As the dollar loses value, the oil-producing states lose vast sums of money, since oil sales are denominated in dollars and their own currencies are fixed to the dollar. Potentially, and depending on far the Gulf states go with their "basket", the dollar could tumble in a big way. This could make borrowing money from China to finance the Iraqi occupation much more expensive and much less atttractive to China.
Ultimately, the Long War thesis could be undone not on politics, but on economics. Bush's dream on bullying the planet into submission was always based on keeping the oil-producing states under the U.S. economic thumb, as well as forcing the "allies" and the U.N. into paying huge sums for the reconstructions of the various conflicts it would entail. Bush is already slashing domestic spending steeply, including grants to cities for Homeland Security, but the ostensible GWOT is untouched. Meanwhile, the allies' numbers are decreasing, as is their support in terms of money and troops. Nothing in Afghanistan promises any kind of financial return on investment, and it's obvious that the Iraq occupation is not improving the gas price situation. The Iraq occupation, at best, would only have allowed foreign oil companies to swindle the Iraqis out their oil while simultaneously forcing the world to pay for the costs of the petroleum infrastructure so that we could be gouged further. Instead, we have what amounts to an enormously expensive coup and occupation that has only de-stabilised the region, increasing the price of oil.
Even the plans of bombing Iran into submission hold no promise for obtaining the oil or profitting in any way. Not that the Long War is about making money (except for defence contractors), but the money to wage it has to come from somewhere. It's one thing to take on fantastic amounts of debt for a long-term financial return, but it's completely another thing to max out your credit card in a bid to crush someone else's religion.
If the dollar does dramatically devalue due to the Gulf states curency policies, the economy would suffer in a big way just as the nation goes into an election. All the Republicans are offering is further tax cuts, and this is like cutting back on the number of hours you work in response to heavy credit card debt. In a situation where the electorate is facing foreclosures, higher gas prices, and the loss of their jobs on top of a stalled Long War, it will take a lot more than the magic word "Hillary" to make them look good.
And, of course, if the neocons lose the White House, the Long War is over, the reward of government jobs in return for Republican loyalty ends, conservative think tanks lose their relevance, and the ability to browbeat the media is substantially reduced. The bankrupting will be blamed, rightly or wrongly, on Bush, and those senators and representatives that uncritically supported Bush will face an unasssailable wave of sound bites of their own making.
And we will pick up the tab for the rest of our lives for allowing a small group of fanatics to control our nation.
story from MENAFN
Gulf currencies surge on revaluation report
(MENAFN - Arab News) The United Arab Emirates dirham surged to a 17-year high, leading a rally in regional currencies as investor piled pressure on Gulf Arab dollar pegs, encouraged by a report that a revaluation could come as early next week.
Kuwait, the only Gulf Arab oil producer that tracks a currency basket, allowed two dinar depreciations in one day yesterday, the first time it has done so since the central bank dropped the dollar peg on May 20. The bank usually sets the day's reference rate at 0500 GMT.
The Saudi Arabian riyal hit a 21-year high and the Qatar riyal a five-year high on speculation that other central banks would follow Kuwait's lead and unshackle their currencies from the tumbling dollar to contain inflation.
Currencies in the world's biggest oil exporting region have been rallying since UAE Central Bank Governor Sultan Nasser Al-Suweidi called two weeks ago for Gulf central banks to switch from fixed pegs to a currency basket including the euro.
The Dubai-based Arabian Business magazine threw fat on the fire yesterday saying a UAE revaluation of 3-5 percent could come as early the National Day holidays on Sunday and Monday. The holidays of Eid Al-Adha, which begin around Dec. 20, would be another option for a move, the magazine reported, citing sources close to the central bank.
"The plan is to make an announcement when the banks are closed. National Day is an option, and if not National Day then the Eid holidays later in December," one of the sources said, according to the website of Arabian Business.
The report's author, Anil Bhoyrul, told Reuters the source was not at the central bank.
A National Day revaluation is unlikely because it would coincide with a summit of Gulf Arab rulers in Qatar on Dec. 3 and 4, analysts said.
"It's not the UAE's style to shock the markets," Mushtaq Khan, economist at Citigroup Global Markets.
"The amount the magazine is talking about is in the ballpark of what we are expecting. But I don't think they will do it before the summit," he said.
Suweidi has repeatedly said he would only act in concert with other Gulf states preparing for monetary union as 2010. He and other central banker say the final decision on a revaluation or scrapping dollar pegs would be made by Gulf Arab rulers.
"I don't think anything will happen before the summit, where the parameters will be laid for either joint or individual action," said Anthony Harris, British ambassador to the UAE for four years to 1998.
Still, bids on the dirham were as high as 3.6600 per dollar, the strongest according to Reuters data going back to 1990. The currency, which has been fixed at 3.6725 per dollar since 1997, is on track to make its biggest one-day gain in 17 years.
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