Possible ramifications on U.S. - EU relations
Read external link, before reading this article. It will help understanding what I mean.
Now, there can be no doubt that were Russia to go ahead and price oil in Euros, instead of Dollars, that would be a huge blow for the U.S. It could possible be the start of a wave of countries (perhaps even some of the larger OPEC countries) making the same move. If a growing number of nations start keeping their currency reserves in Euros instead of in Dollars, the U.S. has no choice but to start taking precautions. If this comes at a time, when U.S. - European relations are - at best - shaky, then I foresee real trouble ahead for the once so friendly atmosphere between Washington and Brussels.
But let's look for a moment at how such a move would occur. Now unless Russia are aiming to seriously damage their relations with Washington, then they would not start this out of the blue. Negotiations with Washington would simply have to take place prior to this thing happening. The question is, that if these negotiations failed, and Russia moved to Euros, how many nations would follow suit. There is no doubt in my mind, that a large number of the Arabic OPEC countries would be only too happy to do so. Perhaps even the Saudis. And Brussels would be very pleased indeed. Now I'm not going to say that the U.S. would take action against these nations in the military sense, but this is a real threat to the U.S. economy - at a time where the Dollar is already on a downslide (allthough it will probably climb again, if Kerry is elected president).
So where does that leave us? There is no way that Brussels would say "No thanks, we would prefer that you guys keep your currency reserves in Dollars". I am not even sure that would be possible. So the U.S. is left with a real problem here. The way I see this, it would pit the U.S. against the EU in a struggle for economic power over the world. And don't be mistaken here: This is huge. It could spell the short term end of the U.S. role as the world's sole superpower, in the economic sense. And it could be a situation from which there is no bouncing back.
The future, then. With the war on terrorism hanging in a balance, and not even near an ending, the last thing the world needs is more division between Washington and Brussels. Problems in Africa and Asia also need attention, and from where I stand, there just has to be some kind of cross atlantic unity as a counterweight to poverty and fundamentalism around the globe. Now I know that some die hard conservatives in the U.S. has since 9/11 taken the stance that Europe and the U.N. are good for nothing, but as a European, I simply do not agree. With all the trouble that's brewing, we need a united front. We need Washington and Brussels to cooperate, or we wont be able to stem the tide. We need unity.
So, obviosly this will not happen overnight. It is a process that will take perhaps years. But if it comes, I hope that Washington will keep their heads cool and view this as a problem that needs solving, instead of war that needs fighting (again in the economic sense). No matter what happens, it is my hope that the U.S. and the EU will try to see through their differences, and try to hold on to their friendship. It will be a dire situation, if not.
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