COLLATERAL DAMAGE FROM AN ILLEGAL WAR: It's the economy, stupid

By: 
Ibrahim A. Warde
Date Published: 
April, 2003
Publication: 
Le Monde diplomatique
Language: 

FOUR DAYS INTO THE WAR, PRESIDENT BUSH ASKED THE UNITED STATES CONGRESS FOR $75BN IN EMERGENCY FUNDS. UNTIL THEN IT HAD BEEN TABOO TO MENTION THE PROSPECTIVE COST OF THIS WAR: THE 2003 FEDERAL BUDGET MADE NO MENTION OF EXPENDITURES ALREADY OUTGOING. THE OFFICIAL DISCOURSE HAD FOCUSED ON THE UNCOSTED FIGHT OF GOOD AGAINST EVIL.

WHEN Lawrence Lindsay, the senior White House economic adviser, publicly suggested that a war against Iraq might cost up to $200bn, he was promptly sacked. But before he went, he had raised two neglected questions: how much will the war cost and who will pay for it? Defence Secretary Donald Rumsfeld, who is a stickler for precision, decided that, since it was impossible to come up with an accurate estimate, it would be pointless to speculate about it. His own analysts had costed a short war and its immediate aftermath at $60bn to $95bn. But Rumsfeld assured everyone that, even under the worst circumstances, the cost "could not exceed $50bn". His deputy, Paul Wolfowitz, the theorist of unilateralist pre-emption on every front, quietly declared, as more than 200,000 United States troops were put in place in countries bordering Iraq: "We have no idea what we will need until we get there on the ground."

There had been no shortage of analyses of the costs of war, but most reports had been ignored both by government strategists and mainstream media (1). A report from the American Academy of Arts and Sciences divided the expenditures into three types (2): military expenses, which would range between $50bn and $150bn; long-term costs of occupation, reconstruction, foreign aid and humanitarian relief which, depending on the outcome of the war and post-war scenarios, could be between $100bn and $600bn (3); and the consequences of war on the US economy (especially the impact on the price of oil or on the stock market), which could reach $1.2 trillion.

Unlike the first Gulf war in 1990-1991, the cost of which at $62bn was borne by Kuwait, Saudi Arabia and, to a lesser extent, Japan and Germany, this war will be essentially funded by the US. Well before the bombing campaign started, costs were rising, as countries put a high price tag on their participation (or in the case of Israel, their non-participation) in the war effort. Asking prices rose as the war became more certain and more unpopular. Turkey, which according to early plans was to serve as a base for a northern invasion by US troops, came close to obtaining a $14.5m aid package (and the right to a free hand in dealing with the Iraqi Kurds) (4). Israel asked for $4bn in supplemental military aid, plus $8bn in loan guarantees. During the unsuccessful campaign to sway undecided members of the UN Security Council, similar gifts were made to Latin American and African countries, to no effect.

Such outlays coincided with a worsening economic situation in the US itself. Unemployment is at its highest level, 6%, in nine years, GNP growth is down to 1% and the stock market is in the doldrums. Since the election of Bush, the dollar has lost substantially against the euro, and foreign investment is down by 85%. Consumer confidence and industrial production are down, and prospects for improvement are dim.

With the 2004 presidential election already on the horizon, Bush Junior has reason to worry.The experience of his father, George Bush Senior, is testimony to the fact that you can win a war and still lose an election. Despite an approval rating of 90% after the first Gulf war, Bush Senior lost his presidential re-election bid in 1992 amid concerns that he had concentrated too much on foreign policy and not enough on the economic recession at home. Now, presidential hopefuls for 2004, such as Democratic Senators John Edwards of North Carolina and Joseph Lieberman of Connecticut, are pointing out that, by overspending on foreign policy, Bush Junior is stinting on homeland security (5). The situation is especially worrying since the two main components of the administration's economic strategy - war Keynesianism and massive tax cuts - will lead to catastrophic budget deficits.

Two years ago the Bush administration said there would be a surplus of $262bn in 2004. Last year, because of an economic slowdown combined with a first round of tax cuts, these numbers had to be revised: there would be a deficit of $14bn in 2004. On the eve of the war the deficit estimate had ballooned to $307bn, not counting the Iraqi expedition, promised tax cuts (which could cost the Treasury $637bn over some 10 years) or probable increases in the defence budget. For the fiscal year 2003 alone, Bush has asked for an increase of $47bn, which would make the US military budget larger than those of the other 191 countries on the earth put together (6).

THE situation he faces is now similar to that faced by Lyndon Johnson during the Vietnam war. Then the US government attempted to maintain support for an unpopular war by spending more on both guns and butter. Most economic dysfunctions of the past four decades - inflation, monetary crises, recessions, - have been attributed to that decision. Bush seems not to care. As the editor of Harper's magazine, Lewis Lapham, noted, Bush is rather like Pope Urban II blessing the crusaders in 1095. His speeches are more likely to invoke God's help in defeating evil than to engage in mundane matters - a task he leaves to his advisers.

One of them, Republican activist Grover Norquist, who also heads the association Americans for Tax Reform, took up the Reaganite argument that lower taxes result in higher growth, claiming: "We can, in the next two months, liberate Iraq and pass the president's tax plan." The neo-conservative camp, anxious for a war against Iraq, had an even more exaggerated vision: the fall of Saddam Hussein would result in democratisation as a domino effect ensured the spread of democracy, liberty, peace and prosperity to the entire Middle East (7). An added bonus was that the US would benefit economically from the war. Not only would it exert unprecedented control over oil supplies (8), but it would also get the lion's share of armament and reconstruction contracts. The leading hawk, Richard Perle, had shown the way as, mixing idealism and pragmatism, he preached the virtues of regime change from his perch as chairman of the Defence Policy Board (a Pentagon advisory panel made up of former senior officials and retired top military officers) while quietly enriching himself and preparing for lucrative post-war arms sales (9).

For the neo-conservatives, war against Iraq promised to be a "cakewalk", and the combination of victory, democracy, peace and prosperity would guarantee Bush his triumphant re-election. But in reality the scenario of a "short and victorious" war, promised by hawks and hoped for by doves, may prove costly. The 11 September 2001 attacks had provided the pretext to put into execution a long-standing plan, and a lightning victory would play into the hands of those who want to obliterate an ever-expanding "axis of evil".

In his book Bush At War, journalist Bob Woodward describes how the deputy defence secretary Paul Wolfowitz pressed Bush as early as 15 September 2001 to attack Iraq rather than Afghanistan because it would be easier: "He worried about 100,000 American troops bogged down in mountain fighting in Afghanistan six months from then. Iraq was a brittle oppressive regime that might break easily. It was doable" (10). Hence the pro-war faction's ardour when "producing proofs"of a link between al-Qaida and Saddam Hussein. But there is no firm consensus among hawks as to which regime, or how many, should be changed after the Iraqi war. Last November the Israeli prime minister, Ariel Sharon, who has the ear of the neo-conservatives, declared the US had to attack Iran "the day after" a victory in Iraq (11). But as the "chicken hawks" (the definition of those advisers whose romantic view of war may be explained by their avoidance of actual service in Vietnam) grow more bellicose, their list of target countries lengthens.

Michael Ledeen, famous as an Iran-Contra protagonist (12), has an ambitious agenda of "fulfilment of the democratic revolution". He writes: "First and foremost, we must bring down the terror regimes, beginning with the Big Three: Iran, Iraq and Syria. And then we have to come to grips with Saudi Arabia." But he adds: "Stability is an unworthy American mission, and a misleading concept to boot. We do not want stability in Iran, Iraq, Syria, Lebanon, and even Saudi Arabia; we want things to change. The real issue is not whether, but how, to destabilise." In his view, the US is all about "creative destruction, so we must destroy [these countries] to advance our historic mission" (13). Destroying villages to save them - as in Vietnam.

There are other war-extensions scenarios in script form. On 10 July 2002 Richard Perle introduced a Rand Corporation analyst, Laurent Murawiec, to the corridors of power; his primary claim to expertise in Middle East affairs was his former association with the noted conspiracy theorist Lyndon LaRouche. In a secret briefing to Defence Policy Board brass, this "expert" denounced Saudi Arabia as the "kernel of evil" and as the principal enemy of the US. He recommended that the US issue an ultimatum to the Saudi Arabia to stop its support of terrorism, as well as its support of anti-US and anti-Israel propaganda. If the Kingdom did not comply, the US should seize the Saudis' financial assets, occupy their oil fields, and "target" their holy places. LaRouche's cryptic conclusion - "Iraq is the tactical pivot, Saudi Arabia the strategic pivot, Egypt the prize" - broadened still further the agenda of regime change (14).

References
(1) See Steven M. Kosiak, "Potential Cost of a War with Iraq and its Postwar Consequences", Centre for Strategic and Budgetary Assessments, 25 February 2003.
(2) Carl Kaysen, "War With Iraq: Costs, Consequences, and Alternatives", American Academy of Arts and Sciences, 2002,
(3) To put these numbers in perspective, the current annual foreign aid budget for the entire world is $15bn.
(4) Turkey initially asked for $40bn as compensation for losses since the first Gulf war. The Turkish parliament refused to ratify the agreement.
(5) The American Prospect, 7 February 2003.
(6) Fareed Zakaria, "Why America scares the world," Newsweek, 24 march 2003.
(7) See William Kristol and Lawrence Kaplan, The War on Iraq: Saddam's Tyranny and America's Mission, Encounter Books, 2003, and Kenneth Pollack, The Threatening Storm: The case for invading Iraq, Random House, 2002.
(8) With proven reserves of 250bn barrels, Iraq is the second largest oil producer (after Saudi Arabia). The country's potential is huge, since only 15 of the 73 fields where oil was discovered are exploited.
(9) Investigative journalist Seymour Hersh made the first revelations about Perle's dealings just before the start of the Iraq war in The New Yorker, 17 March 2003. Perle responded by calling Hersh a "terrorist",and threatening to sue him through the British courts (the magazine is distributed there and the libel laws more rigorous). More press revelations led to Perle's resignation on 26 March from the chairmanship of the Defence Policy Board (of which he still remains a member).
(10) Bob Woodward, Bush at War, Simon and Schuster, 2002.
(11)"Attack Iran the day Iraq war ends, demands Israel", The Times, 5 November 2002.
(12) This refers to the Irangate scandal which covered the secret sale of US arms to Iran during the Iran-Iraq war, and the use of their revenue to finance the Nicaraguan contras. Many prominent figures were involved, including President Ronald Reagan
(13) Michael Ledeen, The War Against the Terror Masters, St Martin's Press, 2002.
(14) The Washington Post, 7 August 2002.

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