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Launch of Iranian oil trading hits wall
Oil exchange unlikely to begin till at least midyear
By John Partridge
Investment Reporter
03/15/06 "Globe
& Mail" -- -- As the nuclear standoff pitting Iran
against the West continues, some conspiracy theorists are more
focused on another plan that the Middle Eastern nation is pursuing.
But they are jumping the gun if they still figure Iran is within
days of launching a new international oil exchange that would sell
its own and other Middle Eastern oil producers' black gold in euros
rather than U.S. dollars -- and which, the theory goes, could
ultimately torpedo the greenback and the U.S. economy.
Despite repeated reports over the past 18 months or so that the
planned bourse would finally open for business on March 20, 2006 --
and go head to head with the New York Mercantile Exchange and the
ICE Futures Exchange in London -- the start date has been postponed
by at least several months and maybe more than a year.
"In the middle of 2006, we are able to start the bourse," Mohammad
Asemipur, special adviser on the project to Iran's Oil Minister,
said when reached in Tehran. The plan is to trade petrochemical
products first, with a crude oil contract coming last, a rollout
that likely will take three years, he said.
"Oh, crikey, it's at a much earlier stage than people would think,"
said British consultant Chris Cook, who claims credit for coming up
with the idea for the exchange in the first place and is a member of
the consortium headed by the Tehran Stock Exchange that is charged
with bringing the project to life.
"You can rest assured, there will not be a crude oil contract,
Gulf-based, in my opinion, within a year -- and that would be really
pushing it," Mr. Cook, a former director of ICE's predecessor, the
International Petroleum Exchange, said when reached in Scotland.
The electronic exchange is to be located on Kish Island in the
Persian Gulf, an Iranian duty- and tax-free zone.
There has been far less talk about the planned bourse in the
mainstream media than on the Internet, particularly on websites
aimed at gold bugs and other economic conspiracy theorists.
The theory is that all trades through the new bourse would be made
in euros, not the U.S. dollar, which for decades has been the
world's primary reserve currency, as well as the one in which oil
and most other commodities have been priced. As a result, European
nations and other countries, especially Middle East oil producers,
tired of having to buy billions of now weakening greenbacks to pay
for their energy purchases, would no longer have to do so.
This, the conspiracy theorists contend, would knock the stuffing out
of the U.S. currency and hasten the decline and fall of the American
Empire, all the while allowing Iran to stick it to the Great Satan.
But, the theory continues, Washington will pre-empt all this by
using Iran's nuclear ambitions as a pretext for attacking the
country.
Kamal Daneshyar, chairman of Iran's Majlis [parliamentary] Energy
Commission reportedly told the Iranian Students News Agency in
December that the exchange would at first operate in both dollars
and euros, but gradually move to the European currency exclusively.
He was also quoted as saying that this would enable Iran to get even
with the U.S. for the economic damages it has inflicted on the
Islamic republic.
Dr. Asemipur, meanwhile, was noncommittal on the currency question,
saying market participants, not the Iranian government, would make
the decision. He also denied the planned bourse could harm the U.S.
economy.
Mr. Cook dismissed the idea that Iran's goal is to use the bourse to
sabotage the greenback. "I have a technical term for that," he said.
"Bollocks!"
As for trading oil in euros, he said the Iranians likely would find
it very difficult, at least in the next several years. "Basically,
there aren't enough euros in circulation, and nor are there likely
to be," he said.
Mr. Cook cited a recent article on Hong Kong-based Asia Times Online
by William Engdahl, who specializes in the geopolitics of oil.
"For the euro to begin to challenge the reserve role of the U.S.
dollar, a virtual revolution in policy would have to take place in
Euroland," Mr. Engdahl wrote. "First the European Central Bank . . .
would have to surrender power to elected legislators. It would then
have to turn on the printing presses and print euros like there was
no tomorrow."
A full challenge to the U.S. dollar as the world central bank
reserve currency, Mr. Engdahl added later, would entail a "de facto
declaration of war on the 'full-spectrum dominance' of the United
States today," and that is something no country or group of
countries is yet willing to launch.
© Copyright 2006 Bell Globemedia Publishing Inc
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