Turkey plans to dump dollar in trade with Iran

Turkey plans to dump dollar in trade with Iran

Turkey is seeking to switch to payments in national currencies for $10 billion worth of trade with neighbouring Iran to lessen exchange rate risks and bolster trade volumes, a Turkish government source said on Friday.

Turkey has made similar proposals to China and Russia in recent months.

Iran proposed earlier this week during a visit by Turkish Prime Minister Tayyip Erdogan that the two countries should conduct bilateral trade in their own currencies as part of widening economic ties.

Bilateral trade jumped to $10.3 billion in 2008 from $2.4 billion in 2003, with Turkey running a large deficit largely due to its gas imports. Ankara and Tehran aim to boost the volume to $20 billion in the next few years. [continued...]

Turkey, Iran sign strategic deal to carry gas to Europe

Iran and Turkey signed a number of deals on Wednesday to facilitate the efficient flow of gas through Turkey to Europe, including accords on allocating some of Iran’s South Pars gas field to the Turkish Petroleum Corporation (TPAO), allowing Iranian gas to be transported via Turkey and allowing Turkmenistan’s natural gas to be pumped to Turkey via Iran, during Turkish Prime Minister Recep Tayyip Erdoğan’s visit to Turkey’s southeastern neighbor.

Turkish Energy Minister Taner Yıldız said the deals provided advantages for Turkey in the use and the sale of some phases of the South Pars gas field. “Its conditions and prices will be negotiated later,” the minister added. Iran, which has the world’s second-largest natural gas reserves, is Turkey’s second-biggest supplier of natural gas after Russia. Turkey had signed a preliminary deal in November 2008 for Iranian gas to be exported to Europe through Turkey and for Turkey to produce gas in the South Pars field.

The investment would amount to $3.5 billion. But this deal has been delayed by objections from the United States, which opposes new energy deals in Iran as part of Western efforts to isolate Tehran over its nuclear program. [continued...]

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OPINION: Turning east

Dealing with the dragon

On both Wednesday and Thursday, the price of oil briefly hit $100 a barrel. The new record made headlines, as well it should have. But what does it mean, aside from the obvious point that the economy is under extra pressure?

Well, one thing it means is that we’re having the wrong discussion about foreign policy.

Almost all the foreign policy talk in this presidential campaign has been motivated, one way or another, by 9/11 and the war in Iraq. Yet it’s a very good bet that the biggest foreign policy issues for the next president will involve the Far East rather than the Middle East. In particular, the crucial questions are likely to involve the consequences of China’s economic growth. [complete article]

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OPINION: What’s America worth?

In the realm of the dying dollar

Great powers die slowly. It took years before the world realized that Great Britain was an imperial corpse, sapped of its strength by two world wars. The funeral finally occurred on Feb. 21, 1947, a freezing winter day in bomb-torn, bedraggled London, when the British wrote their own epitaph. That was the day that London cabled Washington: “His Majesty’s Government, in view of their own situation, find it impossible to grant further financial assistance to Greece,” amounting to a half billion dollars a year and a garrison of 40,000 troops. The British also announced the same day that they were withdrawing from Turkey. “The British are finished,” remarked a stunned Dean Acheson, who was soon to be Harry Truman’s secretary of State. And so they were. It was the early cold war. With the Soviet Union threatening to extend its influence over Greece and Turkey, there was no time for elegies. Instead, a quick passing of the baton took place: the United States would now fill Britain’s role and become the central, stabilizing power in the West. This was the moment of “creation” of the U.S.-led world order, Acheson later realized.

One has to wonder now whether the American superpower is also experiencing a terminal illness, with its decline marked by the dollar’s downward drift. The one difference being that there is no successor on the horizon (the Chinese have a long, long way to go), and the currency that is replacing the dollar, the euro, is backed not by an emerging superpower but by the feeble cacophony of voices that is the European Union. Yet the signs of imperial decadence are unmistakable. The world is losing confidence in the dollar, in no small part because it has lost confidence in America’s strategic judgment and in its sustainability as a great power in the face of record budget and trade deficits, which are forcing the United States to borrow ever more money from future rivals like China and Russia. [complete article]

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FEATURE: Economic recovery from Bush will take a generation

The economic consequences of Mr. Bush

When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.

I can hear an irritated counterthrust already. The president has not driven the United States into a recession during his almost seven years in office. Unemployment stands at a respectable 4.6 percent. Well, fine. But the other side of the ledger groans with distress: a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris—or even the Yukon—becomes a venture in high finance.

And it gets worse. After almost seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands—or so he says—that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both. [complete article]

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NEWS & ANALYSIS: The sliding dollar

The dollar’s decline: from symbol of hegemony to shunned currency

The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible.

After months of huge and sustained turmoil on the money markets, lack of confidence in the world’s totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar.

“An American businessman over here who is given the choice would take anything but the dollar,” David Buik of Cantor Index said yesterday. “I would want to be paid in yen, and if not yen then the euro or sterling.” [complete article]

Critics assail weak dollar at OPEC event

A rare meeting of the heads of state of the OPEC countries ended here today on a political note, with two leaders — President Hugo Chávez of Venezuela and President Mahmoud Ahmadinejad of Iran — blaming the weakness of the United States dollar for high oil prices.

Despite the best efforts of the host country, Saudi Arabia, to steer the meeting away from politics and promote OPEC’s environmental concerns, the leaders of Venezuela and Iran let loose some show-stealing statements.

“The dollar is in free fall, everyone should be worried about it,” Mr. Chávez told reporters here. “The fall of the dollar is not the fall of the dollar — it’s the fall of the American empire.”

During a news conference after the meeting, Mr. Ahmadinejad added: “The U.S. dollar has no economic value.”

Mr. Ahmadinejad said that oil, which was hovering last week at close to $100 a barrel, was being sold currently for a “paltry sum.” And Mr. Chávez predicted that prices would rise to $200 a barrel if the United States were “crazy enough” to strike at Iran, or even at his own country. [complete article]

See also, Dollar continues near record lows (BBC).

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