OPEC (Traitors) Interested in Non-Dollar Currency

NewsToBeRead

http://biz.yahoo.com/ap/071118/opec.html

OPEC Interested in Non-Dollar Currency
Sunday November 18, 6:46 pm ET
By Sebastian Abbot, Associated Press Writer

Ahmadinejad: OPEC Members Interested in Converting Cash Reserves Into
Non-Dollar Currency


RIYADH, Saudi Arabia (AP) -- Iranian President Mahmoud Ahmadinejad
said Sunday that OPEC's members have expressed interest in converting
their cash reserves into a currency other than the depreciating U.S.
dollar, which he called a "worthless piece of paper."


His comments at the end of a rare summit of OPEC heads of state
exposed fissures within the 13-member cartel -- especially after U.S.
ally Saudi Arabia was reluctant to mention concerns about the falling
dollar in the summit's final declaration.

The hardline Iranian leader's comments also highlighted the growing
challenge that Saudi Arabia, the world's largest oil producer, faces
from Iran and its ally Venezuela within the Organization of Petroleum
Exporting Countries.

"They get our oil and give us a worthless piece of paper," Ahmadinejad
told reporters after the close of the summit in the Saudi capital of
Riyadh. He blamed U.S. President George W. Bush's policies for the
decline of the dollar and its negative effect on other countries.

Oil is priced in U.S. dollars on the world market, and the currency's
depreciation has concerned oil producers because it has contributed to
rising crude prices and has eroded the value of their dollar reserves.

"All participating leaders showed an interest in changing their hard
currency reserves to a credible hard currency," Ahmadinejad said.
"Some said producing countries should designate a single hard currency
aside from the U.S. dollar ... to form the basis of our oil trade."

Venezuelan President Hugo Chavez echoed this sentiment Sunday on the
sidelines of the summit, saying "the empire of the dollar has to end."

"Don't you see how the dollar has been in free-fall without a
parachute?" Chavez said, calling the euro a better option.

Saudi Arabia's King Abdullah had tried to direct the focus of the
summit toward studying the effect of the oil industry on the
environment, but he continuously faced challenges from Ahmadinejad and
Chavez.

Iran and Venezuela have proposed trading oil in a basket of currencies
to replace the historic link to the dollar, but they had not been able
to generate support from enough fellow OPEC members -- many of whom,
including Saudi Arabia, are staunch U.S. allies.

Both Iran and Venezuela have antagonistic relationships with the U.S.,
suggesting their proposals may have a political motivation as well.
While Tehran has been in a standoff with Washington over its nuclear
program, left-wing Chavez is a bitter antagonist of Bush. U.S.
sanctions on Iran also have made it increasingly difficult for the
country to do business in dollars.

During Chavez's opening address to the summit on Saturday, the
Venezuelan leader said OPEC should "assert itself as an active
political agent." But Abdullah appeared to distance himself from
Chavez's comments, saying OPEC always acted moderately and wisely.

A day earlier, Saudi Arabia opposed a move by Iran on Friday to have
OPEC include concerns over the falling dollar included in the summit's
closing statement after the weekend meeting. Saudi Arabia's foreign
minister even warned that even talking publicly about the currency's
decline could further hurt its value.

But by Sunday, it appeared that Saudi Arabia had compromised. Though
the final declaration delivered Sunday did not specifically mention
concern over the weak dollar, the organization directed its finance
ministers to study the issue.

OPEC will "study ways and means of enhancing financial cooperation
among OPEC ... including proposals by some of the heads of state and
governments in their statements to the summit," OPEC Secretary General
Abdalla Salem el-Badri said, reading the statement.

Iran's oil minister went a step further and said OPEC will form a
committee to study the dollar's affect on oil prices and investigate
the possibility of a currency basket.

"We have agreed to set up a committee consisting of oil and finance
ministers from OPEC countries to study the impact of the dollar on oil
prices," Gholam Hussein Nozari told Dow Jones Newswires.

Iraqi Oil Minister Hussein al-Shahristani said the committee would
"submit to OPEC its recommendation on a basket of currencies that OPEC
members will deal with." He did not give a timeline for the
recommendation.

The meeting in Riyadh, with heads of states and delegates from 13 of
the world's biggest oil-producing nations, was the third full OPEC
summit since the organization was created in 1960.

Abdullah tried to take the focus off the dollar debate, announcing the
donation of $300 million to set up a program to study the effect of
the oil industry on the environment. Kuwait, Qatar and the United Arab
Emirates also agreed to donate $150 million each to the fund, Prince
Saud Al-Faisal, Saudi Arabia's foreign minister, said Sunday.

The run-up to the meeting was dominated by speculation over whether
OPEC would raise production following recent oil price increases that
have approached $100. But cartel officials have resisted pressure to
increase oil production and said they will hold off any decision until
the group meets next month in Abu Dhabi, United Arab Emirates.

They have also cast doubt on the effect any output hike would have on
oil prices, saying the recent rise has been driven by the falling
dollar and financial speculation by investment funds rather than any
supply shortage.

During his final remarks, el-Badri stressed he was committed to supply
-- but did not mention changing oil outputs.

"We affirm our commitment ... to continue providing adequate, timely,
efficient, economic and reliable petroleum supplies to the world
market," he said.