The Last Gasp of the Dollar?:
As Bill O’ Grady of A.G.Edwards said, “If OPEC decided they didn’t want dollars anymore, it would be the end of American hegemony by signaling the end to the dollar as the sole reserve currency.”Iran has said the bourse will open in July.
“If the dollar lost its status as the world’s reserve currency, that would force the United States to fund it massive account deficit by running a trade surplus, which would increase inflationary pressures.” (Associated Press) ...
Presently, oil is sold exclusively on the London Petroleum Exchange and the New York Mercantile Exchange both owned by American investors. If the bourse opens, central banks around the world will reduce their stockpiles of dollars to maintain a portion of their currency in euros. This is the logical step for Europe which buys 70% of Iran’s oil. It is also the reasonable choice for Russia which sells two-thirds of its oil to Europe but (amazingly) continues to denominate those transactions in dollars.
Washington has succeeded in maintaining its monopoly by propping up the many corrupt and repressive regimes in the Gulf States. The prudent choice for Saudi Arabia would be to move away from the debt-ridden dollar and enhance its earnings with the stronger euro. Regrettably, Uncle Sam has a gun to their head. They understand that such a transition would invite the same response that Saddam got 6 months after he converted to euros and was removed through “shock and awe”.