IRAQ = OIL = U.S. Petrodollars
  • 17 years ago
PetroDollars: The value of the U.S. dollar is determined by the fact that many key commodities (particularly oil and natural gas) are denominated in dollars. Supporters believe that if the denomination changes to another currency, such as the euro, many countries would sell dollars and cause the banks to shift their reserves because they would no longer need dollars to buy oil and gas. This would weaken the dollar relative to the euro (see supply and demand). The core of the hypothesis is that U.S. administrations are greatly motivated by fear of the consequences of a weaker dollar, particularly higher oil prices. This motivation is seen as underlying and explaining many aspects of U.S. foreign policy, including the ongoing Iraq War.
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