September 10, 2014

Important Piece: Foss: “ISIS, Saudi Arabia, and the Threat to the Dollar”

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Writes Paul-Martin Foss:

If Saudi Arabia feels itself unable to combat the external threat from ISIS, or to contain the internal threat from ISIS sympathizers, do not be surprised to see a greatly increased US military intervention. Because of Saudi Arabia’s importance to the petrodollar system, the fall of the Saudi government could severely roil international oil markets. And if the dollar were to lose its position as the preferred currency in oil markets, it could rapidly lose its status as the world’s primary reserve currency.

That defense of the dollar’s status is the real reason for US intervention against ISIS. No one should be misled into believing that the United States is intervening against ISIS for humanitarian reasons in Iraq and Syria, to protect ethnic and religious minorities, or to combat the spread of Islamic terrorism. US intervention is purely an exercise in self-interest to defend Saudi Arabia, and with it the dollar’s reserve currency status.

Remember that Iraq began to accept euros in payment for oil not long before the 2003 US invasion. Iran agreed to accept non-dollar currencies on its oil exchanges and found itself the subject of harsh US sanctions. And now Russia, which has entered into agreements with China to move away from the dollar, finds itself facing US and EU sanctions. The US government will stop at nothing to try to keep the rest of the world from dropping the dollar. Do not be fooled into humanitarian excuses for supporting intervention against ISIS. That is just a front for the US government to defend its interest in securing the dollar’s status as a reserve currency.

Written by C.Jay Engel

Editor and creator of The Reformed Libertarian. Living in Northern California with his wife, he writes on everything from politics to theology and from culture to economic theory. You can send an email to reformedlibertarian@gmail.com