Flashback: Petrodollar Warfare – Saddam abandons Dollar for Euro
Foreign Exchange: Saddam Turns His Back on Greenbacks
By William Dowell for TIME. Monday, Nov. 13, 2000.
Europe’s dream of promoting the euro as a competitor to the U.S. dollar may get a boost from SADDAM HUSSEIN. Iraq says that from now on, it wants payments for its oil in euros, despite the fact that the battered European currency unit, which used to be worth quite a bit more than $1, has dropped to about 82[cents]. Iraq says it will no longer accept dollars for oil because it does not want to deal “in the currency of the enemy.”
The switch to euros would cost the U.N. a small fortune in accounting-paperwork changes. It would also reduce the interest earnings and reparations payments that Iraq is making for damage it caused during the Gulf War, a shortfall the Iraqis would have to make up.
The move hurts Iraq, the U.N. and the countries receiving reparations. So why is Saddam doing it? Diplomatic sources say switching to the euro will favor European suppliers over U.S. ones in competing for Iraqi contracts, and the p.r. boost that Baghdad would probably get in Europe would be another plus.