There are many reasons that the US is pushing on China in the South China Sea. Two articles have been published on Counterpunch in recent weeks exploring “why?” None mention an important economic reason that has, at least in part, motivated the US to go to war and is very much at stake in the growing dispute with China: the value of the dollar.
The dominance of the dollar in world trade is critical to its value and to the US economy. Once the US abandoned the gold standard, it signed firm agreements with Saudi Arabia and all of Middle East OPEC nations that bound them to sell oil in dollars. Because of this agreement the dollar is often referred to as the “petrodollar.” The value of the dollar/petrodollar rests on its being the currency of international trade, not only for oil, but for weapons and food and everything else.
Two Dollar Wars
As I discussed in a 2013 Counterpunch article, one reason Bush II invaded Iraq was because Iraq threatened the US by selling oil in Euros. If Sadam Hussein had been allowed to continue, this would have been a major challenge to the dominance of the dollar as the world’s reserve currency. Petroeuros could begin replacing petrodollars. This would have weakened the value of the dollar and undermined the US economy. That is an underpublicized reason for the elimination of Saddam Hussein. The value of the dollar was at stake as well as the health of our economy. The second Iraq war eliminated this threat and Iraqi oil was again sold in dollars.
Ron Paul made public this rationale but it has been given scant attention. “Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat…There was no public talk of removing Saddam Hussein because of his attack on the integrity of the dollar as a reserve currency by selling oil in Euros. Many believe this was the real reason for our obsession with Iraq. I doubt it was the only reason, but it may well have played a significant role in our motivation to wage war.”