Euros for oil
Iraq strikes blow at
dollar monopoly
By
Rubin Kanowitz
The
rising struggle in the Middle East to break the bonds of U.S. imperialism is
reflected in an event that has been relegated to the financial pages but is
closely watched by both Washington and Wall
Street.
Iraq
announced on Oct. 12 that it will begin carrying out its international oil trade
in Euros instead of U.S. dollars. The funds will be deposited in a French bank.
This
is a first for the international oil trade, which until now has exclusively been
carried out in U.S. dollars. Domination of the international oil market has been
enormously lucrative for U.S. corporations and banks. It increases the demand
for dollars and improves their exchange rate. This gives banks an opportunity to
make profits in the exchange of currencies and generally strengthens U.S.
capitalism
worldwide.
Iraqi
oil exports in September were 2.2 million barrels per day (b/d) or about 5
percent of world exports. Their annual value is approximately $25 billion, based
on a $30-per-barrel price at the well-head.
Total
worldwide crude exports are approximately 40 million b/d and amount to about
$400 billion per year in
trade.
Iraq's
move is not lost on major world oil exporters such as Iran, Libya, Venezuela,
Nigeria and Algeria, all members of the Organization of Petroleum Exporting
Countries, or Mexico. If Iraq succeeds, it will give other countries more
options in how they conduct their
trade.
This
step by Iraq also has to be viewed in the context that the U.S. balance of
trade--the value of its imports of goods and services compared to exports--has
been in a deficit of close to $30 billion per month for some time. This means
its trading partners collectively receive an excess of $30 billion per month in
U.S. currency.
That
excess of dollars abroad is not a problem for U.S. capitalists as long as the
dollar is in strong demand for investments in the stock market, and for plants
and equipment. Furthermore, capitalist governments in Europe and elsewhere have
been selling their gold reserves for dollars and using them in the form of U.S.
government bonds as a reserve for their own currencies. The strong U.S. dollar
in general has had a very favorable impact for U.S. capital.
As
Karl Marx clearly explained, one of the principal functions of money is as a
store of value. Thus a strong and stable currency is of the utmost importance to
the capitalist. An unstable currency, of course, threatens the very preservation
of the capitalist's wealth. To prevent this loss, the capitalist will do
anything.
At
this time and for most of the last decade the U.S. dollar has been supreme
worldwide. Such major currencies as the Euro, the Indian rupee and the South
African rand have been under extreme pressure in relation to the dollar.
But
the step taken by Iraq in the sale of its crude oil exports may herald a turn in
this situation. It certainly is a major development in Iraq's struggle to end
the blockade imposed on it by the U.S. and Britain, and it also can give impetus
to the general movement of the oppressed nations and the working class in the
Middle East, including the uprising for a free Palestine.
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