In November, 2000, Iraq began selling its oil in EUROs, becoming the first OPEC country to abandon its ties to the US dollar.
What significance did this hold?
Right now Saudi Arabia and Iraq are two of the largest oil producers on the planet. Prior to the 2000 change to EUROs by Iraq, most of the oil on the planet was purchased in US dollars, as 2/3rds of the commonly traded currency in the world is US dollars. This is called a "Reserve Currency".
It is widely known and accepted that the US has struck a deal with the Saudis which provides them with US support in the Middle East, in exchange for their continued support of the US dollar by selling their oil in only US dollars. Iraq also promoted the value of the US dollar by selling their oil in that currency, but decided to sell their oil in only EUROs in 2000.
What did that mean for the US dollar?
Well, it meant that the demand for the US dollar would drop internationally ...as the many countries which obtained oil from Iraq would no longer convert their currency to US currency. Instead, they would boost the demand for EUROs by purchasing EUROs.
Iraq became the first large oil supplier in the world to begin trading in the EURO versus the US dollar. Almost immediately following it other oil producing countries began toying with the possibility of following suit. Thus, Iran, Libya, Venezuela, Russia, Indonesia, and Malaysia all began trading oil in EUROs, thereby pushing it to become the world's second "Reserve Currency".
Following 9/11 and the invasion of Afghanistan, the US quickly proceeded to invade Iraq, the only OPEC country in the world to defy the US dollar.
The US accomplished several things by invading and occupying Iraq. First, they sent a message to other OPEC countries that attempted to switch to the EURO.
Second, they now control the world's second largest oil supply.
Third, they began almost immediately trading in, yes you guessed it, US dollars ...thereby maintaining its demand.
Fourth, they now have a military presence in the center of the Middle East.
Fifth, they struck a blow against the EURO, the main competitor to the US dollar.
It is theorized that had the Iraq war/invasion/theft not taken place, and more oil producing countries switched to the EURO, the US dollar would have crashed, thereby causing a literal catastrophe of the US economy.
The Pentagon is planning for operations against Iran as early as 2005.
While the publicly stated reasons will be over Iran's nuclear ambitions, there are unspoken macro-economic drivers explaining the Real Reasons regarding the 2nd stage of petrodollar warfare.
The Israeli air force is training its crews for
long-range bombing missions against Iran.
See Israel-U.S. To Attack Iran When Ready
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