Sludge Report #37 – At Last, A Good Idea From Iraq

Saturday, 28 October 2000, 12:32 pm
Column: C.D. Sludge

In this edition: Operation Brain Storm

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Sludge Report #37

Operation Brain Storm

The UN Security Council this weekend has two critical items on its agenda. Two decisions which will in all probability affect the outcome of history in a world which seems to be racked by millennial phenomena of ever increasing intensity.

Firstly the UN Security Council will consider a Palestinian request for peace keepers to be deployed on the West Bank and in the Gaza Strip.

Secondly it will consider an Iraqi request to be paid in future in Euros, rather than US Dollars, for its Oil Exports.

On the first question the Security Council will almost certainly hit a brick wall.

Hillary Clinton’s bid for the New York Senate seat alone will put paid to any chances of the US relinquishing its veto rights in the Security Council chamber.

On the second question the outcome however is far less clear. And in the long run the answer is if anything, more important.

Why the Iraqi’s want to be paid in Euros is far from clear. Reports on the wire services do not concern themselves with motivations. They hint that the objective may be to upset the US, and this is almost certainly so. But the importance of the request to alter the currency in which they are paid cannot be overstated and is far more than simply a case of Saddam’s spite.

Earlier this week several nations in the EU signed an agreement with Russia concerning longer term oil supplies to the EU (See… Howard's End: Europe's Russian "Energy Bridge"). It seems highly probable that these future transactions will be denominated in Euros.

Meanwhile Iraq, while rebellious to the West on the international stage, remains a friend of Moscow. Earlier this year former Russian President Boris Yeltsin paid a visit to Baghdad in the immediate aftermath of his resignation.

Recently Russian President Vladimir Putin was visibly upset that he was not invited to the peace summit on the Red Sea. And since his snubbing the Russian President has not stepped out of the Arena, rather, his involvement in the Middle East Crisis has been stepped up. He has been reported in recent days to have had conversations with both the Palestinian and Israeli leadership.

It therefore follows that it would be extremely surprising e if the Iraqi move to be paid for oil in Euros, made two weeks ago, was not backed by Russian support.

What then are the implications of Iraq being paid in Euros for its oil?

First of all the change in currency would, on its face, provide support for the Euro. It would increase demand for the currency and support the commercial interests of European Banks.

Of course there is a downside too. The interests of US banks would be harmed, which is why the Iraqi request should be expected to meet considerable opposition from Washington. That said, the US may well use up its steel for vetoing the will of the world when it opposes a resolution on the insertion of peace-keepers into the Holy Land conflict.

Secondly, if Iraq is able to be paid in Euros rather than US Dollars, then it stands to reason that other Islamic nations would soon follow suit.

Why? Because as a result of the latest Palestinian uprising (and its harsh repression by the Israeli Defence Forces) Islamic governments throughout the world are facing enormous pressures from their own people to distance themselves first from Israel and secondly from it’s ally, the “great Satan”, the US.

Thirdly making a change to the payment arrangements behind the UN oil-for-food progamme may potentially have a positive impact on the chances of peace in the Holy Land.

Why? Because the present would be “honest broker” in the peace process, Washington, is not seen as honest by one half of the equation.

For Islamic Nations the world over the relationship with the US, and the US’s involvement in the Middle East Peace Process, is fraught with difficulty.

On the one hand all nations need, indeed require, the assistance of US banks to sell their oil and to trade. On the other hand the people in many of these nations would sooner spit at an American than trade with one.

We have therefore what is known in the business as a circuit breaker in play.

If Iraq gains permission to be paid in Euros then the US, and Israel by proxy, will be seen to have suffered a blow to their prestige. This will support the diplomatic efforts of Islam as they will be seen by their peoples to be making progress.

And, on the face of it, it is difficult to see why the UN would refuse to allow Iraq to be choose to be paid in what is essentially an inferior international currency, at least as far as the markets are concerned.

In turn this would enable the Palestinian people to also feel that progress is being made against their oppressors, and that therefore they might be able to at least return to the negotiating table with some pride.

In times of international crisis a way out is always provided. And this time, no doubt to the surprise of everybody involved, it seems it has been Saddam himself that has opened the window.

It has now long gone time to stop this madness. The time to seize the day and take the courageous decisions has arrived.

Earlier Sludge On The Middle East Crisis:

- Sludge Report #36 – Hypocrisy In The Middle East
- Sludge Report #35 – Let Every Voice Sing Out
- Sludge Report #33 – Darkness Before The Dawn?
- Sludge Report #32 – Resolving A Family Feud

- Anti©opyright Sludge 2000

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Alastair Thompson is the co-founder of Scoop. He is of Scottish and Irish extraction and from Wellington, New Zealand. Alastair has 24 years experience in the media, at the Dominion, National Business Review, North & South magazine, Straight Furrow newspaper and online since 1997. He is the winner of several journalism awards for business and investigative work.

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