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The Colonisation Of Iraq's Monetary System
By Les Hunter
They who control the credit of the nation direct the policy of governments, said Rt Hon Reginald McKenna (1928) – a
former Chancellor of the Exchequer and one time director of the Bank of England. Today, such a claim is today highly
relevant to the future relationship between Iraq and the United States – the world’s only super power. Having occupied
Baghdad, one of the first actions of the United States was to encourage the Iraqis to exchange 2000 of their dinars for
one American dollar.
The traditional method of exercising imperial power is through the acquisition of colonies and the imposition of
taxation upon the subject people. This was the British imperial approach – most obvious in India. With the demise of the
Soviet Union, the United States clearly became the great imperial power of the day (superpower). Typically, the United
States extended and maintained its sphere of interest through monetary means; the military occupation of Iraq is quite
uncharacteristic of the Americans. However, it is unlikely that the occupying troops will remain to be supported by
locally imposed taxation. Financial and corporate control over the economy is much more effective – and much less
obvious.
It can be taken that, in the name of democracy and the free market, American corporations will take control of the
banking system and key elements of the Iraqi economy. There will be particular concern to gain privileged access to
crude oil and to ensure priority in its refining. The Iraqis need not relinquish ownership of the oilfields but just as
effective will be a requirement that royalties, and possibly all exports, be paid for with American dollars. In this
circumstance, no matter how elected, any future government of Iraq will have to accept what is held to be monetary and
economic reality.
The practical effect of the recommendations made at the Bretton Woods conference of 1944 was that each nation’s credit
system be underpinned by the American dollar. In practice, this meant that the availability of each nation’s currency
depended upon having adequate access to the world’s master currency. The Cold War was won for a variety of reasons – not
least of which was having the American dollar recognised as the world’s reserve currency. The greenback had worldwide
acceptability when paying for goods and services in ways not applicable to the rouble.
The requirement that a nation’s currency depended on that nation’s access to US dollars gave organizations like the IMF
the means of dictating the policy of national governments. Of course, the greenbacks made available by the IMF and in
circulation have all been created within the United States banking system – unrestrained by the size of the US
current-account deficit.
However, what has endured for more than half a century is now threatening to unravel. There appears little doubt that
the Euro has the potential to rival the greenback as the world’s master currency and the commensurate ability to
exercise imperial power. In a rapidly changing world, the American corporate and banking takeover of Iraq is unlikely to
experience the plain sailing that has been true for more than fifty years. Indeed, such means of exercising imperial
power seem to have been recognised by those members of the European Union who opposed the war.
Furthermore, the decadence and unjustifiable inequity associated with the present international monetary system is
increasingly being recognised. Protest is taking two forms. One is a mounting call for monetary reform. The other is
based on religious grounds, primarily by those of the Muslim faith for whom the usurious nature of the system is of deep
concern.
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- Les Hunter is a member of the Committee for Economic and Monetary Reform and author of the book "Courage to Change" – A case for monetary reform (published by Harbourside Publications Ltd and available through www.monetaryreform.co.nz).