Dollar - A worthless piece of paper
Iranian President Mahmoud Ahmadinejad has suggested an end to the trading of oil in US dollars, calling the currency "a worthless piece of paper".
The call came at the end of a rare Opec summit, and was opposed by US ally Saudi Arabia.
The Iranian president had wanted to include the attack on the dollar in the summit's closing statement.
The communique made little mention of the dollar, however, focusing instead on energy security and the environment.
The summit in Saudi Arabia was only Opec's third in 47 years.
During the talks, Opec members revealed differences about the future direction of the exporters' group.
But Opec leaders ended with a pledge to provide the world with reliable supplies of oil.
Unfair trade?
Speaking after the end of the summit, Mr Ahmadinejad said all leaders at the meeting were unhappy with recent falls in the value of the dollar.
The dollar has weakened considerably against the euro and other currencies in the past 12 months.
Its decline has affected the revenues of Opec members because most of them price and sell their oil exports in the US currency.
Mr Ahmadinejad said that all Opec countries had showed interest in converting their cash reserves into other currencies.
"They [the US] get our oil and give us a worthless piece of paper," he told reporters.
But Saudi officials were against including any such language in the declaration. One is reported to have warned that it could add to the pressure on the dollar.
However, in the communique Opec did make a reference to the debate, by committing itself to studying "ways and means of enhancing financial co-operation".
Iran's oil minister said that this would allow the formation of a committee to study the dollar's affect on oil prices and investigate the possibility of alternative trading currencies.
Political agenda
The summit was also marked by divisions over the role of Opec in the world oil market.
Venezuelan President Hugo Chavez and his Ecuadorean counterpart, Rafael Correa, whose country rejoined Opec at the summit, both argued for a more political agenda for the group, but ran into opposition from US ally Saudi Arabia.
King Abdullah, the head of state of the host nation, Saudi Arabia said: "Those who want Opec to take advantage of its position are forgetting that Opec has always acted moderately and wisely.
"Oil shouldn't be a tool for conflict, it should be a tool for development."
President Chavez had opened the meeting with a warning that oil prices could double if the US attacked Iran.
Oil has been hitting record peaks of well over $90 a barrel as markets believe the Organisation of Petroleum Exporting Countries will not boost production, despite calls from oil-consuming countries such as the US to do so.
Venezuela's president said the price of crude could reach $150 or even $200 a barrel.
It was Hugo Chavez that called for the OPEC summit after he toured the Middle East in August 2007.
OPEC has held only three summit meetings in its 40-year history. Chavez wants to hold a summit every five years. He arrived in Riyadh with his family members, plus 200 delegates, and found an opulent meeting hall with crystal chandeliers and toilet accessories fitted in gold leaf.
Chavez’ opening remarks at the two-day summit lasted 25 minutes. He said, "We are witnessing constant threats against Iran. If the United States attempts the madness of invading Iran or attacking Venezuela again, the price of oil will probably reach $200.”
Chavez asked OPEC to join his quest for social justice, saying OPEC should be "at the vanguard in the fight against poverty."
Opposing him was Arabia's King Abdullah, a strong Bush ally, who said, "OPEC has always acted moderately and wisely. Oil is an energy for development, it should not become a tool for conflict and emotions.”
Chavez advanced the Caracas Declaration, which calls on the 13-nation OPEC group to, "Put itself at the forefront in the design of a new international economic structure." He wants OPEC to set up a special bank to fund international development in poor nations. He also wants OPEC to set aside tens of billions of dollars to subsidize purchases of petroleum by poor nations.
King Abdullah disagreed, and said OPEC has, "Two essential objectives: first to defend the interest of its members, and second to protect the international economy from sudden shake-ups in oil prices and supplies."
Chavez and Iran said the dollar should be dropped as the standard for pricing petroleum. King Abdullah and Algeria sought to redirect discussions back toward discussions about the environment.
Mamdouh Salameh, an international oil expert, told Al Jazeera: "Saudi Arabia and Kuwait are under the US military shadow. Consequently, it will be anti-American decision if they shift to another currency other than the dollar."
Economists say this signals global concern about the declining strength of the U.S. economy and foreign investor confidence in the dollar.
Because of high oil prices, U.S. Energy Secretary Samuel Bodman begged OPEC to increase production earlier this week, but OPEC officials said they would hold off any decision until oil ministers meet on December 5 in Abu Dhabi, United Arab Emirates.
OPEC officials said that increased output would not bring down prices anyway, since the recent price rise is driven by the falling dollar, and by the financial speculation of investment funds, rather than any supply shortage. The oil market is no longer simply an oil market; it has merged with gigantic high-speed financial and information markets.
Besides, OPEC production quotas are poorly enforced. OPEC produces about 40 percent of the world's oil, but controls 70 percent of the world’s proven reserves.
http://www.cbsnews.com/stories/2007/11/17/world/main3517873.shtml
Despite King Abdullah’s opposition, OPEC closed its summit by signing the Caracas Declaration, which challenges rich nations to assume responsibility for what the Declaration calls a manufactured oil crisis.
OPEC Secretary-General Rilwanu Lukman suggested that wealthy nations should put their own house in order, "By ensuring that their environmental, fiscal, energy and trade policies do not discriminate against oil, thereby helping to achieve global sustainable development."
Chavez blasted the world's industrial powers for expecting cheap energy. He said Third World is more crippled by DEBT than by costly fuel.
http://archives.cnn.com/2000/WORLD/americas/09/28/opec.summit.02/index.h...
OPEC was formed In September 1960 when Middle Eastern nations and Venezuela became angry with Standard Oil of New Jersey for dictating a cut in the price that Standard was willing to pay for Middle Eastern oil. Today $700 billion a year goes to OPEC nations. The Gulf Arab states and Arabia earn more than a billion dollars a day from oil sales. However, high prices threaten to slow the world's strongest economies.
Arabia has the most power in OPEC, because Arabia has the overwhelming majority of OPEC’s spare production capacity, and also because Arabia is an ally of Bush and Israel.
Other OPEC nations are producing near maximum capacity, but a third of Nigeria's production has been shut down by resistance to Bush. Iran wants foreign expertise and investment to exploit its big oil and gas reserves, but Bush has threatened to punish any firm that does business with Iran. These factors, plus the war against Iraq, have sliced at least 2.5 million barrels a day, or about 8 percent, from OPEC output.
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/15/AR200711...
MICROPHONE GAFF
Iran and Venezuela wanted the meeting to focus on the dying dollar. Arabian Foreign Minister Saud al-Faisal opposed this, and did not want any discussion of the dollar, fearing it would weaken the dollar further. "There are media people outside waiting to catch this point, and they will add to it [exaggerate] and we may find that the dollar collapses."
Unknown to him, his microphone had been left on, and journalists saw his remarks on closed-circuit TV. His microphone was instantly shut off.
THE COST OF PLEASING BUSH AND ISRAEL
Arabia has investments in the US and many other countries that are denominated in dollars, and are therefore starting to lose money.
The dollar has fallen 10 per cent against the euro this year, which cuts into oil producers' income and purchasing power. It has also made imports much more expensive, with Gulf countries particularly affected. Inflation has risen dramatically, affecting low-paid foreign workers especially hard.
Global concern is growing that the dollar's weakness signals the end of its reign as the world's main international currency. The dollar would be further damaged if OPEC starts selling its oil in euros, or creates a basket of currencies, as sought by Iran and Venezuela.
Gulf currencies, such as the UAE dirham, have been pegged to the dollar for the past 30 years. Becaue of inflation pressure, Arabia unpegged its currency from the dollar. The other Gulf states will have to do the same, unless they want to continue losing massive amounts of money.
http://english.aljazeera.net/NR/exeres/15E6590A-E541-4142-A58F-B1929C670...
OPEC’s dilemma is that it wants to move away from the dollar, yet Arabia does not want to anger Bush and Israel.
The final statement of the OPEC summit in Riyadh did not include any reference to the dying dollar, but Iran and Venezuela said they would continue to call for dumping the dollar.
Iraqi Finance Minister Bayan Jabor told Reuters that OPEC finance ministers would discuss the weak dollar before oil ministers meet in Abu Dhabi on December 5. The meetng of finance ministers was set up because Ecudador joined Venezuela and Iran.
ECUADOR REJOINS OPEC, MOVES AWAY FROM BUSH
In 1999 the USA opened a military base near the city of Manta, near Ecuador’s coast. The USA has used the base as its hub for “Plan Columbia,” which this USA says is decicated to controlling drug traffic.
The U.S. lease on the base will expire in 2009. Ecuador's President Rafel Correa has refused to renew it. In October during a trip to Italy, Correa said, “We'll renew the base on one condition: that they let us put an Ecuadorean base base in Miami. If there's no problem having foreign soldiers on a country's soil, surely they'll let us have an Ecuadorean base in the United States."
Correa has promised to cut off his arm before extending the lease, and has called U.S. President George W. Bush a "dimwit".
(http://uk.reuters.com/article/reutersEdge/idUKADD25267520071022 )
Ecuador has rejoined OPEC after a 15 year break. At the Riyadh summit, Rafael Correa proposed that a tax be imposed on oil-consuming nations for environmental protection programs. He said, “We are annoyed by all this self-righteous talk of 'don't cut down your trees' from the first world, when they've already done it. If Europe wants to breathe pure air from Amazon countries then Amazon countries shouldn't have to pay for it."
(http://www.reuters.com/article/businessNews/idUSL177919620071118?feedTyp... )