Skip to comments.Mideast Banks Revolt Against US Dollar
Posted on 03/15/2006 8:58:19 AM PST by ex-Texan
A number of Middle Eastern central banks said on Tuesday that they would seek to switch reserves from the US greenback to euros.
The United Arab Emirates (UAE) said that it was considering moving one-tenth of its dollar reserves to the euro, while the governor of the Saudi Arabian central bank condemned the decision by the United States to force Dubai Ports World to transfer its ownership to a "US entity", the UK Independent reported.
"Is it protectionism or discrimination? Is it okay for US companies to buy everywhere but it is not okay for other companies to buy the US?" said Hamad Saud Al Sayyari, the governor of the Saudi Arabian monetary authority.
The head of the UAE central bank, Sultan Nasser Al Suweidi, said that the bank was considering converting 10 percent of its reserves from dollars to euros.
"They are contravening their own principles," said Suweidi. "Investors are going to take this into consideration [and] will look at investment opportunities through new binoculars."
The Commercial Bank of Syria has already switched the state's foreign currency transactions from dollars to euros, Duraid Durgham head of the state-owned bank said. The decision by the bank of Syria follows the announcement by the White House calling on all US financial institutions to end correspondent accounts with Syria due to money-laundering concerns.
Syria's finance minister Mohammed Al Hussein said: "Syria affirms that this decision and its timing are fundamentally political."
This all comes down to Petro Euros vs. Petro Dollars. Arab politics is hard to gauge. But my personal opinion is that these events may prove negative for Americans struggling with monthly bills.
"Oh the Dubai Port Deal will have NO effect on our economy. Oh no, none. Dubabi will just grin and thank us for peeing on them"
Good. They can earn their terror supporting dollars elswhere.
Anyone putting their money in Euros is committing financial suicide... take a look at the short yet stormy history of the Euro and the stability of the political basis for that currency. I'll be amazed if it's still in use in 10 years from now.
This is what happens when you follow economic advice from Chuck Schumer and Hillary! Clinton.
You don't have a clue about economics do you? too many Freepers are substituting emotion for common sense. Believe it or not we do need friends in the International community..unless you don't care about our standard of living.
This trend will continue... because the US is using the dollar domiance to police the entire world moneyflow,
what to catch a few money-laundering criminals and terrorists?
Welcome to world police state!
I'm suggesting that Iran is a bit more devious and far more clever than that. They also love to strut and posture. Recall their open bragging about how they fooled UN atomic energy inspectors? Echoes of Saddam? Arabs enjoy playing games, cheating openly, and love victory by duplicity.
I care about national integrity and putting it before greed.
I'm not taking any advice from Hill and Chuck! Or was your use of the "you" simply rhetorical?
If we take the path pushed by the isolationist Paleo-cons we will all feel good about our "national integrity" while standing in soup lines. It is economic insanity.
I once had some political muscle interfere with an investment I was participating in.
I didn't get mad. I got even.
I hope they do invest it in the crappy Euro. Less money to fund the maddrass hate factories and fund terrorist organizations.
IMO, They have every right to be angry. I would be.
If you cared about integrity you'd never compare the UAE to terrorists thugs like Osama.
Far as I'm concerned, they have every right to put their money in Euros given the Disgraceful conduct of our politicians and people such as yourself. We wouldn't stomach France & Germany's cracks in 2002, which didn't go to these extremes, and the UAE and middle eastern nations shouldn't condone this.
Uh, I am not a big fan of Hillary but you can't blame this on her.
Just wondering if I need to photoshop a crying baby emblem for the republican obedient?
Internet buzz means nothing to me. Paper dollars are no more worthless than paper euros. Our economy is stronger than the European economy so the US dollar is not likely to decline significantly relative to the euro.
Illegal Mexicans do more to depress our standard of living than DPW could ever have done to raise it.
It's hard for me to believe that the port fiasco had absolutely nothing to do with this.
Let them switch to Euros. They'll lose money like never before.
The problem for the Arab countries is that the market controls the sale of oil, despite their stranglehold on supply. As it stands, Middle Eastern oil contracts are sold in dollars just like North Sea Crude is sold in Pounds Sterling. Even OPEC admitted a few years ago that they can't control the denomination of oil contracts. If they want to convert their dollars to euros then fine, they'll have to convert back when the oil is sold. Plus, how absurd is it to convert from one denomination to another denomination that's selling near its high. It doesn't make sense.
Better this then they have the ports.
That's no big deal. It's just a correction of a speculative bubble in the middle eastern markets. That correction is probably good for our market because capital flowing out of those markets will flow into ours. It looks like they had a massive rally in those Arab markets because of rising oil prices over the last few years, and that kind of rally usually gets overdone to the upside. So now it's correcting back down, but in a global sense the lost market value is very small. It's a tiny loss of wealth compared to the loss in our market from 2000 to 2002, and we made it through that major bear market in fairly good shape thanks to swift, decisive action by Bush and the Fed.
It's a fascinating scenario. The game works this way: The first person that successfully exits the dollar door without alerting the others gets to transfer his dollars into other currencies with minimal losses, as their cash-ins drop the value of their dollar holdings. However, any move towards the door alerts the others, which prompts them to move toward the door too, thereby guaranteeing that EVERYBODY loses their asses via a panic selloff and a precipitous drop in the value of the dollars they will be desperately trying to cash in enmasse.
Yeah...this'll last forever.........
This worked out well for them.
I think the top leaders of the UAE understand that the ports deal was derailed by political games and emotion, not by a fundamental change in our business relationship and security relations with the UAE. There will be a lot of publicity about "fallout from the ports deal" because writers have to write about something, but the ports deal isn't going to affect trade with the UAE significantly.
"Better this then they have the ports."
I wouldn't be too sure about that. This could merely be the tip of the iceberg.
I don't predict that it will cause a backlash but it's a possibility. A situation that could have been completely avoided with a little more thought in the Administration and on the Hill.
The UAE has been our strongest ally in the ME and this whole thing was not handled properly by us.
....and here it comes...
If and when those diaper-hat wearing geeks decide to totally switch to the Euro we better tighten up our buttcheeks because our dollar will deflate faster than Pamela Anderson's ta-ta's.
Either we call an all out war for oil now - or wait until our money and credibility is worthless before trying to kick those Arab scumbags off the planet.
Forecasting a dollar collapse is an absolutely unrewarded enterprise. If you're wrong - everybody can come back to you within the highly-functional status quo to razz your butt about being wrong.
If you're right, nobody's gonna A) give a crap and B) be able to get online for you to accept any kind of acknowledgement in any case.
Therefore, if I'm wrong - I will be happy to earn your razzing by the fall of this year. If I'm right, good luck to us all.
I think there is more to this than just "economic warfare." I suspect these countries -- along with many other foreign investors -- are taking a good hard look at the U.S. economy and realizing that a prolonged period of inflation in the U.S. dollar is almost a certainty. This was the real reason for the 1973 "Arab oil boycott," and it's looking more and more like the early 1970s by the day around here.
Even if the USD declines, it is good for our exports and tourism.
But I am saying that Iran and Syria have been plotting this strategy for some time now. They want to create tough economic times for the U.S. They are using oil as a weapon against America. That is why Iran is starting the oil bourse. That is why the news media in Europe (and some in the U.S.) have been reporting that we are on an Oil Crusade in the M.E. "It's all about oil," shout CNN, CBS, and NBC. Yada, yada.
Isn't the ME going through a stock market crash? Are they trying to deflect from that?
If they can knock the legs out from under us economically (rather than militarily), they know it'll make enough voting idiots over here mad enough to vote a Dhimmie into the POTUS in 2008, and then we go back to practicing euroweenie diplomacy with the ME like we did back in Jimmah's and Bubba's administrations. - OB1
It was rhetorical. I know where you stand.
Thank you! This sounds like people I know who thought telling the boss off was worth getting fired for.
But didn't mind becoming financial burdens on their families and friends. How degrading.
This isn't "national integrity". It's foolishness.
It surely did, but, let us not lose sight of the reaction. Is this how we are looked at because we say no to someone? We now have to say yes to all investment so to not hurt pepoles feelings? I say there are a whole lotta people confused about things...on both sides of the argument.