Why is Iran GeoEconomical important?

Who controls oil – controls the world – if USA controls Iran it controls China (biggest customer)

The information gathered here is 99% copy paste of sources (src) around the net presented “as-is”, i can not proof its quality or truthfulness.

US wants to see Iran destroyed and it’s assets seized – because China starts to rival it and all nations are dependant on fossil fuels.

So oil and the control over oil and gas resources becomes a GeoEconomic decisive factor.

It is pretty funny – if you are the biggest economy in the world – you can threaten the rest of the world with economic sanctions – and most follow suit.

India follows, but China is not playing along with Washington demands for a sanction against Iran.

Iran is China’s biggest supplier of oil and “third-largest producer of the oil cartel OPEC” (src)

US Dollar Empire works via oil:

It would go down as “conspiracy theory” if not:

“The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.” (src: Bloomberg)

Wikipedia says:

“The United States dollar remains de facto world currency.[1] Accordingly, almost all oil sales throughout the world are denominated in United States dollars (USD).[2] Because most countries rely on oil imports, they are forced to maintain large stockpiles of dollars in order to continue imports.”

History:

The petrodollar system originated in the early 1970s in the wake of the Bretton Woods collapse.

President Richard Nixon and his Secretary of State, Henry Kissinger, feared that the abandonment of the international gold standard under the Bretton Woods arrangement (combined with a growing US trade deficit, and massive debt associated with the ongoing Vietnam War) would cause a decline in the relative global demand of the U.S. dollar.[3]

In a series of meetings, the United States — represented by then U.S. Secretary of State Henry Kissinger — and the Saudi royal family made an agreement.

The United States would offer military protection for Saudi Arabia’s oil fields, and in return the Saudi’s would price their oil sales exclusively in United States dollars (in other words, the Saudis were to refuse all other currencies, except the U.S. dollar, as payment for their oil exports).

By 1975, all of the oil-producing nations of OPEC had agreed to price their oil in dollars and to invest surplus oil proceeds in U.S. government debt securities in exchange for similar offers by the U.S.[4]

(src)

So buying and selling oil in anything but US Dollars weakens the value of the Dollar?

https://vimeo.com/309019510

not so fun fact: Obama against suing Saudi Arabia over 911

there are blackened parts in the 9-11 report that probably have to do with Saudi Arabia.

A very close economic partner – with secret deals with USA – to uphold the US Dollar and USA will protect Saudi Arabia and it’s oil fields.

“Justice Against Sponsors of Terrorism Act” (JASTA)

The bill has raised tensions with Saudi Arabia.[15]

When the bill was introduced,

Saudi government “threatened” to sell up to $750 billion in United States Treasury securities and other U.S. assets if the bill is passed.[16]

A number of independent economic analysts told the New York Times that Saudi Arabia would be unlikely to follow through on such threats, “saying that such a sell-off would be difficult to execute and would end up crippling the kingdom’s economy”.[16]

An official at Saudi Arabia’s Ministry of Foreign Affairs told the state-run Saudi Press Agency on September 29 that the U.S. Congress must correct the 9/11 bill to avoid “serious unintended consequences”, adding the law is of “great concern” to the Kingdom.[17] (src)

The Central Bank of Central Banks – the BIS – formed 1930 – is still a hub for monetary policy.

“What if the renminbi becomes a key currency alongside the dollar and the euro?”

“Already some emerging market currencies are co-moving with the renminbi against the dollar.

“On current evidence, a renminbi zone would shrink the dollar zone, and widen its current account deficit.”

does not sound too good.

BIS Working Papers  |  No 762  | 20 December 2018 | by  Robert N McCauley and Hiro Ito

https://www.bis.org/publ/work762.htm

Abstract

“This study divides the world into currency zones according to the co-movement of each currency with the key currencies.

The dollar zone groups economies that produce well over half of global GDP.

The euro zone now includes almost all of Europe and some commodity producers, but remains less than half the size of the dollar zone.

The dollar zone share has shown striking stability despite big shifts across zones over time.

These include the demise of the sterling (GB) zone and the expansion of the DM/euro from northwestern Europe to Europe and beyond.

Global imbalances differ from a currency perspective.

In the 2000s, the dollar zone’s current account disappeared by the onset of the Global Financial Crisis (GFC), even as the US current account plumbed all-time lows.

The dollar zone’s net international investment position also reached balance then.

Thus, neither flow nor stock readings on the dollar zone supported widespread predictions in the early 2000s of an imminent dollar crash.

In fact, most of the long-term widening of current accounts occurred within currency zones, where by construction currency risk is limited.

Our account of the dollar’s dominance rests not on the US economy’s size but rather on the size of the dollar zone.

(which translates into: the US Dollar / Euro / Linked currencies empire wants to expand)

In such a world, the rise of another large economy poses the question not of relative size but rather of re-alignment of third currencies.

What if the renminbi becomes a key currency alongside the dollar and the euro?

Already some emerging market currencies are co-moving with the renminbi against the dollar.

BRICS currencies” – alternative free trade zone:

  • Brazilian real (BRL)?
  • Russian ruble (RUB)?
  • Indian rupee (INR)?
  • Chinese renminbi (CNH)?
  • South African rand (ZAR)

‘The Johannesburg Declaration is unmistakable: “We recognize that the multilateral trading system is facing unprecedented challenges. We underscore the importance of an open world economy.”’

‘Relations such as these certainly do not include a superpower (USA) unilaterally imposing an energy export blockade – an act of economic war – on an emerging market and key actor of the Global South.’

‘The mere threat of a US attack on Iran has engineered a rise in oil prices.’

‘US reliance on Middle East Oil is going down while fracking – boosted by higher prices – is ramping up. The threat of war increases with Tehran now overtly referring to its power to cripple global energy supplies literally overnight.’

‘If there ever was a US attack on Iran, Persian Gulf analysts stress only Russia, Nigeria and Venezuela might be able to provide enough oil and gas to make up for lost supplies to the West. That’s not exactly what the Trump administration is looking for.’ (src)

“The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were reimposed after the United States withdrew in May from a 2015 agreement to halt Iran’s nuclear program.” (src)

On current evidence, a renminbi zone would shrink the dollar zone, and widen its current account deficit.

src: https://tradingeconomics.com/united-states/balance-of-trade

2004 U.S. trade deficit in goods $652 billion.
Of this:
  • $160 with China,
  • $75 billion with Japan,
  • $71 with the Euro area.
  • Think 50%, 25%, 25%.
“Potentially bad news for Japan and Europe rather than the United States.”

src: https://economics.mit.edu/files/739

911:

“In April, Saudi Arabia warned it would start selling as much as $750 billion in Treasuries and other assets if Congress passes a bill allowing the kingdom to be held liable in U.S. courts for the Sept. 11 terrorist attacks, according to the New York Times.” (src: Bloomberg)

More History:

Drivers line up for fuel at a U.S. gas station during the worldwide fuel shortages caused by the oil embargo imposed by OPEC, circa 1974.
Drivers line up for fuel at a U.S. gas station during the worldwide fuel shortages caused by the oil embargo imposed by OPEC, circa 1974.

In October 1973, OPEC declared an oil embargo in response to the United States’ and Western Europe’s support of Israel in the Yom Kippur War.

PDF:

E. Altvater – Von der Währungskonkurrenz zum Währungskonflikt Altvater-Oelwaehrung.pdf

Links:

https://www.bloomberg.com/news/features/2016-05-30/the-untold-story-behind-saudi-arabia-s-41-year-u-s-debt-secret

Tweets:

https://twitter.com/hashtag/petrodollar

https://twitter.com/hashtag/Iran

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