In response to CD's question, I thought I dig up an oldie but goodie:

Imagine it this way, you are sitting in your adjustable rate mortgage house, while the Saudis, Venezuelans, Nigerians, Bolivians, Russians, Iranians, and Chinese, have decided that they can get a long just fine with oil from only those regions. China requires trade with foreign countries to be denominated in their national currency (no dollars), the dollar is no longer the international unit of exchange instead, all real value is now denominated in euros backed by oil and every other country is pegged to the euro through a basket portfolio valuation. DOLLARS that were backed by oil are now backed by the faith and credit of the United States of America. Our credit is shit. How is your faith? I don’t do time but I’ll say it this way – when these things come to pass … Why do you think we went into Iraq? Just before we decided to invade Sadam announced he was denominating Iraq’s oil in Euros. Remember this?

Baghdad's switch from the dollar to the euro for oil trading is intended to rebuke Washington's hard-line on sanctions and to encourage Europeans to challenge it. But the political message will cost Iraq millions in lost revenue. RFE/RL correspondent Charles Recknagel looks at what Baghdad will gain and lose, and the impact of the decision to go with the European currency. Prague, 1 November 2000 (RFE/RL) — Iraq is going ahead with its plans to stop using the U.S. dollar in its oil business in spite of warnings the move makes no financial sense. Baghdad this week insisted on and received UN approval to sell oil through the oil-for-food program for euros only after 6 November. Iraq had threatened to suspend all oil exports — about 5 percent of the world's total — if the body turned down the request. The move comes despite repeated cautions that Baghdad's departure from the oil industry standard of the dollar will cost the country millions in currency conversion fees. UN officials have said Iraq will have to reduce the price of its crude oil by about 10 cents a barrel in order to compensate buyers for the additional costs. And the UN has said moving to the euro will mean Iraq earns less interest on its oil revenues, which are held in a UN- monitored escrow account in New York. The UN also has warned that Iraq's switch will create cumbersome new administrative processes because Baghdad says it wants to keep its existing deposits in dollars for now. That means the oil-for-food program will have to maintain two accounts — one in dollars and one in euros — for the time being.

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