Another nail in the "$ as reserve currency" coffin

One leading indicator which signaled the British Pound's removal as global reserve currency was Britain's loss of maritime dominance. When British ships could no longer make the world's seas safe for commerce, it just didn't make as much sense to pay them the "vig".

Today the United States earns the "vig" by keeping the world safe for commerce, although lately things haven't been so safe.

North Korea just tested a Nuclear Bomb, the Taliban are enjoying a resurgence in Afghanistan, oil exporting nations like Russia, Venezuela, and Iran are increasingly sidestepping the US to make direct non-market deals, mainly with China (which also happens to be side stepping the US left, right and center around the world making all kinds of bilateral deals), and Iraq edges ever closer to the taboo, "c"-word (no, not that c-word, "civil war").

If oil is the life blood of the modern global economy, it would seem that keeping that blood flowing would be as vital as it was for Britain to keep the seas safe for shipping.

So, as one who enjoys the perks of living in a nation collecting the "vig", I read Managing Director of the Saudi National Security Assessment Project, Nawaf Obaid's opinion piece in the Washington Post with some concern.

if a phased troop withdrawal [of US troops from Iraq] does begin, the violence will escalate dramatically.

In this case, remaining on the sidelines would be unacceptable to Saudi Arabia. To turn a blind eye to the massacre of Iraqi Sunnis would be to abandon the principles upon which the kingdom was founded. It would undermine Saudi Arabia's credibility in the Sunni world and would be a capitulation to Iran's militarist actions in the region.

To be sure, Saudi engagement in Iraq carries great risks -- it could spark a regional war. So be it: The consequences of inaction are far worse.

It seems to me that he is telling the US, if you can't fix the problem in Iraq, we will.

This would be a dramatic shift in Middle East politics, but consistent with the views of CFR Head Richard Haass, that the American era in the Middle East is ending.

In that event it won't be too much longer before national leaders begin to wonder if they are paying the "vig" to the wrong guys.