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US$: Forget Iran, the problem’s at home
John Berthelsen, Asia Times
Of all the things that could wreck the US dollar – and there are many – the projected Tehran oil bourse, which is tentatively scheduled to open on March 20 to trade Iran’s crude and other petroleum products in euros rather than US dollars, is probably not among them.
The much greater threat to the US currency is the US current account deficit, which ballooned to 7% of gross domestic product in the fourth quarter of 2005. The announcement drove the euro up to 1.202 against the US dollar as skittish traders renewed their concerns about the world’s fiat currency.
The opening of the Tehran bourse has been described by a Bulgarian university professor named Krassimir Petrov as ”the ultimate nuclear weapon that can swiftly destroy the financial system underpinning the American empire”. Both Petrov and William Clark, writing in a publication called the Energy Bulletin, have suggested that the decision by US President George W Bush to attack Iraq on March 20, 2003, was to thwart then-dictator Saddam Hussein’s move to price his crude in euros rather than dollars. They and other writers have been warning that Iran’s decision to open a euro-denominated oil bourse places the mullahs in the same danger of being attacked.
That appears to be an overstretch.
(17 March 2006)
Also at India Monitor.
Kuwaiti oil plan stirs nationalist fervor
Jamie Etheridge, Christian Science Monitor
Declining reserves are forcing the country that nationalized oil 34 years ago to weigh foreign help.
KUWAIT CITY – Like many Arab Gulf nations, Kuwait relies heavily on imported labor and expertise. From street cleaners to construction workers, Kuwait regularly imports knowledge, skills, and workers from abroad. Kuwait’s energy sector, however, has always been sacrosanct.
The country’s natural heritage has been solely in the hands of Kuwaiti companies since the government nationalized the oil industry in the 1970s. Foreign energy companies continued to play a role but served only as hired hands.
Now with some of the country’s most precious oil fields quickly becoming exhausted, Kuwait is considering throwing open the doors and handing over power – albeit limited – to foreign oil companies that have the technical know-how to help stretch what remains and develop what’s yet to be discovered.
(17 March 2006)
See David Robert’s comments at Gristmill.
In Venezuela, oil sows emancipation
Luciano Wexell Severo, MR-zine (Monthly Review)
The data just released by the Banco Central de Venezuela (BCV) confirm that the Venezuelan economy grew at a cumulative 10.2 percent between the fourth quarter of 2004 and the fourth quarter of 2005. This is the ninth consecutive increase since the last quarter of 2003. Overall, in 2005, the gross domestic product (GDP) grew at 9.3 percent.
Just like in the previous eight quarters, the strong increase was fundamentally driven by activities not related to oil: civil construction (28.3 percent), domestic trade (19.9 percent), transportation (10.6 percent), and manufacturing (8.5 percent). The oil sector had an increase of only 2.7 percent.
…WHY IS THE ECONOMY GROWING?
This reinvigoration of the Venezuelan economy is direct — although nonexclusive — result of the increase in oil prices to an average of 57.4 dollars per barrel (Brent blend, December 2005). The hydrocarbons are — and will continue to be for years to come — a pillar of the economy. But, then, what else is news in Venezuela?
The novel thing is that definitely the country is sowing or planting oil in the productive sectors of the economy, as required by Arturo Uslar Pietri seventy years ago. A portion of the oil revenues is used as a funding source to structure and strengthen the domestic market (“endogenous development”) and jumpstart a sovereign process of industrialization and definitive economic independence. The oil provides an instrument in overcoming the rentier, unproductive, and importing economy already established by the 1920s, when the operations of the “devil’s excrement” began in the Lake Maracaibo.
(16 March 2006)
Detailed leftist analysis. A Spanish version of the article is online at the same URL.
Related: Latin America’s Leftist Shift: Hopes and Challenges (Znet)
China ‘ready’ for energy co-operation with US
Andrew Yeh, Financial Times
US China FlagsChina’s government has said it is willing to work with the US on future oil, gas and renewable energy projects, as well as on global energy security issues.
“In the field of energy, China and the US are not competitors,” Qin Gang, foreign ministry spokesperson, said during a press briefing. “China stands ready to co-operate with the US and other countries … on the basis of equality and mutual benefit.”
Mr Qin was responding to comments earlier this week by Dick Lugar, the influential US Senator, who said it was crucial for Washington to broaden its energy co-operation with China and India. US energy dependence was “the albatross” of its national security, he said
(17 March 2006)
Related: Russia to send more oil to China (Bloomberg)