Indian Gold for Iranian Oil: How Far Will America Go to Defend the Dollar?

The world became a far more dangerous place last night after reports surfaced of a gold-for-oil deal between Iran and its second biggest oil exporting market, India.

According to an Israeli-based news website, New Delhi has agreed to purchase Iranian oil in gold while Tehran’s second largest export market, China, is poised to do the same.   By cutting out Wall Street and The City of London, the gold-for-oil deal allows New Delhi (and Beijing if it follows suit) to ensure a steady flow of energy while circumventing US and EU sanctions punishing financial institutions that do business with Tehran.   The biggest beneficiary of this new oil pricing model though is undoubtedly Iran. Not only does it make a laughing stock out of US-led sanctions; it has the power to severely curtail America’s death grip on the global economy.

Forget sabre rattling in the Strait of Hormuz; gold-for-oil poses the greatest threat to America’s influence on the world stage.  The lynchpin of US power isn’t its massive military. It’s the dollar’s role as global reserve currency; a position it owes to a 1973 decision by OPEC to only accept dollars for oil.  Every country which depends on oil (i.e. every industrialized nation on the planet) must keep dollar reserves both to secure their energy needs (the engine of economic growth) and defend against speculative attacks on their home currencies.   This ‘dollar hegemony’ comes with serious perks, like paying cut-rate prices to borrow money on global debt markets despite running up a 15 trillion dollar national debt.

Now, imagine the fallout if the US dollar were de-linked from oil…    Continue reading

The Real Threat to Israel from Egypt’s Revolution

Beneath western praise for the Egyptian people’s stunning victory over autocratic rule runs a deep concern about how these events will impact America’s and Britain’s most treasured ally in the region; Israel.   From Washington to Whitehall, pro-Israeli pundits have already begun sowing seeds of anxiety, warning that Egypt could tear up its peace treaty with Israel and/ or go the way of Iran and embrace clerical rule.

It’s time for a little perspective. Continue reading

The IDF: A Third Class Military

Remember when the Israeli Defence Force was regarded as one of the finest militaries in the world?  That myth was finally laid to rest this week by the disastrous assault on the flotilla ferrying aid to the Gaza strip.  The raid by Israeli commandos in international waters which left at least nine peace activists dead was just the latest IDF operation condemned for its ‘disproportionate use of force’.

Having witnessed the IDF in action in the West Bank and Gaza, I can’t say I’m surprised, though I confess there was a time when I bought into the IDF mythology. Continue reading