THE COST OF WAR
Some have claimed that an American invasion of Iraq would cost so many
billions of dollars that oil returns would never justify such an action.
But when the invasion is placed in the context of the protection of the
entire US economy for now and into the future, the balance of the
argument changes.
Further, there are three other vital factors:
First, America will be asking others to help pay for the war because it
is protecting their interests. Japan and Saudi Arabia made serious
contributions to the cost of the 1991 Gulf war.
Second -- in reality, war will cost the USA very little -- or at least,
very little over and above normal expenditure. This war is already paid
for! All the munitions and equipment have been bought and paid for. The
USA would have to spend hardly a cent on new hardware to prosecute this
war -- the expenditure will come later when munitions and equipment have
to be replaced after the war. But amunitions, hardware and so on are
being replaced all the time -- contracts are out. Some contracts will
simply be brought forward and some others will be ramped up a bit, but
spread over a few years, the cost will not be great. And what is the
real extra cost of an army at war compared with maintaining the standing
army around the world, running exercises and so on? It is there, but it
is a relatively small sum.
Third -- lots of the extra costs involved in the war are dollars spent
outside America, not least in the purchase of fuel. Guess how America
will pay for these? By printing dollars it is going to war to protect.
The same happens when production begins to replace hardware components,
minerals, etc. are bought in with dollars that go overseas and exploit
America's trading advantage.
The cost of war is not nearly as big as it is made out to be. The cost
of not going to war would be horrendous for the USA -- unless there were
another way of protecting the greenback's world trade dominance.
AMERICA'S TWO ACTIVE ALLIES
Why are Australia and Britain supporting America in its transparent
Iraqi war ploy?
Australia, of course, has significant US dollar reserves and trades
widely in dollars and extensively with America. A fall in the US dollar
would reduce Australia's debt, perhaps, but would do nothing for the
Australian dollar's value against other currencies. John Howard, the
Prime Minister, has long cherished the dream of a free trade agreement
with the USA in the hope that Australia can jump on the back of the free
ride America gets in trade through the dollar's position as the major
trading medium. That would look much less attractive if the euro took
over a significant part of the oil trade.
Britain has yet to adopt the euro. If the US takes over Iraq and blocks
the euro's incursion into oil trading, Tony Blair will have given his
French and German counterparts a bloody nose, and gained more room to
manouevre on the issue -- perhaps years more room.
Britain would be in a position to demand a better deal from its EU
partners for entering the "eurozone" if the new currency could not make
the huge value gains guaranteed by a significant role in world oil
trading. It might even be in a position to withdraw from Europe and link
with America against continental Europe.
On the other hand, if the US cannot maintain the oil trade dollar
monopoly, the euro will rapidly go from strength to strength, and
Britain could be left begging to be allowed into the club.
THE OPPOSITION
Some of the reasons for opposition to the American plan are obvious --
America is already the strongest nation on earth and dominates world
trade through its dollar. If it had control of the Iraqi oil and a base
for its forces in the Middle East, it would not add to, but would
multiply its power.
The oil-producing nations, particularly the Arab ones, can see the
writing on the wall and are quaking in their boots.
France and Germany are the EU leaders with the vision of a resurgent,
united Europe taking its rightful place in the world and using its euro
currency as a world trading reserve currency and thus gaining some of
the free ride the United States enjoys now. They are the ones who
initiated the euro oil trade with Iraq.
Russia is in deep economic trouble and knows it will get worse the day
America starts exploiting its take-over of Afghanistan by running a
pipeline southwards via Afghanistan from the giant southern Caspian oil
fields. Currently, that oil is piped northwards -- where Russia has
control.
Russia is in the process of ramping up oil production with the
possibility of trading some of it for euros and selling some to the US
itself. Russia already has enough problems with the fact that oil is
traded in US dollars; if the US has control of Iraqi oil, it could
distort the market to Russia's enormous disadvantage. In addition,
Russia has interests in Iraqi oil; an American take over could see them
lost. Already on its knees, Russia could be beggared before a mile of
the Afghanistan pipeline is laid |
