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Ahmadinejad: US Dollar worthless piece of paper

By Chris V. Thangham     Nov 19, 2007 in Politics
Iranian President Mahmoud Ahmadinejad said OPEC’s members have expressed interest in converting their cash reserves into a currency other than the U.S. dollar, which he calls a “worthless piece of paper."
Ahmadinejad raised this issue at his speech to the reporters in the OPEC meeting in the Saudi capital of Riyadh. He said the U.S. is getting their oil and paying with a worthless piece of paper. He said other OPEC members have agreed to trade oil in a currency other than the depreciating U.S. dollar. However, U.S. ally Saudi Arabia was reluctant to change the currency and wants to protect the dollar currency.
Venezuela also raised this challenge at this summit. Venezuelan President Hugo Chavez said ominously: "The empire of the dollar has to end." He recommended the euro as a better option for oil business trading.
Ahmadinejad blamed U.S. President George W. Bush’s policies for the decline of the dollar and its negative effect on other countries.
He said at the summit:
All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency…Some said producing countries should designate a single hard currency aside from the U.S. dollar ... to form the basis of our oil trade."
Since the oil is priced in U.S. dollars on the world market, the currency’s depreciation is causing concern with the oil producers and is directly contributing to rising crude prices. It has also eroded the value of their current dollar reserves. They instead want a stable and strong currency in the market.
China and India have also switched some of the transaction into their local currencies.
Saudi Arabia's King Abdullah wanted to stay away from this dollar controversy and encouraged its members to focus on the environmental issues at hand, but Ahmadinejad and Chavez posed challenges for him. He requested OPEC’s members yesterday not to speak about the dollar issue openly as it will further erode the dollar, but both Iran and Venezuelan leaders raised the issue today.
Iran and Venezuela have proposed trading oil in a basket of currencies to replace the historic link to the dollar, but they had not been able to generate support from enough fellow OPEC members — many of whom, including Saudi Arabia, are staunch U.S. allies.
Both Iran and Venezuela have a frosty relationships with the U.S., and with increasing sanctions, it is difficult for Iran to do business in dollars.
Saudi Arabia also relented today and seems to have compromised with Iran and Venezuela. The Organization has directed its finance ministers to study whether the dollar currency is helping the OPEC or not.
Iran's oil minister Gholam Hussein Nozary told Dow Jones Newswires that OPEC has agreed to set up a committee consisting of oil and finance ministers from OPEC countries to study the impact of the dollar on oil prices. He said the committee would submit to OPEC its recommendations on a basket of currencies (rather than just dollar currency to stabilize the market). Most likely, the currencies will include the euros, pound sterling and yen.
The meeting in Riyadh, with heads of states and delegates from 13 of the world's biggest oil-producing nations, was the third OPEC summit since the organization was created in 1960.
Like the Verizon ad that says “Can you hear me?" I hope Congress hears this comment from Ahmadinejad and responds positively and brings back a stronger dollar currency. Otherwise it will hurt the US economy. Compared to Iran’s currency Riyal (1USD = 9,334.0 Riyal), the US dollar currency may be strong but is still very weak compared to other major currencies, so it is time to do something rather than just debate the issue over and over.
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