United States foreign policy has changed very little over the past several decades, regardless of which political party is in control of each House of Congress, or which figurehead is currently residing in the White House. Iran has firmly resided in Washington’s crosshairs since the CIA’s 1953 coup d’etat of the democratically elected Mohammed Mossaddegh, which saw the installation of the brutal Shah, who was eventually overthrown with the Islamic Revolution of 1979. The 38th anniversary of the Islamic Revolution was recently celebrated with millions of Iranians jubilantly demonstrating in the streets all over the country:
A source at state-owned National Iranian Oil Co (NIOC) told Reuters that Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total (TOTF.PA), Spanish refiner Cepsa CPF.GQ and Litasco, the trading arm of Russia’s Lukoil (LKOH.MM).
“In our invoices we mention a clause that buyers of our oil will have to pay in euros, considering the exchange rate versus the dollar around the time of delivery,” the NIOC source said.
Lukoil and Total declined to comment, while Cepsa did not respond to a request for comment.
Iran has also told its trading partners who owe it billions of dollars that it wants to be paid in euros rather than U.S. dollars, said the person, who has direct knowledge of the matter.
Analysts say that the move is not just politically motivated: Now that sanctions have been lifted, Europe has become one of Iran’s top trading partners. Hence, it’d simply be more practical for Iran to conduct its oil trades in euros rather than in dollars.
However, Iran’s decision appears to be the latest act of defiance as part of a global shift away from dollar hegemony. Last week Russia became China’s biggest oil partner, thanks in part to Moscow accepting payment in yuan. And last month, Iran and India announced their intention to settle all outstanding crude oil payments in rupees, as part of a joint strategy to dump the dollar and trade instead in national currencies.
Maintaining global dominance of the petrodollar is not a new motive for the U.S. to push for war and regime change against a sovereign nation⏤especially one that happens to be sitting atop massive reserves of oil and natural gas. As revealed in declassified emails, the real reason behind NATO’s military intervention into Libya was to stop Muammar Gaddafi from establishing a new gold-backed, pan-African currency, the gold dinar, to compete with the U.S. petrodollar and Western central banking dominance.
In October of 2000, Saddam Hussein announced his decision to switch Iraq’s oil sales off of the U.S. dollar⏤deemed by Hussein as “the currency of the enemy”⏤and on to the more multilateral euro, a move that resulted in a windfall of hundreds of millions of euros for Iraq. This was regarded as a blatant attack on the dollar by the United States. To protect the supremacy of the dollar, the U.S. responded to Saddam’s decision with a unilateral invasion of Iraq in 2003, flaunting its superior military might seemingly as a powerful warning to any other country that sought to defy U.S. hegemony. This invasion has resulted in a death toll of nearly 300,000, the majority of which were civilians and non-combatants, with countless others who have been maimed, traumatized, or suffered serious bodily injury.
This is a trend that keeps repeating: a country moves off the petrodollar, to be swiftly targeted for invasion and regime change. Syria is another country that moved off the petrodollar, with President Bashar al-Assad announcing the decision in 2006.
What Are The Origins of the Petrodollar?
The petrodollar arose from the ashes of the Bretton Woods system after President Nixon cut the dollar’s last tie to gold in 1971. According to Alexander Clackson, writing for the Centre for Research on Globalization:
What makes the dollar unique is the fact that since the early 1970s it has been, with a few notable exceptions, the only currency used to buy and sell oil on the global market. This began when in 1973 the Richard Nixon administration began negotiations with the government of Saudi Arabia to establish what came to be referred to as the petrodollar recycling system. Under the arrangement, the Saudis would only sell their oil in U.S. dollars, and would invest the majority of their excess oil profits into U.S. banks and Capital markets. The IMF (International Monetary Fund) would then use this money to facilitate loans to oil importers who were having difficulties covering the increase in oil prices. The payments and interest on these loans would of course be denominated in U.S. dollars.This agreement was formalised in the “The U.S.-Saudi Arabian Joint Commission on Economic Cooperation” put together by Nixon’s Secretary of State Henry Kissinger in 1974. The system was expanded to include the rest of OPEC (Organization of the Petroleum Exporting Countries) by 1975. This was a major economic success for the U.S. As long as the world needs oil, and as long as oil is only sold in U.S. dollars, there will be a demand for dollars, and that demand is what gives the dollar its value.