Iran has been gradually moving away from the dollar ever since sanctions were imposed. It accelerated its efforts this year, informing its biggest clients that from September it would require payment in euro or yen. As of today, 85 percent of Iran's oil is sold in currencies other than the US dollar.
Seyed Mohammad Khatibi, vice president of the National Iranian Oil Company (NIOC), said at present 65 pct of oil sales are made in euros and 20 pct in yen.
"Only 15 pct of oil sales are made in dollars and we are progressively replacing this with more credible currencies," he added.
The value of the US dollar has fallen some 30-25 pct since 2004, he said, and "keeping capital in dollars means a significant fall in the value of our assets".
"We have therefore decided to replace the dollar with other currencies," he said.
The difficulty for the United States is that Mr Khatibi is acting in a completely sensible, rational manner - and others are likely to follow his lead.
Besides lusting for the Khuzestan oil fields in southwestern Iran which hold 90 percent of Iranian oil reserves, Bush and Cheney must appreciate that the other advantage of attacking Iran is to signal to Gulf states, Venezuela, Nigeria and others the fate that shifting from the petrodollar invites.
It has been a truism in financial markets for decades that instability leads to a rise in value for the dollar as a "flight to safety" drives investors to the dollar and dollar assets. Bush/Cheney and their advisors probably believe that by initiating an attack on Iran they will secure a rise in the dollar and continued funding of their massive deficits and crony credit bubbles.
I am not convinced that the rest of the world sees the American dollar and American markets as safe havens anymore. It seems more likely to me that an attack on Iran would lead to paralysis as investors flee all identifiable risks - and particularly the risk of investing in a lawless and unaccountable American economy. For those who must invest surpluses, there will likely be an intensification of the existing trend to buy up real productive assets such as commodity and food producers who can remain profitable regardless of what happens in the financial sector or with respect to inflation.
As the dollar tanks, other oil economies will look to diversify their risks of holding dollars and dollar assets. The Gulf states have been importing accelerating inflation from the USA with their dollar pegs, and the refusal of Saudi Arabia to follow the Fed's lead with a 50 basis point rate cut has invited speculation that Saudi and other Gulf states might abandon the dollar peg as the pressure increases. Iran got there first, but bombing Iran won't change the reality that the dollar is worth 30 percent less today than when Bush took office, and will be worth less still when he leaves.