Breaking: US $ being replaced as oil currency (Updated)
by cosmic debris
Mon Oct 05, 2009 at 06:37:41 PM PDT

The story is breaking on Reuters, but it comes originally from Robert Fisk at the UK Independent. TheDemise of the Dollar http://www.independent.co.uk/news/business...

Apparently several Arab states have been in secret negotiations with Russia, Japan, China and France to replace the US Dollar with a variety of other currencies including the Yuan, Yen, Euro and a new unified currency "planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar..."

As I add info as I find it, please discuss the implications in comments.

From Fisk's article

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

And more on China

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

More sources coming in now:

From Reuters: Gulf in talks on replacing US$ for oil: report http://www.reuters.com/article/newsOne/idU...

From Bloomberg: Dollar Falls as Paper Says Arab States May Stop Using Greenback http://www.bloomberg.com/apps/news?pid=206...

http://www.dailykos.com/story/2009/10/5/79... -(Updated)