The Great game is back with petro dollar hegemony included. (Some assembly required.)

With every passing day this government looks more and more like a banana republic. We have the trade deficit, the buget deficit and the crushing national debt and now W and Co. want to borrow another 2 trillion dollars to privitize Social Security.

What is the world to think?

From Defense Talk comes this startling story:

Oct 11, 2003, 14:50
President Vladimir Putin said Thursday Russia could switch its trade in oil from dollars to euros, a move that could have far-reaching repercussions for the global balance of power -- potentially hurting the U.S. dollar and economy and providing a massive boost to the euro zone.

"We do not rule out that it is possible. That would be interesting for our European partners," Putin said...

Putin's words come in the wake of a protracted drive by the EU to attract more countries' trade and currency reserves into euros, in a bid to chip away at U.S. hegemony over the global economy and money supply.

A move by Russia, as the world's second largest oil exporter, to trade oil in euros, could provoke a chain reaction among other oil producers currently mulling a switch and would further boost the euro's gradually growing share of global currency reserves.

The BBC reports:

"Russians are buying more euros than dollars for the first time since the new European currency became available, according to the central bank.

The swing may signal the weakening grip in Russia of the US currency which has dominated the economy here for most of the past decade.

It comes after a 15% fall of the dollar against the euro this year."

The Furguson Report notes this is a much deeper problem than it might appear. It's all about the new "Great Game."

"This past February, a French intelligence-connected newsletter, Intelligence Online, wrote a piece, 'The Strategy Behind Paris-Berlin-Moscow Tie'. Referring to the UN Security Council bloc of France-Germany-Russia to try to prevent the U.S.-British war moves in Iraq, the Paris report notes the recent efforts of European and other powers to create a counterpower to that of the United States.

Referring to the new ties of France with Germany and more recently with Putin, they note, 'a new logic, and even dynamic seems to have emerged. An alliance between Paris, Moscow and Berlin running from the Atlantic to Asia could foreshadow a limit to U.S. power. For the first time since the beginning of the 20th Century, the notion of a world heartland -- the nightmare of British strategists -- has crept back into international relations.'

Mackinder, father of British geopolitics, wrote in his remarkable paper, 'The Geographical Pivot of History' that the control of the Eurasian heartland, from Normandy France to Vladivostock, was the only possible threat to oppose the naval supremacy of Britain. British diplomacy until 1914 was based on preventing any such Eurasian threat, that time around the expansion policy of the German Kaiser eastwards with the Baghdad Railway and the Tirpitz German Navy buildup.

World War I was the result. Referring to the ongoing efforts of the British and later Americans to prevent a Eurasian combination as rival, the Paris intelligence report stressed, 'That strategic approach (i.e. to create Eurasian heartland unity) lies at the origin of all clashes between Continental powers and maritime powers (UK, U.S. and Japan) ...

It is Washington's supremacy over the seas that, even now, dictates London's unshakeable support for the U.S. and the alliance between Tony Blair and Bush.'

Iraq started it: (And paid for it.)

Until November 2000, no OPEC country dared violate the dollar price rule. So long as the dollar was the strongest currency, there was little reason to as well.

But November was when French and other Euroland members finally convinced Saddam Hussein to defy the United States by selling Iraq's oil-for-food not in dollars, 'the enemy currency' as Iraq named it, but only in euros.

The euros were on deposit in a special UN account of the leading French bank, BNP Paribas. Radio Liberty of the U.S. State Department ran a short wire on the news and the story was quickly hushed.

This little-noted Iraq move to defy the dollar in favor of the euro, in itself, was insignificant. Yet, if it were to spread, especially at a point the dollar was already weakening, it could create a panic selloff of dollars by foreign central banks and OPEC oil producers.

In the months before the latest Iraq war, hints in this direction were heard from Russia, Iran, Indonesia and even Venezuela.

An Iranian OPEC official, Javad Yarjani, delivered a detailed analysis of how OPEC at some future point might sell its oil to the EU for euros not dollars. He spoke in April, 2002 in Oviedo Spain at the invitation of the EU.

All indications are that the Iraq war was seized on as the easiest way to deliver a deadly pre-emptive warning to OPEC and others, not to flirt with abandoning the Petro-dollar system in favor of one based on the euro."