Where have you seen information that Chavez is building an enrichment facility? I have seen that Venezuela announced it may aquire nuclear power reactors from Argentina or Brazil, but nothing concerning uranium enrichment. Also, Iran is supposedly helping Venezuela explore for uranium. I have seen nothing about them supplying Iran with uranium, as Iran has it own supply within its borders.He is just borrowing lines from his buddy and ally Hugo Chavez, who used them first. Works for Chavez too.
Again, he is referring to Hugo Chavez (Venezuela) which has already started building its own enrichment facilities. Venezuela is also suspected to be the current source of much of Iran’s uranium.
Iran and Related Geopolitical Defense Issues
- Thread starter LogisticsGuy
- Start date
You are wright, they are just numbers in a computer and the US treasury can whip them out at any time that they chose no matter which bank those numbers are located. Money in any form is backed up only by a government’s promise. It that government withdraws its promise, the value disappears just like that. Poof!
That is the big Gun they have to use though they seldom use it for obvious reasons.
This hasn't ever been true.
I had a Dutch guilder account in my local British bank in the 1980s, for the money I was being paid for working in the Netherlands. It took me about an hour to set it up, & get all the paperwork done to present to a Dutch bank when I got over there so that I could draw on it. If it was that easy for a retail customer 27 years ago, what do you think it's like for major corporations & national governments nowadays?
The so-called 'eurodollar' (dollars held in non-US banks outside the USA) market was huge by the 1970s. Back then it was because US banks charged much higher spreads & handling fees than European banks, but it also got dollars out of the reach of US regulators. It's still out there. I seem to remember hearing that the majority of US dollar denominated international trades take place outside the USA, & are not handled by US banks.
It's a big gun which would explode in their faces if they tried to use it.
The US treasury can't 'whip them out' of banks outside the USA. It has no jurisdiction outside the USA. Countries which are under US embargo, such as Iran, still conduct trades in US dollars, & the USA can't do anything to stop it as long as there's an offshore dollar market.
What it could do is kill the offshore dollar market, by ceasing to honour international dollar transfers. This would cause the US dollar to become almost worthless. Dollar denominated trade would immediately switch to pounds, euros, yen, etc.
There'd be a worldwide economic slump, & the USA would be hit hardest.
Actually they have never used it, or even threatened to do something that stupid.
- The computers (plural) are in the banks, not a US government office. They don’t have the numbers.
- You can selectively refuse to pay back your bonds, but you cannot repudiate only part of your currency, only all of it. Including all of the currency in every citizen’s wallet, bank account, and Social Security fund. That is cutting off your nose to spite your face with a vengeance, not to mention political suicide.
- The big gun is not repudiating the currency, it is blocking access to the US banking system. That is the threat that can force banks to refuse to do business with Iran or banks that do business with Iran. All the money in the world is worthless, if you cannot use it.
Since the 1930's there have been a large number of regulatory controls and international conventions. Basel III and other international treaties at the state to state bank level and further regulatory controls over a banking entities conduct as part of the Bank Settlement Plan prevents this. Swerve has elaborated on the real politique if the US Treasury irrationally attempted such nonsense.
There is a lot of bogus conspiracy theory nonsense out there on this subject. Don't buy into it.
Venezuela signed a deal with Russia for a nuclear powerplant construction. As far as I know, you're right, no enrichment facilities
Russia, Venezuela sign deal on nuclear power plant construction (Update 1) | World | RIA Novosti
They have used it drug laundering cases but not in sanction cases but they can.
Confiscating assets outside the USA in drug laundering cases is done with the co-operation of local authorities. The US treasury & other US government agencies do not and can not take direct action to seize money in any non-US jurisdiction. The US government liaises with government agencies in other countries to take action against money launderers outside the USA. Money seized outside the USA is confiscated by the local authorities, not the US government.
I would like to see an official source for that statement, since I know that it is wrong.
The US does not deny the value of its money and cannot “withdraws its promise, the value disappears just like that. Poof!” What they do is cut off their access to US banks, and through an agreement the banks of Europe. That is over 60% of the world’s economy that the bank cannot exchange funds with, for things like arranging trade deals. When that happens the bank has to either agree to stop doing business with the drug lords, terrorists, etc. or companies stop doing business with the bank and move their money to a bank that can handle their transactions. But that agreement only applies to drug money and terrorism. Similar action is still being negotiated against Iran, but is being dealt with on a case by case basis in the each bank’s home country, so it is not completely in place.
But in some cases, such as companies owned by the Iranian Revolutionary Guard, the businesses have no options and the bank has to operate through other cut-out banks, which charge their own transaction fees (usually exorbitant, because of the cost of being caught). Lately the ban on doing business has extended more and more to these secondary banks, blocking nearly all access to the global finance net, which is why Iran is forced to negotiate barter deals for its oil.
Sampanviking
Banned Member
Sadly that is not correct. Certainly national banks can hold a quantity of foreign, currency sufficient for SME requirements plus of course holiday money and travellers cheques etc, but Oil and Gas transactions exist in a different stratosphere. With the daily Oil Volumes trading at between 80 and 90 million barrels at often well over $100 a barrel, you have a daily dollar requirement in the billions and an annual requirement in Trillions. Well you wont get that much from the Post Office!
National Banks get there dollars from US banks either as paper cash or more often as an account in the US bank itself. As Oil and Gas companies deal in the same or larger amounts of dollars as do National Banks, there is no point in them going to the local bank (and paying double interest or commission) when they can buy or borrow directly from the US bank itself at the same or similar rates that a national bank can be offered.
Even if the notional value is transferred from the US bank to the Oil companies own bank for transactions, this transfer will most likely still reflect an account held by the National Bank at the US bank, which means that the money remains technically under the control of US Financial Regulators.
If you ever read the financial commentaries regarding why Iraq, Iran and Libya choose to move away from the petrodollar, it is always stated that it was to remove the ability of the US Federal authorities to delay or otherwise interdict their Oil and Gas Revenues while within the US banking system.
This is of course a very simplistic summary as there are near countless variations on how these arrangements can be structured and vast quantities of law and regulations affecting how money can be held and transferred between Banks, Companies and Governments of individual nation states. One of the great achievements of the USA has been to agree a relatively streamline arrangement with nearly all the countries on the globe for dollar transactions, which is why so many are transacted within the US banking system itself.
The international trade is done in “dollar equivalents” NOT cash dollars. It is an accounting fiction to simplify the transaction of funds in multiple denominations. There is not enough cash US$ in the world to handle even 1 days transactions. Nobody exchanges tanker loads of oil, or makes any other large financial transaction, on a cash basis, it is all done with letters of credit.
The actual amount of physical money of any denomination present at a bank branch is seldom more than 1% to 3% of the individual branch’s total accounts. And NO, it is not a violation of regulations or anything else, check the rules on your bank account and you will generally find that for anything over a certain amount, usually much less than $50,000 dollars cash, you have to give them 3+ days notice to assemble it.
There would be a huge number of banks that would be amazed to learn how much of their business they have not been doing. You do not have to use US banks to trade in dollars. US banks have ABSOLUTELY NO ADVANTAGE except a reputation for regulation and operating practices. And yes, that is taking into accounts the various scandals, that is why those scandals get so much attention from the press in the first place.
Which regulatory agency are you referring to? The Federal Reserve can order banks not to do business with other banks, but that is about it. The Justice Department can block an account, or a transaction if they know about it far enough in advance, or monitor an account, branch, or bank, but that is about it.
The “delay or otherwise interdict” of Iranian oil revenues is the result of the US government convincing banks not to accept or provide letters of credit with Iranian banks. The money doesn’t disappear, they just cannot move it around to where it is needed as easy. Try this article Shipping executive: Picking up Iranian crude 'is like getting leprosy' - CNN
Basically Iran can still sell the oil, but they cannot move the money around to use it
- Back to Iran to pay employees and taxes (or bribes).
- To a third country to pay for purchases
- To other bank accounts for personal use (theft) by officials.
Correct. Which is why being DENIED ACCESS to that system is such a threat to Iran. Not something silly like declaring their dollar holdings worthless
What??? Where does all this come from?
My local bank may never have had enough guilders in it to pay out if I'd ever walked in & tried to withdraw all my pay. I'd have had to give notice, while they got guilders. If I wanted any of that money, I transferred it into my sterling account.
That's how it works. Most of the time, the notional currency is just an accounting unit. The entire sterling cash supply, for example, would buy about a week of British output.
As for the annual dollar requirement for oil trading - well, have you ever heard of the velocity of circulation of money? It goes round & round. A million dollars can be spent many times in the course of a year. And there is this thing called credit.
And, of course, see what My2Cents wrote.
the concerned
Active Member
I've read that the reason that Iran hasn't bought advanced military hardware is that the Iranian government doesn't trust its armed forces other than the republican guard thats why the Su-25's went to them not the airforce. After the gulf war when people were on mild talking terms France offered to sell iran 60 mirage F-1's but the iranian government refused .Remember the iranian government is not as unilaterally supported by its people as it makes out.I think everyone is being premature Iran to develop a nuclear weapon is going to have to let one off to test it theres no other way .We detected the one that North Korea tested i'm sure that we would detect the one that Iran tests then we could deal with them with Russia's support not needing chinas.
The reason why Iran hasn't bought a lot of ''advanced'' hardware recently is because a lot of countries won't sell stuff to Iran, not because it doesn't trust its military. The ''republican guards'' that you refer to are actually called the Revolutionary Guards or the Pasdaran. The Revolutionary Guards have very strong political backing - they run a vast business network in Iran involving dozens of companies and charities - and as a result of their performance in the war with Iraq, when they were used as shock troops or to shore up army units that were ''low in spirit'', are considered to be very reliable. When Saddam attacked, a lot of trained and experienced Iranians were purged due to their association with the Shah's regime, which in turned weakened the Iranian military, this is where the Revolutionary Guards came in.
http://www.rand.org/pubs/monographs/2008/RAND_MG821.pdf
I'm getting off topic here but a country that has traditionally not trusted it's military is Saudi Arabia. That's why the Saudi Arabia National Guard [SANG] has been built up, that's why is is them and not the army that protect many key installations and that's why there has been a policy by the saudi government of ensuring that the army and SANG have different weapons, radios, vehicles, etc, so that both can't coordinate their actions easily in event of a coup. And off course there was also Saddam's Iraq which had the Republican Guard and the Special Republican Guard.
This is the first I've heard of it but I do know that the mullahs, upon coming to power in 1979, initially had plans to sell the F-14s. It turned out to be a blessing that they didn't!
Sampanviking
Banned Member
My2Cents
I really am at a loss at how to even begin replying to your post. The truth of the matter is that were it not for the fact that you were quoting me almost line for line, I would not have realised that they were replies directed to me, as they have almost no relevance to the points I was making.
You talk about cash, when I was talking about transactions within the banking system and you also talk about the Fed materialising and dematerialising funds in banks which was something being argued by some other posters a page or so ago.
The key point of the US having achieved a smooth infrastructure for International Trade is the one point you agree with (Thank God) but then fail to appreciate what the consequences of this are.
A huge amount of global trade is conducted, denominated in dollars with the Oil and Gas being at the forefront of dollar usage. Well these Dollars are not given away, so the currency has to be bought and the only institutions able to supply sufficient are the major US banks that get them from the Fed. It really does not matter which banks nominally handle a transaction on behalf of a client as what appears in the clients bank account does not represent where actual monies actually exist and where they are actually held.
For example, when I buy HKD from Barclays to fund purchases from Hong Kong I have a UK HKD currency account that shows a balance of funds purchased (and charged a commission against) in HKD. I however know for a fact, that those nominal HK dollars do not exist in the vaults of my local Barclays. Instead I can only see them because they are credited to a Barclays Client Account opened by Barclays with the Hang Seng Bank of Hong Kong and that the actual money exists in a trade account of Hang Seng in Hong Kong itself and guaranteed by funds held in the vaults in Hong Kong. When I make a purchase from a Hong Kong supplier, a few nominal accounts make a few changes, and the value changes from my account to the supplier, who in all likelihood has a local account that is guaranteed by the very same funds in the very same vault in Hang Seng. Emails, phone calls, Goods and banking Instructions may have whizzed backwards and forwards across half the globe, but not one actual HKD has moved as much as an inch!
It is the same with the Oil and Gas transactions, but here as the scale is much greater, the Oil and Gas companies can open their own Account with a US Bank and buy dollars at a rate similar to that at which a national clearing bank can buy at. The value of funds may the transferred to a National Bank, but that National Bank will most likely hold the value within a Client Account it has opened with a US Bank. Likewise, when a Oil deal is transacted in dollars, the chances are high, irrespective of the actual banks co-ordinating the transaction, that the actual dollars are all within the US banking system and have not actually left the US. This is why so many countries that generate dollar surpluses are not content to simply allow these dollars to sit in an account, as they have no physical access to them and so "recycle" them back the US in return for T Bonds and other similar more tactile securities.
Letters of Credit are mechanisms or Instruments that are only as good as the Financial Infrastructure that they are operating within. They are not cash within themselves and only represent a guarantee from a bank along with instructions for the making of the transaction. Not every bank will accept letters of credit from any other bank. Letters drawn for banks dealing in dollars held within a US bank will have codes incorporated within them that will indicate that this is the case and that the receiving bank can accept the letter as valid more quickly.
Finally, Oil and Gas Trading is deadline and settlement driven business and anything that disrupts these schedules will damage confidence and good will. If the US wants to use its regulatory ability to disrupt another countries petrodollar Oil receipts it only needs to invoke anti terrorism or money laundering regulations to delay completion of payments or to freeze funds nominally held by a country like Iran. If payments are delayed by compliance/due diligence investigations, Iran would have to make a choice, either release the Oil before payment is received or even cleared and risk not being paid, or delay release and disrupt delivery schedules etc for which penalties will most certainly be payable to the customer. An even bigger risk for Iran on this score would be to have dollar funds frozen and find that just as happened in Libya, that they were being used to finance and arm opposition groups.
So my original points were.
1) The US benefits from High Oil and Gas prices as these dollars have to be bought from US banks for a commission and there will also be a variety of transaction and facility charges as a deal goes through.
2) That these dollars rarely if ever will leave the environs of the US banking system, as it is cheaper to keep them within it and also the only way to ensure the smooth progress of a transaction across International borders.
Finally of course, to appreciate the complexity of trading outside of the petrodollar, you only have to look at the efforts undertaken by China it internationalise the Yuan. Over the last decade, a vast proportion of its International Diplomacy worldwide has been visits by China's most senior leaders, accompanied by vast entourages of senior bankers and finance ministry officials as they try and negotiate the legal framework for direct currency transactions at Inter-Government, Inter-Bank and finaly at Corporate levels.
China, Russia and Iran are three of the countries at the forefront of using local currencies to transact Oil and Gas and it represents a substantial loss of income previously enjoyed by the US.
I really am at a loss at how to even begin replying to your post. The truth of the matter is that were it not for the fact that you were quoting me almost line for line, I would not have realised that they were replies directed to me, as they have almost no relevance to the points I was making.
You talk about cash, when I was talking about transactions within the banking system and you also talk about the Fed materialising and dematerialising funds in banks which was something being argued by some other posters a page or so ago.
The key point of the US having achieved a smooth infrastructure for International Trade is the one point you agree with (Thank God) but then fail to appreciate what the consequences of this are.
A huge amount of global trade is conducted, denominated in dollars with the Oil and Gas being at the forefront of dollar usage. Well these Dollars are not given away, so the currency has to be bought and the only institutions able to supply sufficient are the major US banks that get them from the Fed. It really does not matter which banks nominally handle a transaction on behalf of a client as what appears in the clients bank account does not represent where actual monies actually exist and where they are actually held.
For example, when I buy HKD from Barclays to fund purchases from Hong Kong I have a UK HKD currency account that shows a balance of funds purchased (and charged a commission against) in HKD. I however know for a fact, that those nominal HK dollars do not exist in the vaults of my local Barclays. Instead I can only see them because they are credited to a Barclays Client Account opened by Barclays with the Hang Seng Bank of Hong Kong and that the actual money exists in a trade account of Hang Seng in Hong Kong itself and guaranteed by funds held in the vaults in Hong Kong. When I make a purchase from a Hong Kong supplier, a few nominal accounts make a few changes, and the value changes from my account to the supplier, who in all likelihood has a local account that is guaranteed by the very same funds in the very same vault in Hang Seng. Emails, phone calls, Goods and banking Instructions may have whizzed backwards and forwards across half the globe, but not one actual HKD has moved as much as an inch!
It is the same with the Oil and Gas transactions, but here as the scale is much greater, the Oil and Gas companies can open their own Account with a US Bank and buy dollars at a rate similar to that at which a national clearing bank can buy at. The value of funds may the transferred to a National Bank, but that National Bank will most likely hold the value within a Client Account it has opened with a US Bank. Likewise, when a Oil deal is transacted in dollars, the chances are high, irrespective of the actual banks co-ordinating the transaction, that the actual dollars are all within the US banking system and have not actually left the US. This is why so many countries that generate dollar surpluses are not content to simply allow these dollars to sit in an account, as they have no physical access to them and so "recycle" them back the US in return for T Bonds and other similar more tactile securities.
Letters of Credit are mechanisms or Instruments that are only as good as the Financial Infrastructure that they are operating within. They are not cash within themselves and only represent a guarantee from a bank along with instructions for the making of the transaction. Not every bank will accept letters of credit from any other bank. Letters drawn for banks dealing in dollars held within a US bank will have codes incorporated within them that will indicate that this is the case and that the receiving bank can accept the letter as valid more quickly.
Finally, Oil and Gas Trading is deadline and settlement driven business and anything that disrupts these schedules will damage confidence and good will. If the US wants to use its regulatory ability to disrupt another countries petrodollar Oil receipts it only needs to invoke anti terrorism or money laundering regulations to delay completion of payments or to freeze funds nominally held by a country like Iran. If payments are delayed by compliance/due diligence investigations, Iran would have to make a choice, either release the Oil before payment is received or even cleared and risk not being paid, or delay release and disrupt delivery schedules etc for which penalties will most certainly be payable to the customer. An even bigger risk for Iran on this score would be to have dollar funds frozen and find that just as happened in Libya, that they were being used to finance and arm opposition groups.
So my original points were.
1) The US benefits from High Oil and Gas prices as these dollars have to be bought from US banks for a commission and there will also be a variety of transaction and facility charges as a deal goes through.
2) That these dollars rarely if ever will leave the environs of the US banking system, as it is cheaper to keep them within it and also the only way to ensure the smooth progress of a transaction across International borders.
Finally of course, to appreciate the complexity of trading outside of the petrodollar, you only have to look at the efforts undertaken by China it internationalise the Yuan. Over the last decade, a vast proportion of its International Diplomacy worldwide has been visits by China's most senior leaders, accompanied by vast entourages of senior bankers and finance ministry officials as they try and negotiate the legal framework for direct currency transactions at Inter-Government, Inter-Bank and finaly at Corporate levels.
China, Russia and Iran are three of the countries at the forefront of using local currencies to transact Oil and Gas and it represents a substantial loss of income previously enjoyed by the US.
gazzzwp
Member
Are Israel's Chances Realistic?
As the US seems to be taking more of a diplomatic stance toward the crisis, there are increasing noises being made concerning a unilateral response from Israel which itself could amount to nothing more than trying to up the ante with the US administration in an attempt to get them to take action.
This apparently was the case during the 1973 Yom Kippur when the US re-supplied Israel with vital military equipment to prevent them from using nuclear arms and initiating a far more dangerous state of affairs. I'm sure that some experts might like to comment on the analogy but I'm sure that it is a valid one.
So what are Israel's chances of success if they do decide to go it alone? The hurdles are numerous:
1) The distance may be at the limit of their fighter aircraft. Resupplying in mid air poses other risks particularly if it has to take place close to the Iranian border.
2) What will the flight path be? What are the political implications of crossing other territories on the way to the Iranian targets?
3) How will the Israeli aircraft cope with Iran's modern air defences such as S300, SA-5, S200, Tor-M1 etc?
4) What about the response of the Iranian air force? Albeit flying out of date aircraft but the MIG 29's and F14's must pose a few potential problems.
5) The nuclear sites are widespread and difficult to destroy requiring heavy bunker busting munitions. Huge numbers of aircraft would need to be involved to guarantee destruction of such a large number of well protected targets.
6) If they lost a lot of aircraft how vulnerable would it leave the IDF in the short term?
On the face of it, it hardly seems possible for a nation with a limited military force such as Israel's. What about use of submarine launched cruise missiles? Nuclear tipped missiles? Would Israel risk such an attack in view of the short term international outcry and the possible long term retaliation?
I just cannot see how it would be feasible.
As the US seems to be taking more of a diplomatic stance toward the crisis, there are increasing noises being made concerning a unilateral response from Israel which itself could amount to nothing more than trying to up the ante with the US administration in an attempt to get them to take action.
This apparently was the case during the 1973 Yom Kippur when the US re-supplied Israel with vital military equipment to prevent them from using nuclear arms and initiating a far more dangerous state of affairs. I'm sure that some experts might like to comment on the analogy but I'm sure that it is a valid one.
So what are Israel's chances of success if they do decide to go it alone? The hurdles are numerous:
1) The distance may be at the limit of their fighter aircraft. Resupplying in mid air poses other risks particularly if it has to take place close to the Iranian border.
2) What will the flight path be? What are the political implications of crossing other territories on the way to the Iranian targets?
3) How will the Israeli aircraft cope with Iran's modern air defences such as S300, SA-5, S200, Tor-M1 etc?
4) What about the response of the Iranian air force? Albeit flying out of date aircraft but the MIG 29's and F14's must pose a few potential problems.
5) The nuclear sites are widespread and difficult to destroy requiring heavy bunker busting munitions. Huge numbers of aircraft would need to be involved to guarantee destruction of such a large number of well protected targets.
6) If they lost a lot of aircraft how vulnerable would it leave the IDF in the short term?
On the face of it, it hardly seems possible for a nation with a limited military force such as Israel's. What about use of submarine launched cruise missiles? Nuclear tipped missiles? Would Israel risk such an attack in view of the short term international outcry and the possible long term retaliation?
I just cannot see how it would be feasible.
To me that i think is the baseline, AFAIK hasn't the US GBU-57A/B MOP been developed directly as a result of the depth of potential Iranian/North Korean nuclear sites? (Or if not directly developed, the requirements for a penetrator able to tackle those facilities were certainly in the front of the designers minds)
The potential for Israel to purchase them is slim, due to the fact that IIRC the MOP is designed to be carried by the B-52 or B-2. So as it stands the possibility for a purchase is unlikely.
Without a deep penetrator to do the job, any Israeli strike would be pointless. It'd be the first issue to be addressed if I was an Israeli planner if i was planning to preempt.
Just out in the last week, these look to be a pair of very good reports.
The 1st is on the strategy and implications of Iran's long range missile arsenal and WMD development.
http://csis.org/files/publication/120222_Iran_Gulf_Mil_Bal_II_WMD.pdf
It includes a nice map showing just how much of Europe in threatened by the various missile ranges (see page 13) showing how much of Europe is in range.
The 2nd details Iran’s conventional military, with special emphasis on their use in an asymmetric strategy.
http://csis.org/files/publication/120221_Iran_Gulf_MilBal_ConvAsym.pdf
The 1st is on the strategy and implications of Iran's long range missile arsenal and WMD development.
http://csis.org/files/publication/120222_Iran_Gulf_Mil_Bal_II_WMD.pdf
It includes a nice map showing just how much of Europe in threatened by the various missile ranges (see page 13) showing how much of Europe is in range.
The 2nd details Iran’s conventional military, with special emphasis on their use in an asymmetric strategy.
http://csis.org/files/publication/120221_Iran_Gulf_MilBal_ConvAsym.pdf
Two interesting articles.
While not revealing anything most who study the area don't already know regarding the military, it did bring out some interesting information that , for me, was new.
Fresh water is as important as oil to the Gulf Region.
One scenario is for Iran to attack the desalination plants along the Gulf, threatening nations allied to the United States. Saudi Arabia obtains nearly 70% of its fresh water from these plants. However, Iran also has this vulnerability.
While not revealing anything most who study the area don't already know regarding the military, it did bring out some interesting information that , for me, was new.
Fresh water is as important as oil to the Gulf Region.
One scenario is for Iran to attack the desalination plants along the Gulf, threatening nations allied to the United States. Saudi Arabia obtains nearly 70% of its fresh water from these plants. However, Iran also has this vulnerability.