QUERETARO, Mexico, March 3 (UPI) -- Oil is still the life blood of the modern economy and so it is perhaps unsurprising that opponents of the war U.S. President George W. Bush wants to wage in Iraq -- and he does appear to want to wage it -- see oil as being at its heart.
But those who point to oil as the real U.S. motive for war -- as, for example, Mayor of London Ken Livingstone did two weeks ago -- are being unrealistic about the economics of oil and unfairly cynical about Bush's administration. It is true that the United States worries about depending on the volatile Middle East for oil supplies and that Iraq has more proven reserves of oil than any other country. But few Middle Eastern countries would want to impoverish themselves by seeking to hold off from oil sales and world supply of oil is growing faster than demand for it. The U.S. president is not embracing all the hazards of war simply for oil.
Why then? Board games have the answer -- those old games of military strategy that enthusiasts now tend to play on computers and in which the aim is to overcome enemies, eliminate their threat, grow more powerful, dominate -- and therefore become more safe and sure of survival.
The U.S. case for war does has to do with defense, not economics. The world's superpower feels vulnerable. How do you defend yourself against a multitude of people who see your culture as utterly decadent and evil and who therefore see nothing wrong in attacking you with any weapon available -- from biological poison, to nuclear warhead, to passenger aircraft?
It is true: Sept. 11, 2001 changed everything.
"If we wait for threats to fully materialize, we have waited too long," said Bush June 1, 2002, in a speech at the U.S. military academy at West Point. "Pre-emptive strike" soon became a controversial new element in our vocabulary of conflict. From the first it gave Bush and his main international ally, British Prime Minister Tony Blair, a problem.
Should any strike be pre-emptive? That is the first question, and a big one. Who has the right to make a pre-emptive strike? Russia in Chechnya? India in Pakistan? Pakistan in India? South Korea in North Korea? Or only the United States?
It is evident that it would help Bush's cause if the United Nations were to throw its weight behind war, legitimizing an attack on Iraq. But Bush has sought the U.N.'s support chiefly by warning it that this is its "last chance." Meanwhile countries are being hectored or bribed into supporting the cause of war. France and Germany are derided as "old Europe" by U.S. Defense Secretary Donald Rumsfeld for failing to agree with the U.S. line on Iraq.
Is this the way to gather support for the controversial move of a pre-emptive strike? The U.S. administration is showing disdain for those who disagree with it over immensely difficult issues.
And then, where Iraq is concerned, there is a second question, and one just as difficult for Bush and Blair. Is Iraq in its current condition -- being investigated by United Nations weapons inspectors, forced gradually into yielding up its weapons, watched permanently by U.S. and U.K. forces -- really capable of a damaging strike against the West? Is it really harboring terrorist groups? What harm can it now do?
It is this perception of a repellent but weakened enemy-depicted recently by Peter Brookes, the cartoonist of the London Times, as a spider, a "tyrantulus," whose threat is greatly exaggerated -- that makes it still harder for Bush and Blair to justify a pre-emptive strike. Bush and his administration evoke Churchill but, however evil the mass murderer Saddam Hussein may be, Iraq is not the steadily re-arming, steadily advancing, immensely powerful Germany of Hitler. It is, fortunately, a much less powerful country and one that, in the past 12 years, has steadily been pegged back militarily. So why are Bush and Blair so anxious to attack?
Only in recent days, as the debate over war or no war has become still more frenetic and urgent, have Bush and Blair become a little more open about their aim, an aim that might itself be seen as imperialist and controversial. It is to curb not just Saddam but a hostile region.
In a televised speech Wednesday to the American Enterprise Institute in Washington, Bush said, "A liberated Iraq can show the power of freedom to transform that vital region (the Middle East), by bringing hope and progress into the lives of millions."
The war then will bring democracy to the Middle East, Bush thinks.
Friday, in Wales, Blair was still more open about the motives of the proposed war. "If we do not take a stand now," Blair said, "against the growth of this chemical, biological and nuclear weapons' threat then at some point a state or a terrorist group, pursuing extremism with no care for human life, will use such weapons, and not just Britain but the world will be plunged into a living nightmare."
"A state or a terrorist group," said Blair, not just Iraq. He is speaking of the threat from hostile countries or groups, not just from one country.
The proposed war on Iraq is intended to do three things, in our view. It would remove Hussein from power and bring the opportunity for political change in Iraq. It would serve as a warning to other states that are hostile to the West, showing them that the United States and Britain are not afraid, as Blair put it, to "make a stand." And thirdly it would facilitate the effort to tackle hostile states and terrorist groups by giving U.S. and British forces a presence in Iraq, in the midst of the Middle East.
The prospective attack is strategic, a placing of a big counter on the board in the midst of an area occupied by enemies.
Bush and Blair feel strongly the move is essential. Blair faces considerable domestic opposition and might be deterred by the lack of a second U.N. resolution paving the way to military action.
Bush, in our judgment, will not be. He has made up his mind. He has more than 200,000 troops in place in the Gulf, transferred there at a cost of more than $2 billion. He is not going to hold back now. In mid-March, in our view, and certainly before the end of March, for the desert will soon be heating up and chemical and biological suits are ill-suited to high temperatures, the attack is going to be made.
Is it the right thing to do? We have set out above what we believe to be Bush and Blair's motives. Another factor: they think, no doubt rightly, that to win over hearts and minds in the Middle East would take a long time and might never be achieved. The inveterate hostility is going to be there for years to come. The only sure defense against it is to attack and get amongst the enemy.
There are counter-arguments. It might not be necessary at all to use war and invasion to fight terror. Neither Saddam, nor other hostile governments, nor terrorist groups may ever be able to inflict as severe harm as was seen on Sept. 11, 2001, if the West is more vigilant. There was never any pre-emptive strike against the Soviet Union yet it never did fire its missiles at the West. And an attack may leave tens, even hundreds of thousands of innocent Iraqis dead as well as sacrificing the lives of Western troops.
Beyond this, there is the question of whether an invasion might turn still more Muslims against the West and provoke more terrorism than before. The nightmare then might be of the vulnerability of easy targets: the American who has long lived safely in an Islamic country who suddenly finds himself a victim. And there would be the example given by the world's super-power that a pre-emptive strike may sometimes be justified, not with international backing but in the face of international criticism. How many states, rogue or otherwise, might be emboldened by that example?
Our own view is that to attack, particularly in the absence of the legitimizing sanction of the United Nations, would be a mistake. A war opposed by many in the West will stir up still greater animosity in the Islamic world. The terrorists and Hussein himself should be pursued more patiently.
But leave aside the question of right and wrong. We think the war is going to happen imminently. The risks Bush and Blair will be taking are huge. The sheer economic cost, examined in previous Global View columns, will be very high, especially if the attack is made, as seems likely, without the U.N.'s sanction. And the war itself may prove difficult to wage.
In Afghanistan the Taliban, itself a force with resented foreign leaders, rapidly caved in to Western forces. It is far from clear that this will happen in Iraq. Even after years of Hussein, will Iraqis welcome Americans as liberators? Or will the elite troops of the Republican Guard fight hard and long? If Baghdad is defended, Western troops could find themselves facing the most difficult kind of warfare: urban fighting in which the advantage given by superior technology is greatly reduced. It might not be an easy war.
The impact on financial markets of an attack will, we think, be marked. We would expect the U.S. dollar to plummet, the gold price to soar still further and the U.S. stock market to tumble significantly, so that the Dow breaks well below its four-year low recorded in October 2002. The oil price, close to $40 per barrel for a time Thursday, will shoot still higher, perhaps as high as $60 per barrel. Its ascent and the period of time for which it remains very high depends on the course of the war and on the extent of unrest in other countries, above all Saudi Arabia. Serious unrest in Saudi Arabia, the world's biggest oil exporter, would constitute an economic danger to the West and would be likely to lead to the deployment of U.S. and British troops there as well.
Bush's gamble, if it comes, could hardly be bigger. If he, and perhaps Britain, go it alone, without U.N. backing, they will wage an almost unprecedented pre-emptive war, at high financial cost, at considerable military risk, and with the danger of alienating much of the world community and inciting further violence, and all this while sending stock markets and economic growth down and budget deficits up.
For investors, as well as for Bush and Blair, the strategic move likely to be made in the next few weeks augurs a period of enormous danger. The United States is moving its pieces to try to dominate a hostile region. The consequences of that terrible September day a year-and-a-half ago may only just have begun.
(Global View is a weekly column in which our economics correspondent reflects on issues of importance for the global economy. Please send any correspondence to [email protected].)
