Arab States Have Launched Secret Moves To Stop Using U.S. Currency For Oil Trading

By Robert Fisk | The Independent

In the most profound financial change in recent Middle East history, Gulf Arabs are planning - along with China, Russia, Japan and France - to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place - although they have not discovered the details - are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil - yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

Continue reading at the Independent.

Related article: Econoblog: The markets have spoken on the future of the dollar

Comments

[liberalcynic]

10:20 AM on 11/09/2009

THe US Dollar has no real importance greater than anyother reserve bank currency.
It doesn't matter what oil is traded and quoted in, the currency which purchases use to buy it will be that of those who use it. if it was quoted in Euros, or Australian Dollars, Swiss Francs, Canandian Dollars or Japanese Yen there would not be an issue just instead of using USD we use whatever to quote and pay for our oil.
how arrogant is it to say because America is American and we demand oil oil should be quoted in USD; when most of it is in Arab nations or under ocean.



Read more at: http://www.huffingtonpost.com/2009/10/06/arab-states-have-launched_n_310826.html&cp

[liberalcynic]

10:19 AM on 11/09/2009

THe US Dollar has no real importance greater than anyother reserve bank currency.
It doesn't matter what oil is traded and quoted in, the currency which purchases use to buy it will be that of those who use it. if it was quoted in Euros, or Australian Dollars, Swiss Francs, Canandian Dollars or Japanese Yen there would not be an issue just instead of using USD we use whatever to quote and pay for our oil.
how arrogant is it to say because America is American and we demand oil oil should be quoted in USD; when most of it is in Arab nations or under ocean.

[Bcasey11]

01:55 PM on 10/18/2009

i see the collapse of the american system

[delta7777]

01:29 PM on 10/07/2009

http://en.wikipedia.org/wiki/Bretton_Woods_system
Bretton Woods established an international monetary system tied to gold. Post WWII, US had the most stable currency and became the reserve currency. In 1971 the US unilaterally terminated gold convertibility thereby changing the dollar from a specie currency to a fiat currency. nonetheless still remaining the accepted reserve currency largely because of the balkanization and instability of other nations and currencies. This placed the US in the unique position to simply print money (backed only by "full faith and credit") to cover its debts. Currently. other nations, particularly the EU and China are showing enough political and economic strength to make their currencies sufficiently stable to be considered for a "market basket" international currency.
It is no surprise that world nations will no longer put up with the current reserve currency situation. Nor should they.

[Durango]

02:50 PM on 10/07/2009

But neither China nor the EU have the track record of stability the USA has.

But even if they did change over from dollars for oil, how does that result in the Apocalypse and the End of the United States?

(This is not directed at you)

[lostpl8]

04:02 AM on 12/06/2009

The Euro and most all other currency in the world are basicly fiat currency. While the Euro, shows signs of competing with the "dollar" the fact is the euro zone also include Greece, but no one knows how long Germany and France will continue to support it which could lead to a problem with the Euro. The Yen, while stable, Japan did suffer a lost decade. Gold could never be used in the oil market it is not fluid enough, and there is not enough of it to support the oil economy.

[Pippen]

01:10 PM on 10/07/2009

People are confused save a handful of posts in this thread.

This is War.

If Iran and/or the UAE drop the US Dollar as a standard, not only will we embargo,sanction and blockade that country from conducting any trade at all, we will launch the most massive military invasion the world has ever seen and we will institute the draft.

Oil drives the US Stockmarket and our economy. If the stockmarket collapses (and it would) ANY sitting U.S. President would declare war immediately and would not hesitate to mobilize.

Iran does not want a war and def does not want a trade war.

If Russia and China support Iran with this financial move, we will see the beginnings of WWIII emerge in the same month.

Mark my words well.

[Durango]

01:22 PM on 10/07/2009

Bull.

What matters is what Saudi Arabia does.

Iran and Venezuela are bit players compared to the Kingdom.

But even if they did switch why would China be at war?

So they can see their US investments disappear over night?

So they can see the worlds economy collapse and all that development they have worked on these past years go for nothing?

[Pippen]

07:25 AM on 10/08/2009

I'm not sure China would engage a war or trade war with the US because they dont have too, they can easily side step the entire event and win by not participating. They've learned how to win while other countries squander resources on War efforts. Instead they'll probably profit from the demise of Iran and the rise in military spending from the US.

However, if the US stock market collapses because of Irans meddling with the dollar, rest assured we'd have allies you'd not thought possible before hand. The US is a big whore and there are LOTS of Johns lined up at the hotel. These johns are not going to sit idly by and watch the best gig in 100 years get rolled.

Rule of Law is right. There is war and then there is World War. Right now this generation is experiencing a war by proxy. Only some families see and hear the pain while others have no idea where Iraq and Afghanistan is on a map.

We get no news of our soldiers on our media outlets and they've been silenced. Where is Dan Rather when you need him ?

[Rule Of Law]

01:49 PM on 10/07/2009

And once again, America's sons and daughters will be rounded up to go and die for the Corporate Overlords whose money it is they are fighting to protect.

This economy, now that the banks have extorted every dollar we have, plus those only coming generations will provide, will never recover without jobs, reregulation, and a populist movement to rebuild the middle class that powers this country!

That won't happen. But War--real war, not this 5 or 10 soldiers die at a time stuff--will be coming, just as it did to FDR. And the blood sucking banks, MIC, and Congress will become even fatter on our misery and deaths.

[Durango]

02:46 PM on 10/07/2009

Somehow I think the soldiers who were killed or wounded, not to mention their families would contest your definition of "real war."

And please, please; please. Spare me the Apocalyptic future scenarios.

George Bush and the Book of revalations crowd are a (not so ) distant memory.

[land2341]

01:04 PM on 10/07/2009

The only thing propping our dollar up was faith - and that faith has been sorely tested here lately (like maybe ten years worth of pushing our luck.)

Currently, the primary thing holding it up is too many other countries would lose too much if it fell, so they prop it up. Looks like they're gonna do what is in their own best interest and stop dating ole Unca Sam.

Oops! No faith, no oil deposit money, Hear that flushing sound?

[Durango]

01:13 PM on 10/07/2009

Faith is what my Econ 101 Professor explained to us propped up all currencies.

But the faith is that the United States will have the worlds largest, most stable economy. And a stable government as well.

And history has shown that faith to be well placed.

The USA has many economic challenges. But collapse of our economy is not likely. And if it did collapse it would take the worlds economy with it. Which means payment in Euros would have no better value.

Why are so many people wanting to forecast the collapse of the United States?

We have problems. But nothing compared to the Civil War or WW II.

[MyLIberalKos]

12:15 PM on 10/07/2009

Everything but the little people have become too big to fail.

Everyday we pay the consequences of Reaganomics and neoconservative economics

good articles; http://iamned1.blogspot.com

80's: Arthur Laffer, MIlton Freidman, Greenspan, Alexander M. Haig, Jr, Donald T. Regan, James A. Baker 3rd,
Later: Robert Rubin, Bernanke, Paulson

[FrTown]

10:49 AM on 10/07/2009

The misleading title borders on plain old big0try. The article goes on to say that secret meetings were also held by China, Russia, Japan and France.

[SFA]

09:30 AM on 10/07/2009

this is even worse then Iran or Iraq war hysteria.

[Joe Marshall]

11:00 AM on 10/07/2009

Actually no this one is real. Read up on the rise of the British and Pound Sterling hegemony in the post Napoleon European period and how the rise of other powers lead to the first world war. See if you can find any parallels. This is the real deal....this is a recipe for world war.

[Durango]

01:19 PM on 10/07/2009

Huh?

Trading for oil in other than dollars is a recipe for war? In what alternate reality?

Why do you think the trading is now in dollars? Because dollars are safe and secure. As safe and secure as is possible.

You think anyone wants to get paid in Euro's? They have a track record of what 10 years?

Would you trade in Rubles? Never.

And don't forget that when the oil producing countries receive those dollars where are they going to put them?

The first place is in the worlds biggest most stable economy, the USA.

Why are people so quick with the apocalyptic scenarios?

Is everyone a wanna be Hollywood screen writer?

[Usama]

05:40 AM on 10/07/2009

Im currently in the UAE and I have to say that even if the UAE is an ally of America, they are looking out for their own interest to avoid falling into the ditch of mismanagement, corruption, greed, shortsightedness, misguidance that plagues America. Just look at who has profitted from this financial crisis. Every report of financial institutions raking in profits and their executives recieving millions in contractually obligated bonuses should be a glaring reality as to in what direction America is going. The UAE is a tiny country and would like to do business with America, but it wisely avoided following the advice of America's 'get rich quick' securities derivatives market. And you can't just blame politicans. The American culture is now 'get rich quick' at the expense of someone slower/not as cunning/not yet on the curve. And foreign investors were suckered into the worldwide securities market by the claims that American investments were sound. A country like the UAE is thanking God they weren't one of those who got taken for a ride.

So the indication that American allies want to bail on the American currency should make Americans want to actually take their pitch forks and torches to those who took America down that path. Corporations, financial institutions, are the primary players, and the politicans and banking officials are their stooges. But Im afraid Americans won't be able to fix this problem.

[alexa07]

11:43 AM on 10/07/2009

Unfortunately, Usama, you are correct, but it's far easier to bash the Arabs even though (as a previous comment indicates) the article contradicts the headline. If anyone takes the time to read the article, (many do not), it is clear that other countries, even Japan, are taking part in these mtgs.

"Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars."

It's easier to bash the Arabs rather than to point the finger at our political, corporate & media leaders who have allowed this crisis to occur, hurting not only the American public, but many peoples around the world.

[alexa07]

11:46 AM on 10/07/2009

Unfortunately, Usama, you are correct, but it's far easier to bash the Arabs even though (as a previous comment indicates) the article contradicts the headline. If anyone takes the time to read the article, (many do not), it is clear that other countries, even Japan, are taking part in these mtgs.

"Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars."

It's easier to bash the Arabs rather than to point the finger at our political, corporate & media leaders who have allowed this crisis to occur, hurting not only the American public, but many peoples around the world.

[SolarArray]

01:33 AM on 10/07/2009

So there is going to be a surge in dollar stores?

[MarcusT]

02:35 AM on 10/07/2009

They'll become the $20 stores.

[tlboyles1]

12:14 AM on 10/07/2009

I'm just going to move to Fern Forest on the Big Island (very rural, 3 acre plots) and be happy. Everyone there I've met, and I mean EVERY ONE, wants to "save the forest" and become as self sufficient as possible and NO BODY could care less what happens to the mainland and it's mess of politics and finance. Last time I was there, it was WONDERFUL!. If the rest of the world blew up, I would not have cared. Hope to be there within a year. Already have a 12x12 cabin (we built it last May - HARD WORK) on our three acres. Can't wait to live there permanently and whatever happens with the MASSES here on the mainland (most likely not pretty)...... Oh well.

[MarcusT]

12:19 AM on 10/07/2009

:))))))))) Thank god the big island isn't at all dependent on an outside economy.

[tlboyles1]

12:22 AM on 10/07/2009

Fern Forest, on the WET side of the island. No utilities, other than electricty, which you DON'T absolutely NEED! Catchment systems for water (120 inches of rain per year). And ANYTHING will grow. 3 acres can grow food for 2 people with a LOT to spare.

[MarcusT]

12:27 AM on 10/07/2009

Hmmmmmm, sounds like that forest is going to have to become a farm.

[vascopyjama]

12:04 AM on 10/07/2009

Third rate country, you betcha. Think back a few years about where we stood in the world and look at where we are heading. We had some moral standing before Iraq but that's gone also.
We should just outsource our political system to China and be done with it. The only way we can possibly turn this around is to have honest politicians but this would mean getting money (bribes) and lobbyists out of government.

The American Dream has become a nightmare and it will get a lot worse before corruption, stupid politicians, big business and greed are happy.

[MarcusT]

12:08 AM on 10/07/2009

Get Israel back into it's mandated borders would produce instant world wide gratitude and renewed standing.

[vascopyjama]

12:27 AM on 10/07/2009

That's where the money and bribes part comes in.

[alexa07]

11:54 AM on 10/07/2009

Marcus,
The Obama people, to their discredit, seem to be intent on following the same old script, pointing the finger at yet another Muslim country, all the while ignoring the nukes in Israel. Pressuring the Palestinians to forsake the Goldstone report was the final stroke for me. One more chance to do the right thing? Well, Michael Moore is waiting to see what his adm will do about Afghanistan. What a series of disappointments!

[tlboyles1]

12:02 AM on 10/07/2009

Outfitting the entire United States' households with solar/wind power WOULD cost the same as making war with Iraq and Afganistan, but there is a HUGE difference. The wars: money down a black hole. Outfitting the country with solar or wind to be self sufficient for energy..... can you even begin to imagine the amount of JOBS (as in $$$ right here in the good old USA) that would bring. And our trade deficit would PLUMMET! I don't see how that could be a bad thing. But, like I said in a previous post, there is a large element in this country that finds it much more gratifying to go to war and kill people to protect the CORPORATE INTERESTS and maintain the status quo, than actually helping the national condition.

[vascopyjama]

12:24 AM on 10/07/2009

Along with a lot of other things, wasn't alternative energy and green jobs high on Obama's to do list during the campaign? Guess that changed too. Oh hang on, he's only had 9 months to do something.

[Archivist1000]

11:34 AM on 10/07/2009

vascopyjama: I bet you had a soother to suck on until age 5 .... instant gratification seems to be important to you.

[RomeoMD25]

11:58 PM on 10/06/2009

Obama is dreaming.
Peter Schiff and Gerald Celente are absolutely on the mark.
Ask...what's behind the dollar? Answer: Nothing it's just green toilet paper.
Citizens are? trying to audit the Federal Reserve here because they seem to be printing currency like water with no
approval/oversight from Government and just pumping them out.
Pretty soon it's going to be like Zimbabwe money, completely worthless.
Smart Americans are changing out fiat currency for gold and silver