Groucho Marxism

In a previous blog post I suggested that Israel convinced the US to bomb Iran because Israel wants to turn Iran into a failed state. That’s not to suggest that the US doesn’t also want to attack Iran. On the contrary, the US has wanted to attack Iran ever since the Iranian revolution of 1979. This revolution culminated in the overthrow of the Pahlavi dynasty, essentially a puppet government of the US. The pertinent question is not ‘why the US bombing Iran?’ but ‘why it has taken it so long to do so?’. The answer is that previous US administrations all understood that attacking Iran would be a disaster and therefore refused to be drawn into such a conflict. And for a time it seemed the current administration would do the same.

Trump himself has said many times that he would not bomb Iran, despite pressure from hawkish Republicans to do so. So what changed? This is where Israel comes in. Netanyahu and his administration knew full well that they were pushing at an open door in encouraging the US to attack Iran. They understood that now is the time to do that when Trump is punch drunk following the relative ease with which the US was able to kidnap Venezuelan President Nicolas Máduro. Netanyahu probably appealed to Trump’s ego and convinced him he is the ‘big man’ who could succeed where previous presidents had failed. It may also be that Israel has compromat on Trump and others high up in US politics and can blackmail them by threatening to release this material to the general public.

Whatever the explanation, Israel was able to put its finger on the scales to convince Trump and his administration that the benefits of attacking Iran would outweigh the costs. But what exactly are these benefits? Let us first dispense with the bogus explanations that have been put forward in defence of this war. This is not about spreading freedom and democracy to Iran, despite the fact that it obviously has a huge deficit in these areas. This is also not about preventing Iran from having nuclear weapons as there is no evidence whatsoever that Iran was developing such weapons. Trump himself claimed last year that the US had completely destroyed Iran’s nuclear facilities, yet now apparently expects us to believe that they have managed to build them up again in the space of six months!

The obvious explanation as to why the US is so desperate to attack Iran is that it wants Iran’s oil. But is attacking a country really the best way to get hold of its oil reserves? The US seems to think so, but there are other ways. China, for example, is able to get hold of oil from Iran through diplomatic means. Indeed, China buys more than 80% of Iran’s exported oil, with oil from Iran accounting for around 15% of China’s total oil imports. Of course China is able to do this because it is allied with Iran whereas the US is not. This points to the real reason that the US has launched its attack. Since the 1970s, all oil on the global market has been priced in US dollars. This arrangement, referred to the ‘petrodollar’ system, has afforded the US exorbitant power, but this power is now beginning to wane.

The petrodollar system is unravelling due to shifting geopolitical alliances and the green energy transition. The expansion of the BRICS bloc, which now includes Iran and Saudi Arabia along with Brazil Russia, India, China, and South Africa, has encouraged trading oil and other goods in non-dollar currencies. Saudi Arabia has shown willingness to trade oil in other currencies following the expiration of the original 50-year U.S.-Saudi pact in 2024. Other Middle Eastern oil producers are shifting focus to Asian markets, with China pushing for more oil to be invoiced in yuan. The declining demand for dollars could lead to higher inflation in the US, as demand for currency is what gives it value, which could lead to political instability.

However this is not the reason that the US is so desperate to prop up the petrodollar. The reason is that the petrodollar significantly enhances the ability of the US to implement and enforce economic sanctions. By ensuring that the vast majority of global oil trade is denominated in USD, the petrodollar system forces nations to maintain access to US financial markets, which the US can then restrict to impose sanctions. Furthermore, the US can freeze foreign assets held in dollars, crippling the ability of targeted nations to conduct international trade. The US can also impose secondary sanctions on foreign companies, threatening to cut them off from the US banking system if they do business with sanctioned entities.

Thus, the reason the US is attacking Iran is not so much about getting hold of Iran’s oil as it is about trying to ensure that the US can continue to wield enormous power on the global stage. We have seen this power exercised in Cuba recently when the US cut off oil imports to the country, leaving the island in darkness. If oil was priced in another currency it would have been a lot more difficult for the US to do this. Whether the US will succeed in propping up the petrodollar system by attacking Iran remains to be seen. Personally, I find it unlikely. According to a recent report by Deutsche Bank, the war on Iran could actually usher in the end of the petrodollar. Once again we seem to be witnessing the American empire collapsing in real time.