Paul Krugman follows up his column "Yes He Would" in Money Talks. I hope he's wrong in his answer to the second question, "but I wouldn't count on it":
If It's the President's Will, There's a Way, Money Talks, NY Times: Readers respond to Paul Krugman's Apr. 10 column, "Yes He Would":
George Whitty, Nyack, N.Y.: To what extent do you believe Iran's declared plans to open an oil exchange denominated in euros this spring factors into the Bush administration's plans for war there? And to what extent do you believe that Iraq's efforts in a similar direction had to do with Bush's subsequent invasion there?...
Paul Krugman: I'm all for healthy suspicion of the Bush administration's motives; these days, yesterday's crazy conspiracy theory often turns out to be today's conventional wisdom. But this one, which has been around for a while, just isn't right, for two reasons.
First, the currency denomination of oil sales just doesn't matter very much. The U.S. derives two advantages from the special role of the U.S. dollar. First, foreign individuals hold a lot of U.S. currency — actual green stuff. This is, in effect, a zero-interest rate loan. Second, foreign governments, especially in Asia, hold a lot of reserves in low-interest U.S. bonds, another form of cheap loan. Neither of these decisions is likely to change because oil prices are set in euros rather than dollars. So the alleged motivation isn't there.
[Second], whom do you imagine is dictating U.S. foreign policy based on sophisticated economic arguments? John Snow? Karl Rove? In general, it's a bad idea to assume that people in power know what they're doing. And to imagine that this administration, of all administrations, is driven by deep economic concerns is an unlikely fantasy.
Jim Grefer, Alexandria, Va.: I have little doubt that the folks in the Bush administration are pondering whether an invasion in Iran could bring back the mantle of war president for Bush and help sweep the Republicans back to power. But it is reasonable to ask whether the public and the Democrats in Congress will allow that to happen again — fool me twice.
Paul Krugman: If we got a news flash tonight saying that bombs are dropping on Iran, do you have any confidence that leading figures in politics and the media would have the courage to condemn the president's action and question his motives? I don't. There would be a chorus of people — which would surely include just about every prominent Republican, plus Joe Lieberman and the editorial pages of The Washington Post and The Wall Street Journal — praising the president and denouncing anyone who raises questions for undermining the commander-in-chief in a time of war. The public might nonetheless turn on the administration, but I wouldn't count on it.