I would like to thank the hundreds of people from all over the world that emailed me positive

feedback throughout 2003 with respect to my research and Internet based essay on the Iraq

war. Based on your overwhelmingly positive feedback and my own sense of patriotic duty, I

am currently writing a book based on this research. Additionally, I am also working with a

former government economist to construct an empirical model studying the possible effects of

the dollar's valuation in response to a euro currency pricing mechanism for OPEC producers.

The results of will hopefully be included in the proposed forthcoming book, tentatively entitled:

Petrodollar Warfare: Oil, Iraq, and the Future of the Dollar (Available Fall 2004).

For those who are already familiar with my original pre-war essay from January and March

2003, you may want to skip the opening parts of this essay and review the expanded section

explaining the importance of Hydrocarbons regarding Peak oil and US Geostrategy, and then

review my somewhat lengthy update from January 1, 2004. The main flaw from my original

essay a year ago was an excessive focus on the macroeconomic perspectives of the Iraq

war. In this essay, and in the forthcoming book, I have attempted to remedy this deficiency by

including a detailed analysis of the oil depletion/geostrategic aspects, which appear to be

second coalescing factor that lead to the Iraq war. For comments email: wrc92@aol.com.

Summary

Although completely unreported by the U.S. media and government, the answer to the

Iraq enigma is simple yet shocking -- it is in large part an oil currency war. One of the

core reasons for this upcoming war is this administration's goal of preventing further

Organization of the Petroleum Exporting Countries (OPEC) momentum towards the

euro as an oil transaction currency standard. However, in order to pre-empt OPEC, they

need to gain geo-strategic control of Iraq along with its 2nd largest proven oil reserves.

The second coalescing factor that is driving the Iraq war is the quiet acknowledgement

by respected oil geologists and possibly this administration is the impending

phenomenon known as Global "Peak Oil." This is projected to occur around 2010, with

Iraq and Saudi Arabia being the final two nations to reach peak oil production. The issue

of Peak Oil has been added to the scope of this essay, along with the macroeconomics of

`petrodollar recycling' and the unpublicized but genuine challenge to U.S. dollar

hegemony from the euro as an alternative oil transaction currency. The author advocates

graduated reform of the global monetary system including a dollar/euro currency

`trading band' with reserve status parity, a dual OPEC oil transaction standard, and

multilateral treaties via the UN regarding energy reform. Such reforms could potentially

reduce future oil currency and oil warfare. The essay ends with a reflection and critique

of current US economic and foreign policies. What happens in the 2004 US elections

will have a large impact on the 21st century.

Revisited -- The Real Reasons for the Upcoming War With

Iraq:

A Macroeconomic and Geostrategic Analysis of the

Unspoken Truth

"If a nation expects to be ignorant and free, it expects what never was and never will be . . .

The People cannot be safe without information. When the press is free, and every man is able

to read, all is safe."

Those words by Thomas Jefferson embody the unfortunate state of affairs that have

beset our nation. As our government prepares to go to war with Iraq, our country seems

unable to answer even the most basic questions about this upcoming conflict. First, why

is there a lack of a broad international coalition for toppling Saddam? If Iraq's old

weapons of mass destruction (WMD) program truly possessed the threat level that

President Bush has repeatedly purported, why are our historic allies not joining a

coalition to militarily disarm Saddam? Secondly, despite over 400 unfettered U.N

inspections, there has been no evidence reported that Iraq has reconstituted its WMD

program. Indeed, the Bush administration's claims about Iraq's WMD capability appear

demonstrably false. [1] [2] Third, and despite President Bush's repeated claims, the CIA

has not found any links between Saddam Hussein and Al Qaeda. To the contrary, some

intelligence analysts believe it is more likely Al Qaeda might acquire an unsecured

former Soviet Union Weapon(s) of Mass Destruction, or potentially from sympathizers

within a destabilized Pakistan.

Moreover, immediately following Congress's vote on the Iraq Resolution, we suddenly

became informed of North Korea's nuclear program violations. Kim Jong Il is

processing uranium in order to produce nuclear weapons this year. (It should be noted

that just after coming into office President Bush was informed in January 2001of North

Korea's suspected nuclear program). Despite the obvious contradictions, President Bush

has not provided a rationale answer as to why Saddam's seemingly dormant WMD

program possesses a more imminent threat that North Korea's active nuclear weapons

program. Millions of people in the U.S. and around the world are asking the simple

question: "Why attack Iraq now?" Well, behind all the propaganda is a simple truth --

one of the core drivers for toppling Saddam is actually the euro currency, the -- .

Although apparently suppressed in the U.S. media, one of the answers to the Iraq enigma

is simple yet shocking. The upcoming war in Iraq war is mostly about how the CIA, the

Federal Reserve and the Bush/Cheney administration view hydrocarbons at the geostrategic

level, and the unspoken but overarching macroeconomic threats to the U.S.

dollar from the euro. The Real Reasons for this upcoming war is this administration's

goal of preventing further OPEC momentum towards the euro as an oil transaction

currency standard, and to secure control of Iraq's oil before the onset of Peak Oil

(predicted to occur around 2010). However, in order to pre-empt OPEC, they need to

gain geo-strategic control of Iraq along with its 2nd largest proven oil reserves. This

essay will discuss the macroeconomics of the `petrodollar' and the unpublicized but real

threat to U.S. economic hegemony from the euro as an alternative oil transaction

currency. The following is how an individual very well versed in the nuances of

macroeconomics alluded to the unspoken truth about this upcoming war with Iraq:

"The Federal Reserve's greatest nightmare is that OPEC will switch its

international transactions from a dollar standard to a euro standard. Iraq

actually made this switch in Nov. 2000 (when the euro was worth around 82

cents), and has actually made off like a bandit considering the dollar's steady

depreciation against the euro. (Note: the dollar declined 17% against the euro

in 2002.)

"The real reason the Bush administration wants a puppet government in Iraq --

or more importantly, the reason why the corporate-military-industrial network

conglomerate wants a puppet government in Iraq -- is so that it will revert back

to a dollar standard and stay that way." (While also hoping to veto any wider

OPEC momentum towards the euro, especially from Iran -- the 2nd largest

OPEC producer who is actively discussing a switch to euros for its oil

exports)."

Although a collective switch by OPEC would be extremely unlikely barring a major

panic on the U.S. dollar, it would appear that a gradual transition is quite plausible.

Furthermore, despite Saudi Arabia being our `client state,' the Saudi regime appears

increasingly weak/threatened from massive civil unrest. Some analysts believe civil

unrest might unfold in Saudi Arabia, Iran and other Gulf states in the aftermath of an

unpopular U.S. invasion and occupation of Iraq [3]. Undoubtedly, the Bush

administration is acutely aware of these risks. Hence, the neo-conservative framework

entails a large and permanent military presence in the Persian Gulf region in a post-

Saddam era, just in case we need to surround and control Saudi's large Ghawar oil fields

in the event of a Saudi coup by an anti-western group. But first back to Iraq.

"Saddam sealed his fate when he decided to switch to the euro in late 2000

(and later converted his $10 billion reserve fund at the U.N. to euros) -- at that

point, another manufactured Gulf War become inevitable under Bush II. Only

the most extreme circumstances could possibly stop that now and I strongly

doubt anything can -- short of Saddam getting replaced with a pliant regime.

"Big Picture Perspective: Everything else aside from the reserve currency and

the Saudi/Iran oil issues (i.e. domestic political issues and international

criticism) is peripheral and of marginal consequence to this administration.

Further, the dollar-euro threat is powerful enough that they will rather risk

much of the economic backlash in the short-term to stave off the long-term

dollar crash of an OPEC transaction standard change from dollars to euros. All

of this fits into the broader Great Game that encompasses Russia, India,

China."

This information about Iraq's oil currency is not discussed by the U.S. media or the Bush

administration as the truth could potentially curtail both investor and consumer

confidence, reduce consumer borrowing/spending, create political pressure to form a

new energy policy that slowly weans us off Middle-Eastern oil, and of course stop our

march towards a war with Iraq. This quasi `state secret' is addressed in a Radio Free

Europe article that discussed Saddam's switch for his oil sales from dollars to the euros,

to be effective November 6, 2000:

"Baghdad's switch from the dollar to the euro for oil trading is intended to

rebuke Washington's hard-line on sanctions and encourage Europeans to

challenge it. But the political message will cost Iraq millions in lost revenue.

RFE/RL correspondent Charles Recknagel looks at what Baghdad will gain

and lose, and the impact of the decision to go with the European currency." [4]

At the time of the switch many analysts were surprised that Saddam was willing to give

up approximately $270 million in oil revenue for what appeared to be a political

statement. However, contrary to one of the main points of this November 2000 article,

the steady depreciation of the dollar versus the euro since late 2001 means that Iraq has

profited handsomely from the switch in their reserve and transaction currencies. Indeed,

The Observer surprisingly divulged these facts in a recent article entitled: `Iraq nets

handsome profit by dumping dollar for euro,' (February 16, 2003).

"A bizarre political statement by Saddam Hussein has earned Iraq a windfall of

hundreds of millions of euros. In October 2000 Iraq insisted upon dumping the

US Dollar -- `the currency of the enemy' -- for the more multilateral euro." [5]

Although Iraq's oil currency switch appears to be completely censored by the U.S. media

conglomerates, this UK article illustrates that the euro has gained almost 25% against

the dollar since late 2001, which also applies to the $10 billion in Iraq's U.N. `oil for

food' reserve fund that was previously held in dollars has also gained that same percent

value since the switch. It was reported in 2003 that Iraq's UN reserve fund had swelled

from $10 billion dollars to 26 billion euros. According to a former government

analyst, the following scenario would occur if OPEC made an unlikely, but sudden

(collective) switch to euros, as opposed to a gradual transition.

"Otherwise, the effect of an OPEC switch to the euro would be that oilconsuming

nations would have to flush dollars out of their (central bank)

reserve funds and replace these with euros. The dollar would crash anywhere

from 20-40% in value and the consequences would be those one could expect

from any currency collapse and massive inflation (think Argentina currency

crisis, for example). You'd have foreign funds stream out of the U.S. stock

markets and dollar denominated assets, there'd surely be a run on the banks

much like the 1930s, the current account deficit would become unserviceable,

the budget deficit would go into default, and so on. Your basic 3rd world

economic crisis scenario.

"The United States economy is intimately tied to the dollar's role as reserve

currency. This doesn't mean that the U.S. couldn't function otherwise, but that

the transition would have to be gradual to avoid such dislocations (and the

ultimate result of this would probably be the U.S. and the E.U. switching roles

in the global economy)."

For the entire article go to

http://newsanalysis1.tripod.com/polit/id7.html