, the euro would have the leverage it needs to
become a powerful force in general international trade. Other nations would
have to start swapping some of their dollars for euros.

The dollars the USA has printed, the 'cheques' it has written, would start to
fly home, stripping away the illusion of value behind them. The USA's real
economic condition is about as bad as it could be; it is the most debt-ridden
nation on earth, owing about US$12,000 for every single one of it's 280
million men, women and children. It is worse than the position of Indonesia
when it imploded economically a few years ago, or more recently, that of
Argentina.

Even if OPEC did not switch to euros wholesale (and that would make a very
nice non-oil profit for the OPEC countries, including minimising the various
contrived debts America has forced on some of them), the US's difficulties
would build. Even if only a small part of the oil trade went euro, that would
do two things immediately: * Increase the attractiveness to EU members of
joining the 'eurozone', which in turn would make the euro stronger and make 
it
more attractive to oil nations as a trading currency and to other nations as 
a
general trading currency. * Start the US dollars flying home demanding value
when there isn't enough in the bank to cover them. * The markets would
over-react as usual and in no time, the US dollar's value would be spiralling
down.
-----------------------------------------------------------------------------
**************************************************
Colin A. Wraight
Professor of Biochemistry and Biophysics
Center for Biophysics & Computational Biology
156 Davenport Hall/MC-147
University of Illinois
607 South Mathews Avenue tel: 217-333-3245
Urbana, IL 61801 fax: 217-244-6615
*************************************************
Jesook Song
Department of Anthropology
University of Illinois, Urbana-Champaign
109 Davenport Hall MC 148
607 South Mathews Street
Urbana, IL 61801
office phone number) 217-333-9168
email) [log in to unmask]

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