Why Would We Go To War With Iran?

by Stephen Wellington

“The need for oil certainly was a prime motive [in Hitler’s decision to invade Russia]…

– Albert Speer’s testimony at Nuremberg War Trials, German Minister for Armaments and War Production, 1941-1945 1

To understand if there will be a war with Iran we must first understand why we went to war with Iraq. In my view, the petrodollar warfare hypothesis explains one reason for our invasion and occupation of Iraq. US attempts to control Iraq’s fairly young and untapped oil supply (in a world of peaked oil fields), as well as the influence of lobby groups such as AIPAC, are also factors to be considered. However, in this article we will focus on the petrodollar hypothesis of the Iraq invasion and its implications for a war with Iran.

Setting the Scene-The Stagflation of the 1970s

Stagflation, a period where there is stagnation in the economy and inflation in prices, is a major multifactorial economic problem. Our economies are built upon Keynesian macroeconomic models that assume that inflation and stagnation do not occur together. They also assume infinite supply of energy which is impossible from a finite energy source such as fossil fuel. The stagflation of the early 1970’s was partly due to the economic warfare waged by the Saudi’s against the West in response to US support of Israel. OPEC restricted oil supplies which caused the economies of the West to come to a grinding halt. Another reason for the stagflation of the early 1970s was the excessive amounts of dollars in the reserves of oil exporting countries. The more dollars that are in circulation, but not reinvested, means that even more dollars have to be printed by the Federal Reserve and this decreases the value of each dollar in circulation. The early 1970s was the first time in US history where the US current account, the account that shows the balance of trade between countries, was in the red which signified that the country as a whole was beginning to live beyond its means. Interestingly, today the US current account is in a $747 billion deficit in its trade to other countries.

What is a Petrodollar and what is Petrodollar Recycling?

A petrodollar3 refers to the dollars that oil exporters receive from selling oil. In 1971 and 1973, a highly confidential meeting between an American ambassador, most likely Henry Kissinger, and the Saudi royal family, resulted in Saudi Arabia, and thus OPEC4, trading oil in US dollars. The US arranged a deal with the Saudi royal family, in which it would bring Saudi Arabia into the 20th century as a major world player, keep the Saudi royal family in power, and sell them expensive weapons for defense, as long as the Saudis traded oil in US Dollars and reinvested the money in US banks. This reinvestment of US Dollars, which were originally used to buy oil, in the US treasury and US banks, is known as Petrodollar recycling.

Petrodollar recycling acts as a double loan effectively. The first part of this double loan means that the US is able to print dollars to pay for oil without having to produce goods and services in exchange for it. These goods and services are then acquired when OPEC decides to use these dollars. The second part comes from all other economies that have to pay dollars for oil but cannot print dollars in their central banks. This puts the United States at an incredible advantage economically, as other countries effectively pay an indirect tax as their dollars in reserve decrease in value due to inflation. At the same time the US can print new dollars to cover expenditures, in particular military expenses. However, it also means that the United States has effectively been living on the backs of the oil exporters who have been selling oil in dollars since the Post World War II era. The positive side for the oil exporting countries is that they receive a financial return on the money they invest in the US economy, as well as access to American technology and weapons. Nevertheless, all this debt makes the US economy extremely fragile, fragile enough for the Dollar to be deposed as the World Reserve Currency if OPEC were to abandon trading oil in US dollars.5
Saddam Abandoned the Dollar

Saddam, under pressure from the Oil for Food Program and angry at the United States for their duplicity over the Rumaila oilfield in the first Gulf War6, was the first to announce that he would trade oil in Euros in September 2000.7 By trading oil in Euros, Saddam threatened the Petrodollar Recycling system, and was thereby able to triple Iraq’s savings account from $10billion to €26billion in 3 years8. This threatened US hegemony and contributed to the weakening dollar. “If most other Organisation of Petroleum Exporting Countries (OPEC) followed the Iraqi and Iranian example, the stability of the US dollar would be at stake,” says Ranjit Singh Kalha, an ambassador to Iraq during the first gulf war9. It is now common knowledge that the United States intended to attack Iraq before the attacks on 9/11 took place.10 Immediately after the US invasion of Iraq, the new US-backed Iraqi government conveniently started selling oil in dollars again.11 Although John McCain has recently commented that the war in Iraq was about oil12, there are no official government documents that specifically state that the Iraq War was about re-establishing US dominance over its oil supply. However, back in June 2003 when asked why a nuclear power such as North Korea was being treated differently from Iraq, where hardly any weapons of mass destruction had been found, the Deputy Defence Minister Mr. Wolfowitz, an architect of the Iraq war, said: “Let’s look at it simply. The most important difference between North Korea and Iraq is that economically, we just had no choice in Iraq. The country swims on a sea of oil.”13

Iran abandons the Dollar

Although it had been selling oil in Euros for years before, in December 2007 Iran completely stopped selling oil in the U.S. dollar through a Euro and Yen based Oil Bourse on the island of Kish to exchange commodities, particularly petroleum.14 This was confirmed on May 2, 2008 by Hojjatollah Ghanimifard, an oil ministry representative, who said “The dollar has completely been removed from our oil trade…Crude oil customers have agreed with us to use other currencies.”16
An Attack on Iran

The US and Israel planned to originally attack Iran after Iraq in 2003/200416.The neoconservatives in the Pentagon made contingency plans for an attack against Iran by the Israeli Air Force in 2005.1717 Although the Pentagon slightly has altered the contingency plans they remain in place and have been on the verge of being instigated each year for the last 5 years.18 The plans consist of a 3-day blitz against 1,200 Iranian targets and military bases.19 Should there be an attack on Iran, it will be interesting to see if the Oil Bourse on the island of Kish will be a target.

There have recently been two incidents where the US has fired warning shots at Iranian speed boats in the Gulf of Hormuz20 and the US has positioned another aircraft carrier just a few miles off the coast of Iran.21 Information has recently come out that the British naval troops captured by the Iranians in 2007 were in fact in disputed waters, in opposition to the lies the British government was telling the public when the sailors were captured.22 The words of General Smedley Butler, the greatest US anti-war General of our time, from 1936 are haunting: “The Japanese, a proud people, of course will be pleased beyond expression to see the United States fleet so close to Nippon’s shores. Even as pleased as would be the residents of California were they to dimly discern through the morning mist, the Japanese Fleet playing at war games off Los Angeles. The ships of our navy, it can be seen, should be specifically limited, by law, to within 200 miles of our coastline. Had that been the law in 1898 the USS Maine would never have gone to Havana Harbour. She never would have been blown up. There would have been no war with Spain with its attendant loss of life. 200 miles is ample, in the opinion of experts, for defence purposes.”23

One can only imagine that some sort of manufactured pretext for war such as the Gulf of Tonkin or USS Maine incident will occur. It may be planned and provoked and would result in a significant loss of life. In fact, the recent trouble in Lebanon in May 2008 seems to have been a pretext set up by the West for a bombing raid on Lebanon and Iran which never came to fruition.24 And what is it all for? If one takes the petrodollar war theory into account in a world where most oil fields have peaked, then of course one can claim that it is necessary to remain in Iraq, and to attack Iran, in order to defend American interests. American economic and strategic interests are dependent on continued world demand for oil and that it will be bought in dollars. And the unfortunate reality for the United States is that neither of these two factors, that allow current US economic debt imbalances, is sustainable even through the use of unilateral violence. And perhaps more importantly, even if such policies could be sustained through violence, it is necessary to point out the immorality of killing innocent Iraqis and Iranians for the sake of American economic gain.

1. Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power, Free Press 1991, p.334
2. Rank Order: Current Account Balance, CIA Fact Book
3. Coined by Ibrahim Oweiss in 1973
4. John Perkins Confessions of an Economic Hit Man: The Shocking Story of How America Really Took Over the World, Ebury Press, 2006
5. William R. Clarke, Petrodollar Warfare, New Society Publishers, 2004, p. 118
6. According to Ranjit Singh Kalha in his new book The Ultimate Prize, he states that the US approved of Saddam’s invasion of Kuwait. (http://newspostindia.com/report-48375)
7. http://news.bbc.co.uk/1/hi/world/south_asia/1550366.stm
8. William R. Clark interview with The Peak Oil and Global Warming Channel (http://ldscooperative.com/node/47)
9. India Times: Saddam made two strategic ‘mistakes’ to invite US wrath, India Today: Two strategic mistakes Saddam made
10. CNN International: O’Neill: Bush planned Iraq invasion before 9/11
11. Financial Times: Iraq returns to international oil market
12. You Tube: John McCain: Oil is Only Reason for U.S. Wars in Middle East
13. The Guardian: Wolfowitz: Iraq war was about oil
14. RIAN: Iran stops accepting U.S. dollars for oil
15. UPI: Iran gives up on dollars in political move
16. The Israel Lobby and U.S. Foreign Policy: An interview with John Mearsheimer and Steve Walt
17. Centre for Research on Globalisation: Planned US-Israeli Attack on Iran
18. The Times Online: Pentagon ‘three-day blitz’ plan for Iran , Interview with Ex-CIA Analyst Ray McGovern
19. US ‘Iran attack plans’ revealed, The Times Online: Pentagon ‘three-day blitz’ plan for Iran
20. US-contracted ship fires on Iranian boat: report
21. The Guardian: Deployment of aircraft carrier a US ‘reminder’ to Iran, says Gates
22. The Telegraph: MoD account of Iranian kidnap in doubt
23. Smedley D. Butler, War is a Racket: The Antiwar Classic by America’s Most Decorated Soldier, Feral House, 1936
24. The Real News Network: What is really happening in Lebanon?, Press TV: US plan for Lebanon attack revealed, The Jerusalem Post: White House denies Iran attack report