Petrodollar warfare
The phrase petrodollar warfare refers to a hypothesis that a hidden, driving force of United States foreign policy over recent decades has been the status of the United States dollar as the world’s dominant reserve currency and as the currency in which oil is priced.
The term was coined by William R. Clark, who has written a book with the same title.
The phrase oil currency wars is sometimes used with the same meaning.
Supporters of this hypothesis believe that the value of the U.S. dollar is determined by the fact that many key commodities (particularly oil and natural gas) are denominated in dollars.
They believe that if the denomination changes to another currency, such as the euro, many countries would sell dollars and cause the banks to shift their reserves because they would no longer need dollars to buy oil and gas.
This would weaken the dollar relative to the euro (see supply and demand).
The core of the hypothesis is that U.S. administrations are greatly motivated by fear of the consequences of a weaker dollar, particularly higher oil prices.
This motivation is seen as underlying and explaining many aspects of U.S. foreign policy, including the ongoing Iraq War.
This view is controversial.
Opponents dispute virtually every economic claim underpinning the hypothesis, including the theory’s emphasis on the dollar denomination of commodities and the physical location of the major oil exchanges, the claim that the U.S. finances its current-account deficit by printing dollars, and so on.
Opponents also sometimes point out that the Bush administration has repeatedly called for China to stop propping up the dollar by holding very large dollar reserves, a stance seemingly at odds with the administration’s supposed overriding interest in maintaining a strong dollar.
The following was taken from:http://en.wikipedia.org/wiki/Petrodollar_warfare