Iran is proposing to develop something far more threatening to Bush interests than nuclear capability, WMD’s, or even terrorists. According to this interesting article by William Clark, Iran has been planning to set up an international oil exchange denominated in the Euro currency. What needs to be understood is that if the world begins to primarily price crude in Euro, America will suffer as a net importer of the product, which incidentally will harm American corporate profits. The Iranian example as argued by Clark will be just like many US wars in the past. As Smedley Butler argued war is essentially the ultimate form of corporate welfare.

The world is starting to ask the important question of why should we hedge oil with dollars instead of the more valuable euro? Iraqtalked about it. Iran now is talking about it. Russia’s hinting at it. Why does this development have the US government and its special interests all in a tizzy? Well to put it simply the entire warfare welfare state is at stake. If the dollar collapses, inevitibly so does the American empire and the free ride it has been enjoying on the rest of the world.

Iraq and Iran may have never declared war on the people of the US, but by deciding to switch to Euro’s they have effectively declared war on the US socialist state. According to Clark:

“One of the Federal Reserve’s nightmares may begin to unfold in 2005 or 2006, when it appears international buyers will have a choice of buying a barrel of oil for $50 dollars on the NYMEX and IPE – or purchase a barrel of oil for €37 – €40 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar – and assumes that some sort of “intervention” is not undertaken against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world – global oil and gas trades.”

That nightmare is now coming to fruition for the US welfare state as can be indicated by the price of crude in dollars versus euro [Euro = Red line; Dollar = Yellow line] NYMEX Crude in USD vs. EUR.

Since October 10, 2002, the day of congressional war authorization, NYMEX Crude has advanced 74% in dollars, while only 31% in euro. This divergence shows just how weak dollar purchasing power is becoming. The current crude rally in dollars is not so much evidenced by extreme crude demand as it is depreciation of the dollar against the commodity.

So what is the US socialist welfare/warfare state to do in the face of such a threat? Well, it has nothing to do with free markets and every thing to do with death and destruction.