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Oil for War: Iraq Using Oil Revenue to Buy U.S. Treasury Securities

Posted by Joshua Price on April 23, 2008

This is all we need. We have another Arab country investing significant amounts of its oil wealth into our treasury debt.

The Washington Times recently reported that the Iraqi government is investing billions of dollars earned from oil sales in U.S. Treasury securities instead of spending the revenue on vital reconstruction projects.

I know many of you will say that this shouldn’t be a concern because we’re attempting to install an Iraqi government that’s friendly to America and the West; therefore, it’s highly doubtful that Iraq would hold the American debt it possess over our heads. Right. These are the same folks telling us that we have nothing to worry about when it comes to China holding so much of our debt.

But that’s not the only point in this story.

Oil for War. That’s what conservative radio talk show host Michael Savage has proposed as a way for Iraq to help repay the estimated $500,000 billion we’ve spent to liberate that country.

His plan, which I fully support and should be given serious consideration, of course it won’t because it’s logical and not corrupt, would require Iraq to essentially pay us in barrels of oil which would increase the supply of oil here in America. This, in turn, would lead to somewhat lower gas prices and lower transportation costs associated with shipping goods all across the country.

This idea is perfectly logical, but more importantly, it’s entirely plausible. We know Iraq has plenty of oil reserves and could afford such a requirement. It’s not like this would severely deplete Iraq’s natural resources or severely strain Iraq’s economy.

So if this plan is so logical and feasible, why hasn’t it been instituted? There are two reasons and one of them can be found in the following excerpt:

Oil-rich Gulf Arab states resisted pressure from the United States and Iraq yesterday to forgive Iraq tens of billions of dollars in prewar debt, amid concerns about how the Baghdad government spends its growing oil revenues.

The Gulf Arab states are greedy. They are ferociously protective of their precious oil reserves and revenues–even though they’re quite abundant in that area. Just look, not only will Iraq not pay us back for liberation costs already incurred, it’s still not using oil revenue to pay for its own reconstruction.

By the way, this is precisely why we should have used our air superiority to level the troublesome areas in Iraq, and not just at the onset of the war. But remember how we were repeatedly told that we had to be very careful when firing on a target because we didn’t want to destroy surrounding infrastructure that would need to be replaced at our cost should it be destroyed? Well folks I’d say we we’re having to do that anyway.

We probably could have saved 500-1,000 of our men and women’s lives by bombing the hell out of certain areas instead of going house to house trying not to accidentally destroy some damn piece of infrastructure that we’ve had to replace anyway!

Second, as Savage has pointed out on his show, the oil companies won’t allow it due to the downward pressure the direct increase in free supply to America would cause to the price of oil.

From their perspective we have to continue to allow the OPEC nations and countries like Iraq to manipulate the oil supply in a way that supports upward pressure on prices.

Why? Because higher prices, holding costs and other variables constant (which in this case is possible), means higher profit for the oil companies and oil-producing countries. It’s a win-win, except of course if you care about America and its security and sovereignty.

It’s absolutely absurd that Iraqis are taking their oil revenues (when some of that oil should be coming directly to us, not at market-determined prices by the way–i.e. it should be free) and instead of paying us back, they’re earning interest off of some of the very debt attributed to their liberation.

How is this allowed go on?

But this all goes back to one fundamental point: it’s not about what’s good for America; it’s about what’s good for the bottom line and the wallet.

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