On May 10, Russian President Vladimir Putin ignited a firestorm that is bound to sweep across the global economy. In his State of the Nation speech to parliament,, he announced that Russia was planning to make the ruble “internationally convertible” so that it could be used in oil and natural gas transactions. Presently, oil is denominated exclusively in dollars and sold through the New York Mercantile Exchange (NYMX) or the London Petroleum Exchange (LPE) both owned by American investors. If Russia proceeds with its plan, the ruble will go nose to nose with the dollar on the open market sending several billions of surplus greenbacks back to the United States. This could potentially send the American economy into freefall; triggering a deep recession and an extended period of hyper-inflation.

“The ruble must become a more widespread means of international transactions,” Putin said. “To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in rubles."

Currently, the central banks around the world carry large stockpiles of dollars to use in their purchases of oil. This gives the US a virtual monopoly on oil transactions. It also forces reluctant nations to continue using the dollar even though it is currently underwritten by $8.4 trillion national debt.

Putin’s plan is similar to that of Iran, which announced that it would open an oil-bourse (oil exchange) on Kish Island in two months. The bourse would allow oil transactions to be made in petro-euros, thus discarding the dollar. The Bush administration’s belligerence has intensified considerably since Iran made its intentions clear. In fact, just yesterday, Secretary of State Condi Rice said that “security guarantees were not on the table” regardless of any Iranian commitment to stop enriching uranium. In other words, Washington will not provide Iran a “non-aggression pact” whether it follows UN Security Council guidelines or not.

Surely, this is a sign that Uncle Sam is on a fast-track to war.

The United States must protect its dollar-monopoly in the oil trade or it will lose the advantage of being the world’s “reserve currency”. As the reserve currency, the US can maintain its towering $8.4 trillion national debt and $800 billion trade deficit without fear of soaring interest rates or hyper-inflation. Trillions of greenbacks are constantly circulating in oil transactions just as hundreds of billions are stockpiled in foreign banks. In effect, the Federal Reserve is issuing bad checks with every dollar printed on the assumption that they will never reach the bank for collection. So far, they’ve been right, and as the price of oil continues to skyrocket, the Fed just keeps cheerily printing more worthless paper sending it to the 4 corners of the earth. Regrettably, if Russia or Iran goes ahead with their conversion plan, then the bad checks will flood back to their source and precipitate a meltdown.

America’s economic supremacy depends entirely on its ability to compel nations to make their energy acquisitions in greenbacks. If the flaccid dollar is not linked to the world’s most vital resource, then banks will dump it overnight. This extortion-racket is the system we are defending in Iraq, not “democracy”. It is a huckster’s scam designed to perpetuate American debt by forcing worthless currency on the developing world.

In a recent article by Dave Kimble, “Collapse of the petrodollar looming”, the author provides the details of Russia’s importance to the world oil market.

“Russia's oil exports represent 15.2% of the world's export trade in oil, making it a much more significant player than Iran, with 5.8% of export volumes. Russia also produces 25.8% of the world's gas exports, while Iran is still only entering this market as an exporter…. Venezuela has 5.4% of the export market.”

Obviously, it is not in Russia’s interest to trade with its European partners in dollars any more than it would be for the US to trade with Canada in rubles. Putin can strengthen the Russian economy and improve Russia’s prestige in the world as an energy superpower by transitioning to rubles. But, will Washington allow him to succeed?

A growing number of nations are now focusing on the empire’s Achilles’ heel, the dollar. Venezuela, Russia, Norway and Iran are all threatening to move away from the greenback. Is this a spontaneous uprising or is it a new type of asymmetrical warfare?

Whatever it is, Washington is bound to be reeling from the affects. After all, war maybe possible with Iran or Venezuela, but what about Russia? Would Bush be stupid enough to risk nuclear Armageddon to protect the drooping dollar?

The administration is exploring all of its options and is developing a strategy to crush Putin’s rebellion. (This may explain why Newsweek editor and undeclared spokesman for the Council on Foreign Relations (CFR), Fareed Zacharia, asked his guest on this week’s “Foreign Exchange” whether he thought Putin could be “assassinated”?!? Hmmm? I wonder if we’ll hear similar sentiments from Tom Friedman this week?)

The Council on Foreign Relations (CFR), the secretive organization of 4,400 American elites from industry, finance, politics, media and the military (who operate the machinery of state behind the mask of democracy) has already issued a tersely worded attack on Putin (“Russia’ Wrong Direction”; Manila Times) outlining what is expected for Russia to conform to American standards of conduct. The missive says that Russia is headed in “the wrong direction” and that “a strategic partnership no longer seems possible”. The article reiterates the usual canards that Putin is becoming more “authoritarian” and “presiding over the rollback of Russian democracy”. (No mention of flourishing democracy in Saudi Arabia or Uzbekistan?) The CFR cites Putin’s resistance to “US and NATO military access to Central Asian bases” (which are a dagger put to Moscow’s throat) the banishing of Washington’s “regime change” NGOs from operating freely in Russia (“Freedom Support Act funds”) and Russia’s continued support for Iran’s “peaceful” development of nuclear energy.

America has never been a friend to Russia. It took full advantage of the confusion following the fall of the Soviet Union and used it to apply its neoliberal policies which destroyed the ruble, crushed the economy, and transferred the vast resources of the state to a handful of corrupt oligarchs. Putin single-handedly, put Russia back on solid footing; taking back Yukos from the venal Khordukovsky and addressing the pressing issues of unemployment and poverty-reduction. He is a fierce nationalist who enjoys a 72% approval rating and does not need the advice of the Bush administration or the CFR on the best path forward for his country.

The US has purposely strained relations with Russia by putting more military bases in Central Asia, feeding the turmoil in Chechnya, isolating Russia from its European neighbors, and directly intervening in its elections.

When the G-8 summit takes place next week, we should expect a full-throated attack from the corporate media on Putin as the latest incarnation of Adolph Hitler. Watch the fur fly as the forth estate descends on its newest victim like feral hounds to carrion. (Putin’s announcement that Russia would be converting to rubles HAS NOT APPEARED IN ANY WESTERN MEDIA. Like the Downing Street Memo, the firebombing of Falluja, or the “rigged” 2004 elections, the western “free press” scrupulously avoids any topic that may shed light on the real machinations of the US government)

Putin’s challenge to the dollar is the first salvo in a guerilla war that will end with the crash of the greenback and the restoration of parity among the nations of the world. It represents a tacit rejection of a system that requires coercion, torture and endless war to uphold its global dominance. When the dollar begins its inevitable decline, the global-economic paradigm will shift, the American war machine will grind to a halt, and the soldiers will come home. Maybe, then we can rebuild the republic according to the lost values of human rights and the rule of law.

Putin’s plan is set to go into effect on July 1, 2006.