April 07, 2006
Friday

Iran has a plan to destroy America, and it has nothing to do with the bomb.

Instead, the Islamic republic will use oil and euros to slay the Great Satan, breathless accounts on the Internet warn. The attack will proceed as follows:

Iran will open an oil trading exchange that operates in euros rather than dollars - until now, the world's sole currency for buying crude. Other countries, whose central banks were holding onto dollars largely to buy oil, will dump their dollars en masse.

The greenback's value will collapse. The American economy will tank. The U.S.-dominated New World Order will disappear in a flurry of currency trades.

This tall tale has circulated on the Web for months. Bloggers type apocalyptic postings about it. People who identify themselves as economists engage in detailed, sometimes arcane debates on it. And like any good online story, the saga of the Iranian oil exchange, or bourse, has taken on a viral life of its own.

It has veered deep into the Web's netherworld of conspiracy theorists. America invaded Iraq, for example, because Saddam Hussein started trading oil in euros. We'll do the same thing to Iran, for the same reason. The dispute over Tehran's nuclear program? A smokescreen to cover America's true intent - stopping the bourse.

The story contains several grains of truth. Iran does, in fact, want to create an oil exchange.

The petroleum-rich republic has pursued the idea, off and on, for years. The bourse would rival the New York Mercantile Exchange and International Petroleum Exchange in London - the twin centers of the oil-trading world.

But it's far from clear that the effort will take off. And even if it does, most economists consider it little threat to the United States.

First of all, Iran would need the cooperation of its oil-producing neighbors to make such an exchange work, and relations with many of them are strained.

"I don't believe the Iranians would dream of going ahead without Saudi agreement," said Chris Cook, the British consultant and former director of the International Petroleum Exchange who first suggested to the Iranians that they create the bourse. The exchange, he said, would likely start with selling petroleum chemicals and expand into crude later - if the gulf's other oil producers agreed.

"The whole idea would be, in the medium or long term, to get into crude oil," he said. "But you understand how sensitive it is."

In addition, luring business from New York and London to the theocratic republic of Iran might prove difficult. And Iran lacks many of the elements needed to create a successful exchange, including close proximity to international financial institutions, traders, economists and computer experts.

"You can't set up a petroleum exchange in Omaha," said John Taylor, a senior fellow at Stanford University's Hoover Institution and a former U.S. Treasury undersecretary for international affairs. Referring to Iran, he added, "It's doable. In this particular case, it seems like a bit of a stretch."

Should the bourse open, most economists regard the idea that it could kill the dollar as preposterous. Currencies can easily be swapped on the financial markets, meaning one doesn't need a stockpile of greenbacks to buy oil, they say. And countries hold onto, or sell, dollars for many other reasons than to trade oil.

"There's a difference between the currency on the invoice and the currency that people actually want to hold," said Richard Lyons, executive associate dean of the University of California's Haas School of Business.

Skeptics see in the oil bourse tale a prime example of an Internet discussion run amok. In the Web's planetwide echo chamber, a story that normally would interest a limited pool of financiers and oil industry players has mutated into Armageddon. Even its most speculative elements have come to be treated as fact, at least by some.

"It's got 20,000 hits on Google - that means there must be something there," said Geoffrey Bowker, director of Santa Clara University's Center for Science, Technology and Society. "It's like a playground situation, in the old days, when a rumor would start around a school. In an hour, it's reality."

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