peaccenicked
6th April 2003, 08:16
http://www.iraqwar.ru/iraq-read_article.ph...Id=1791&lang=en (http://www.iraqwar.ru/iraq-read_article.php?articleId=1791&lang=en)
"The war that may end the age of superpower
The United States, like ancient Rome, is beginning to be plagued by the limits of power. This fact is tactically acknowledged by US Defense Secretary Donald Rumsfeld and Joint Chiefs Chairman General Richard B Myers that the war plan should not be criticized by the press because it has been framed in a diplomatic and political context, not merely pure military considerations in a vacuum. They say that it is the best possible war plan politically, though it may be far from full utilization of US military potential. America's top soldier has criticized the uniformed officer corps for expressing dissent that seriously undermines the war effort. Such criticism is characterized by Myers as "bearing no resemblance to the truth", counterproductive and harmful to US troops in the field.
Only time will tell who will have the last laugh. The US Central Command (Centcom) has announced that the next phase with an additional 120,000 reinforcements will not begin until the end of April. That is three times the duration of the war so far. In Vietnam, the refrain of all is going as planned was heard every few weeks with self-comforting announcements that another 50,000 more troops would finish the job quickly.
There is no doubt the US will prevail over Iraq in the long run. It is merely a question of at what cost in lives, money and time. Thus far, a lot of pre-war estimates have had to be readjusted and a lot of pre-war myths about popular support for US "liberation" within Iraq have had to be re-evaluated. Time is not on America's side, and the cost is not merely financial. America's superpower status is at stake.
This war highlights once again that military power is but a tool for achieving political objectives. The pretense of this war was to disarm Iraq of weapons of massive destruction (WMD), although recent emphasis has shifted to "liberating" the Iraqi people from an alleged oppressive regime. At the end of the war, the US still needs to produce indisputable evidence of Iraqi WMD to justify a war that was not sanctioned by the United Nations Security Council. Overwhelming force is counterproductive when applied against popular resistance because it inevitably increases the very resolve of popular resistance it aims to awe into submission.
To dismiss widespread national resistance against foreign invasion as the handiwork of coercive units of a repressive regime insults the intelligence of neutral observers. All military organizations operate on the doctrine of psychological coercion. No-one will voluntarily place him/herself in harm's way unless they are more apprehensive of what would appen were they to do nothing. Only when a nation is already occupied by a foreign power can the theme of liberation by another foreign power be regarded with credibility. A foreign power liberating a nation from its nationalist government is a very hard sell. The US manipulates its reason for invading Iraq like a magician pulling color scarves out a breast pocket. First it was self defense against terrorism, then it was to disarm Iraq of WMD, now it invades to liberate the Iraqi people form their demonic leader. Soon it will be to bring prosperity to the Iraqi people by taking control of their oil, or to save them from their tragic fate of belonging to a malignant civilization.
There is no point in winning the war to lose the peace. Military power cannot be used without political constraint, which limits its indiscriminate application. The objective of war is not merely to kill, but to impose political control by force. Therein lies the weakest part of the US war plan to date. The plan lacks a focus of what political control it aims to establish. The US has not informed the world of its end game regarding Iraq, beyond the removal of Saddam Hussein. The idea of a US occupational governor was and is a laughable non-starter.
Guerilla resistance will not end even after the Iraqi government is toppled and its army destroyed. Drawing upon British experiences in Malaysia and Rhodesia, the force ratio of army forces to guerilla forces needed for merely containing guerilla resistance, let alone defeating a guerilla force, is about 20 to 1. US estimates of the size of Iraq's guerilla force stands at 100,000 for the time being. This means the US would need a force of 2 million to contain the situation even if it already controls the country.
At the current rate of war expenditure at $2.5 billion a day, the war budget of $75 billion will be exhausted after 30 days, or until April 20, ten days before the projected arrival of all reinforcements to the front. Nobody has asked how a doubling of forces will win a guerilla war in Iraq. The US is having difficulty supplying 120,000 troops now, how will doubling the supply load over a 300 miles supply line help against an enemy that refuses to engage face to face? Domestic political opposition in the United Kingdom has started to demand that Prime Minister Tony Blair should pull British troops out now, based on the grounds that the US war plan has changed.
The White House is trying to protect Bush by feeding the media video clips of his old speeches warning against high casualties and a long war: a grand total of three times in the past six months. Bush aides are also trying to deflect attention from Vice President Dick Cheney's excessive optimism, in which he said confidently that the war would be over in a matter of weeks, not months.
There seems to be a link between the war on Iraq initially going badly for the US and a lull in terrorist threats in the US, despite heightened fears of terrorism risks at the start of the war. No mainstream or anti-war commentators have pointed this out, despite it seeming to be empirical evidence that terrorism is only a weapon of last resort.
The US has overwhelming strategic superiority in the sense that given enough time, the sheer military and economic power of the US will prevail. But the problem is that the political objectives of the US do not lend themselves to unrestrained use of military power. The need of presenting the US invasion as a liberating force prevents the full application of both "shock and awe" and US air superiority. "Smart" bombs are both expensive and ineffective because they need specific targets. Yet such targets are also ones that the Iraqis expect the US to hit. These weapon can easily be neutralized with a tactic of preemptive dispersal. What is the point of firing 40 cruise missiles costing a total of $1 billion to hit a few empty buildings in one night.
If the Iraqis manage to hold out past the summer, the war is going to be a new ball game. The other Arab governments in the region can manage to stand by if the US scores a quick victory, but Arab governments would have to come to yield to popular demand to come the aid of Iraq if the war drags on for months, even if the US makes steady military progress, but fails to bring the war to a convincing close. Syria and Iran are at risk of becoming part of the war. The prospect of Russian intervention is not totally out of the question. Bush already has had to warn Russian President Vladimir Putin about alleged Russian military aid to Iraq, which Moscow summarily dismissed.
For the US, it is not a matter of winning the war eventually, it must win a quick and decisive victory, or its image of superpower invincibility will suffer. An offensive war must conclude within a short time, while a defensive war only needs to continue. This is particularly true with a superpower. Every day that passes without a decisive victory for the invader is an incremental victory for the defender. Stalingrad did not need to destroy the German Wehrmacht. It only needed to hang on without surrendering. Despite orchestrated denial, the US has failed to deliver on its original war scenario of a quick and easy win with both military and moral superiority. Claiming that it had always anticipated a long war now only adds to the credibility gap on new assurances of the reliability of any new war plan.
Globally, two traditional allies of the US, France and Germany, will now want to be treated with more equal status with more political independence. The European Union may even begin to claim the moral high ground in world affairs over the US, promoting more tolerance for diversity of cultural values and historical conditions, over the impositions of US values as a universal standard for the whole world, for which no non-US citizens will be willing to die to implement. Even US citizens may only be willing to die to defend the US, but not to project by force US values all over the world, particularly if this war should show that even with much sacrifice in the form of American soldiers' lives, success remains elusive.
The US must bring the war to a successful conclusion within a matter of weeks, or it will be fighting a defensive war on all fronts. There is only one thing worse than an empire, and that is an empire that fails to conquer a small nation.
The "collateral damage" from this war is not limited to Iraqi civilians. The US economy will also be considered collateral damage - and by extension global economy as well. The first Gulf War, notwithstanding its military success due to clear political objectives, the uncertainty over oil prices further weakened an US economy already in recession. Despite the Federal Reserve's aggressive cutting of short-term interest rates, the economic slowdown persisted and cost the first President George Bush his re-election in 1992.
Today, the Fed again faces the impact of war against Iraq on the global economy, coupled with what chairman Alan Greenspan calls a "soft patch" at home. Business confidence may remain low for some reasons not related to the war, even if the war should end quickly - an unlikely prospect at best. Unemployment has continued to climb, industrial production remains stagnant and the economies of Europe and Japan are slumping even more than that of the US. Much of the Third World, except China, is gripped by economic and financial distress.
If the war drags on further, or if the economy does not bounce back when the fighting ends, Fed officials have suggested they are prepared to pump money into the economy by reducing interest rates even more than they have done already.
Despite its institutional role as an central bank that is independent of political influence, the Fed is constitutionally obliged to support the White House on national security issues that affect the economy. Thus Greenspan has not made public any anxiety he may have about the endless costs of war or the risks of disruption to world oil supplies, in aquiescence of Bush's war plans. Greenspan was reported to have been at the White House at least three times in the first 10 days of the war, and he met with Bush on Monday to review the US economic outlook.
The impact of war costs on the federal budget deficit played a part in Congress' gutting of the proposed Bush tax cut package. Some have even accused the White House of denying the military adequate troops in Iraq for fear of its adverse impact of the budget deficit, which would jeopardize chances of congressional passage of the tax package. Charges of exposing US soldiers to unnecessary danger merely to protect tax cuts for the rich have been heard. In the end, Congress cut the Bush tax cut proposal by half anyway. Former White House chief economist R Glenn Hubbard argued that the country could afford both the war on Iraq and the Bush tax cut plan, which had been largely put together by himself.
Hubbard reasoned that the tax cut would add one percent to the US gross domestic product (GDP) for the next two years and would help to pay for the war, the expenditure for which is a fraction of the GDP. One percent of the GDP would be $100 billion. The budget revenue boost from $100 billion of GDP would be $30 billion a year. The war is costing $2.5 billion a day at current engagement levels. In the past 11 days, the war cost is already over $30 billion. Perhaps the Harvard-educated Hubbard should brush up on his arithmetic.
It is true that the Persian Gulf now accounts for a smaller share of world oil production than in 1990, and the major industrial economies have become more efficient in oil consumption than a decade ago. Yet the global economy now operates in a globalized market so efficient that its vulnerability comes not from an industrial slowdown caused by a disruption of oil supply, but from oil price volatility in an uncertain market. For Japan and Germany, even a slight rise in oil prices would do great damage to their respective prospects of recovery.
Greenspan's reputation was built mostly on his response to financial crises. When the stock market crashed on October 19, 1987, two months after Greenspan became chairman, the Fed lent tens of billions of dollars to financial institutions and pushed down overnight lending rates. The moves flooded financial markets with money, which helped preserve liquidity and restore confidence in the financial system, but it started the bubble economy of the 1990s.
After the attacks on September 11, 2001, the Fed pumped $100 billion into the monetary system in four days. On September 12 alone, the Fed lent a handful of key banks $46 billion unconditionally. The Federal Reserve Bank of New York, which runs the Fed's trading operations, flooded the banking system with additional billions of dollars by buying up treasury securities at record volumes throughout the week.
Greenspan's record has been blemished since the stock market bubble burst in 2000. He was stubbornly late in recognizing the excesses of the "new economy" in the stock market bubble by hailing it as a spectacular rise in productivity. Since 2001, the Fed has lowered interest rates 12 times and reduced its benchmark federal funds rate to the lowest level in 41 years. When talk of war escalated last year, raising anxiety levels in business and among investors, the Fed reduced the federal funds rate in November by an additional one-half percentage point, to 1.25 percent from 1.75.
Fear of deflation provides the argument is that if oil prices move up, the Fed could easily reduce interest rates further, without causing inflation. Yet the ramifications of higher oil prices go beyond inflationary effects. Higher oil prices distort the economy by siphoning consumer spending away from non-oil sectors, which at the moment are holding up much of the economy.
If the war drags on, depressing business confidence further and tilting the country toward a new recession, the Fed has little room for further cutting interest rates, since it cannot reduce the federal funds rate for overnight loans to below zero.
But Greenspan and other Fed officials have recently insisted that even if the overnight Fed funds rate is lowered to zero, they still have other tools to stimulate the economy. The Fed can buy longer-term Treasury securities, such as two-year or five-year or even ten-year securities. By paying cash for such securities, the Fed would essentially be pumping money into the economy and pushing long-term interest rates even lower from the current 4.5 percent to 2.5 percent. But that would be virgin territory for the Fed, and officials have acknowledged that the precise impact would be unpredictable.
There are other issues as well. The Fed's easy-money policies have already stimulated home buying and refinancing, prompting consumers to convert the appreciated equity in their homes to cash by so-called cash-out refinancing, to buy big-ticket consumer goods. But this easy money has done nothing to rejuvenate business spending, which had been held down by overcapacity and poor earnings, as well as war jitters. Furthermore, abrupt changes in interest rates, particularly long-term rates, does violence to structured finance (derivatives) which is already exceedingly precarious. The Fed may fall into the trap of setting off an implosions of derivative defaults, what Warren Buffet has called "financial weapons of mass destruction".
The militant right in the US has committed suicide with the war on Iraq. It has given itself a fatal dose of poison in an attempt to cure the Saddam virus.
The link between war expenditure and the Federal budget and the Bush tax cut is complex. The size of the invasion force was arrived at more by the constraints of logistics and the new "trasnsformational" doctrine, championed by Rumsfeld, behind the war plan. The myth upon which the war plan was based was that there would be instant domestic rebellion against Hussein, at least in the Shi'ite south - not concerted Iraqi guerilla resistance. The plan for a two-front, north-south attack on Baghdad was foiled by Turkey, the support from whom the US had been overconfident and did not secure with sufficient bribing. Washington was also unwilling to pay the political price of accommodating Turkish interests in a post-war Iraq at the expense of the Kurds. The Rumsfeld war plan was a fast moving, light forward force to enter Baghdad triumphantly with little resistance after a massive "shock and awe" air attack and wholesale surrender by the Republican Guards.
The plan was flawed from the start, a victim of Washington's own propaganda of the war being one of liberation for the Iraqi people. Instead, the invasion acted as a unifying agent for Iraqi and pan-Arabic nationalism and elevated Saddam to the role of hero and possibly martyr for the Arab cause in a defensive battle by a weak nation against the world's sole superpower.
The Democrats can do nothing, for it is their party that cut the Bush tax cut by half, and with the exception of a few brave voices, the Democrats went along with the fantasy war plan.
Geographically, without the northern front, Iraq is a big bottle with a narrow bottleneck in the south and one lone seaport which could be easily mined. The long supply line of over 300 miles from the port to Baghdad is along open desert, vulnerable to easy guerilla attacks at any point. The US war machine requires massive supply of fuel, water, food and ammunition. The fuel trucks are 60 feet long and cannot be missed by even an untrained fighter with a long range rifle with an explosive bullet. As the weather turns hot this month, US troops will find nature a formidable enemy. If these factors weren't enough to frustrate US war plans, even Lieutenant General William Wallace has openly admitted that US troops were not effectively prepared for the enemy it is now fighting.
Now the war is threatening to spill over to Syria and Iran and is creating political instability in all Arab regimes in the region. NATO is weakened and the traditional transatlantic alliance is frayed. This war has succeeded in pushing Russia, France, Germany and China closer, in contrast if not in opposition to US interests worldwide, a significant development with long term implications that are difficult to assess at present. Globalization is dealt a final blow by this war. The airlines are dead and without air travel, globalization is merely a slogan. The freezing of Iraq foreign assets is destroying the image of the US as a financial safe haven. The revival of Arab nationalism will change the dynamics in Middle East politics. The myth of US power has been punctured. The geopolitical costs of this war to the US are enormous and the benefits are hard to see.
This war will end from its own inevitable evolution, even without anti-war demonstrations. It will not be a happy end. There is yet no discernible exit strategy for the US. After this war, the world will have no superpower, albeit the US will remain strong both economically and militarily. But the US will be forced to learn to be much more cautious, and more realistic, about its ability to impose its will on other nations through the application of force. The UK will be the big loser geopolitically. The British military has already served notice to Blair that Britain cannot sustain a high level of combat for indefinite periods.
The invasion of Iraq represents a self-inflicted blow to US imperialism. Anti-war demonstrations all over the world and within the US will raise public consciousness on what the war really means, and for what it really stands. The aim is not to simply stop this war, but the forces behind all imperialistic wars.
Saddam is not insane, his record of rule is not pretty, but it is typical of all regimes afflicted with garrison state mentality. That mentality has been created by a century of Western, and most recently US, imperialism.
Americans, even liberals and radical leftists, cannot possibly sympathize with the natural need for violence in the political struggle of nationalists in their struggle against imperialism. They harbor a genuine sense of repugnance for political oppression unfamiliar to their own historical conditions. Be that as it may, only Iraqis are justified in trying to rid Iraq of any leader not to their liking, not a foreign power, no matter how repugnant the regime may seem to foreigners. Moral imperialism is imperialism nonetheless.
Further, this invasion is transforming Saddam into a heroic fighter in defense of Iraqi and Arab nationalism and as a brave resistance fighter against the world's sole superpower. The only people in the entire world buying the liberation propaganda are Americans, and even many Americans who supported the idea of regime change in Iraq are rethinking its need and feasability. The populations in most Arabic nations are increasingly wishing they had Saddam as their leader.
In a world order of nation-states, it is natural for all citizens to support their troops, but only on their own soil. Support for all expeditionary or invading forces is not patriotism. It is imperialism. All nations are entitled to keep defensive forces, but offensive forces of all countries must be condemned by all, socialists and right-wing libertarians alike. Some of the most rational anti-war statements and arguments in the US at this moment are coming from the libertarian right, not the left.
The real enemy is neo-liberalism. The war on Iraq is part of a push to make the world safe for neo-liberalism. This war is a self-destructive cancer growing inside US neo-imperialism. Just as the Civil War rescued Abraham Lincoln from the fate of an immoral segregationist politician and projected him in history as a liberator of slaves, this war will rescue Saddam from the fate of a petty dictator and project him in history to the ranks of a true freedom fighter. That has been Bush's gift to Saddam, paid in full by the blood of the best and bravest of Iraqi, American and British citizens. "
"The war that may end the age of superpower
The United States, like ancient Rome, is beginning to be plagued by the limits of power. This fact is tactically acknowledged by US Defense Secretary Donald Rumsfeld and Joint Chiefs Chairman General Richard B Myers that the war plan should not be criticized by the press because it has been framed in a diplomatic and political context, not merely pure military considerations in a vacuum. They say that it is the best possible war plan politically, though it may be far from full utilization of US military potential. America's top soldier has criticized the uniformed officer corps for expressing dissent that seriously undermines the war effort. Such criticism is characterized by Myers as "bearing no resemblance to the truth", counterproductive and harmful to US troops in the field.
Only time will tell who will have the last laugh. The US Central Command (Centcom) has announced that the next phase with an additional 120,000 reinforcements will not begin until the end of April. That is three times the duration of the war so far. In Vietnam, the refrain of all is going as planned was heard every few weeks with self-comforting announcements that another 50,000 more troops would finish the job quickly.
There is no doubt the US will prevail over Iraq in the long run. It is merely a question of at what cost in lives, money and time. Thus far, a lot of pre-war estimates have had to be readjusted and a lot of pre-war myths about popular support for US "liberation" within Iraq have had to be re-evaluated. Time is not on America's side, and the cost is not merely financial. America's superpower status is at stake.
This war highlights once again that military power is but a tool for achieving political objectives. The pretense of this war was to disarm Iraq of weapons of massive destruction (WMD), although recent emphasis has shifted to "liberating" the Iraqi people from an alleged oppressive regime. At the end of the war, the US still needs to produce indisputable evidence of Iraqi WMD to justify a war that was not sanctioned by the United Nations Security Council. Overwhelming force is counterproductive when applied against popular resistance because it inevitably increases the very resolve of popular resistance it aims to awe into submission.
To dismiss widespread national resistance against foreign invasion as the handiwork of coercive units of a repressive regime insults the intelligence of neutral observers. All military organizations operate on the doctrine of psychological coercion. No-one will voluntarily place him/herself in harm's way unless they are more apprehensive of what would appen were they to do nothing. Only when a nation is already occupied by a foreign power can the theme of liberation by another foreign power be regarded with credibility. A foreign power liberating a nation from its nationalist government is a very hard sell. The US manipulates its reason for invading Iraq like a magician pulling color scarves out a breast pocket. First it was self defense against terrorism, then it was to disarm Iraq of WMD, now it invades to liberate the Iraqi people form their demonic leader. Soon it will be to bring prosperity to the Iraqi people by taking control of their oil, or to save them from their tragic fate of belonging to a malignant civilization.
There is no point in winning the war to lose the peace. Military power cannot be used without political constraint, which limits its indiscriminate application. The objective of war is not merely to kill, but to impose political control by force. Therein lies the weakest part of the US war plan to date. The plan lacks a focus of what political control it aims to establish. The US has not informed the world of its end game regarding Iraq, beyond the removal of Saddam Hussein. The idea of a US occupational governor was and is a laughable non-starter.
Guerilla resistance will not end even after the Iraqi government is toppled and its army destroyed. Drawing upon British experiences in Malaysia and Rhodesia, the force ratio of army forces to guerilla forces needed for merely containing guerilla resistance, let alone defeating a guerilla force, is about 20 to 1. US estimates of the size of Iraq's guerilla force stands at 100,000 for the time being. This means the US would need a force of 2 million to contain the situation even if it already controls the country.
At the current rate of war expenditure at $2.5 billion a day, the war budget of $75 billion will be exhausted after 30 days, or until April 20, ten days before the projected arrival of all reinforcements to the front. Nobody has asked how a doubling of forces will win a guerilla war in Iraq. The US is having difficulty supplying 120,000 troops now, how will doubling the supply load over a 300 miles supply line help against an enemy that refuses to engage face to face? Domestic political opposition in the United Kingdom has started to demand that Prime Minister Tony Blair should pull British troops out now, based on the grounds that the US war plan has changed.
The White House is trying to protect Bush by feeding the media video clips of his old speeches warning against high casualties and a long war: a grand total of three times in the past six months. Bush aides are also trying to deflect attention from Vice President Dick Cheney's excessive optimism, in which he said confidently that the war would be over in a matter of weeks, not months.
There seems to be a link between the war on Iraq initially going badly for the US and a lull in terrorist threats in the US, despite heightened fears of terrorism risks at the start of the war. No mainstream or anti-war commentators have pointed this out, despite it seeming to be empirical evidence that terrorism is only a weapon of last resort.
The US has overwhelming strategic superiority in the sense that given enough time, the sheer military and economic power of the US will prevail. But the problem is that the political objectives of the US do not lend themselves to unrestrained use of military power. The need of presenting the US invasion as a liberating force prevents the full application of both "shock and awe" and US air superiority. "Smart" bombs are both expensive and ineffective because they need specific targets. Yet such targets are also ones that the Iraqis expect the US to hit. These weapon can easily be neutralized with a tactic of preemptive dispersal. What is the point of firing 40 cruise missiles costing a total of $1 billion to hit a few empty buildings in one night.
If the Iraqis manage to hold out past the summer, the war is going to be a new ball game. The other Arab governments in the region can manage to stand by if the US scores a quick victory, but Arab governments would have to come to yield to popular demand to come the aid of Iraq if the war drags on for months, even if the US makes steady military progress, but fails to bring the war to a convincing close. Syria and Iran are at risk of becoming part of the war. The prospect of Russian intervention is not totally out of the question. Bush already has had to warn Russian President Vladimir Putin about alleged Russian military aid to Iraq, which Moscow summarily dismissed.
For the US, it is not a matter of winning the war eventually, it must win a quick and decisive victory, or its image of superpower invincibility will suffer. An offensive war must conclude within a short time, while a defensive war only needs to continue. This is particularly true with a superpower. Every day that passes without a decisive victory for the invader is an incremental victory for the defender. Stalingrad did not need to destroy the German Wehrmacht. It only needed to hang on without surrendering. Despite orchestrated denial, the US has failed to deliver on its original war scenario of a quick and easy win with both military and moral superiority. Claiming that it had always anticipated a long war now only adds to the credibility gap on new assurances of the reliability of any new war plan.
Globally, two traditional allies of the US, France and Germany, will now want to be treated with more equal status with more political independence. The European Union may even begin to claim the moral high ground in world affairs over the US, promoting more tolerance for diversity of cultural values and historical conditions, over the impositions of US values as a universal standard for the whole world, for which no non-US citizens will be willing to die to implement. Even US citizens may only be willing to die to defend the US, but not to project by force US values all over the world, particularly if this war should show that even with much sacrifice in the form of American soldiers' lives, success remains elusive.
The US must bring the war to a successful conclusion within a matter of weeks, or it will be fighting a defensive war on all fronts. There is only one thing worse than an empire, and that is an empire that fails to conquer a small nation.
The "collateral damage" from this war is not limited to Iraqi civilians. The US economy will also be considered collateral damage - and by extension global economy as well. The first Gulf War, notwithstanding its military success due to clear political objectives, the uncertainty over oil prices further weakened an US economy already in recession. Despite the Federal Reserve's aggressive cutting of short-term interest rates, the economic slowdown persisted and cost the first President George Bush his re-election in 1992.
Today, the Fed again faces the impact of war against Iraq on the global economy, coupled with what chairman Alan Greenspan calls a "soft patch" at home. Business confidence may remain low for some reasons not related to the war, even if the war should end quickly - an unlikely prospect at best. Unemployment has continued to climb, industrial production remains stagnant and the economies of Europe and Japan are slumping even more than that of the US. Much of the Third World, except China, is gripped by economic and financial distress.
If the war drags on further, or if the economy does not bounce back when the fighting ends, Fed officials have suggested they are prepared to pump money into the economy by reducing interest rates even more than they have done already.
Despite its institutional role as an central bank that is independent of political influence, the Fed is constitutionally obliged to support the White House on national security issues that affect the economy. Thus Greenspan has not made public any anxiety he may have about the endless costs of war or the risks of disruption to world oil supplies, in aquiescence of Bush's war plans. Greenspan was reported to have been at the White House at least three times in the first 10 days of the war, and he met with Bush on Monday to review the US economic outlook.
The impact of war costs on the federal budget deficit played a part in Congress' gutting of the proposed Bush tax cut package. Some have even accused the White House of denying the military adequate troops in Iraq for fear of its adverse impact of the budget deficit, which would jeopardize chances of congressional passage of the tax package. Charges of exposing US soldiers to unnecessary danger merely to protect tax cuts for the rich have been heard. In the end, Congress cut the Bush tax cut proposal by half anyway. Former White House chief economist R Glenn Hubbard argued that the country could afford both the war on Iraq and the Bush tax cut plan, which had been largely put together by himself.
Hubbard reasoned that the tax cut would add one percent to the US gross domestic product (GDP) for the next two years and would help to pay for the war, the expenditure for which is a fraction of the GDP. One percent of the GDP would be $100 billion. The budget revenue boost from $100 billion of GDP would be $30 billion a year. The war is costing $2.5 billion a day at current engagement levels. In the past 11 days, the war cost is already over $30 billion. Perhaps the Harvard-educated Hubbard should brush up on his arithmetic.
It is true that the Persian Gulf now accounts for a smaller share of world oil production than in 1990, and the major industrial economies have become more efficient in oil consumption than a decade ago. Yet the global economy now operates in a globalized market so efficient that its vulnerability comes not from an industrial slowdown caused by a disruption of oil supply, but from oil price volatility in an uncertain market. For Japan and Germany, even a slight rise in oil prices would do great damage to their respective prospects of recovery.
Greenspan's reputation was built mostly on his response to financial crises. When the stock market crashed on October 19, 1987, two months after Greenspan became chairman, the Fed lent tens of billions of dollars to financial institutions and pushed down overnight lending rates. The moves flooded financial markets with money, which helped preserve liquidity and restore confidence in the financial system, but it started the bubble economy of the 1990s.
After the attacks on September 11, 2001, the Fed pumped $100 billion into the monetary system in four days. On September 12 alone, the Fed lent a handful of key banks $46 billion unconditionally. The Federal Reserve Bank of New York, which runs the Fed's trading operations, flooded the banking system with additional billions of dollars by buying up treasury securities at record volumes throughout the week.
Greenspan's record has been blemished since the stock market bubble burst in 2000. He was stubbornly late in recognizing the excesses of the "new economy" in the stock market bubble by hailing it as a spectacular rise in productivity. Since 2001, the Fed has lowered interest rates 12 times and reduced its benchmark federal funds rate to the lowest level in 41 years. When talk of war escalated last year, raising anxiety levels in business and among investors, the Fed reduced the federal funds rate in November by an additional one-half percentage point, to 1.25 percent from 1.75.
Fear of deflation provides the argument is that if oil prices move up, the Fed could easily reduce interest rates further, without causing inflation. Yet the ramifications of higher oil prices go beyond inflationary effects. Higher oil prices distort the economy by siphoning consumer spending away from non-oil sectors, which at the moment are holding up much of the economy.
If the war drags on, depressing business confidence further and tilting the country toward a new recession, the Fed has little room for further cutting interest rates, since it cannot reduce the federal funds rate for overnight loans to below zero.
But Greenspan and other Fed officials have recently insisted that even if the overnight Fed funds rate is lowered to zero, they still have other tools to stimulate the economy. The Fed can buy longer-term Treasury securities, such as two-year or five-year or even ten-year securities. By paying cash for such securities, the Fed would essentially be pumping money into the economy and pushing long-term interest rates even lower from the current 4.5 percent to 2.5 percent. But that would be virgin territory for the Fed, and officials have acknowledged that the precise impact would be unpredictable.
There are other issues as well. The Fed's easy-money policies have already stimulated home buying and refinancing, prompting consumers to convert the appreciated equity in their homes to cash by so-called cash-out refinancing, to buy big-ticket consumer goods. But this easy money has done nothing to rejuvenate business spending, which had been held down by overcapacity and poor earnings, as well as war jitters. Furthermore, abrupt changes in interest rates, particularly long-term rates, does violence to structured finance (derivatives) which is already exceedingly precarious. The Fed may fall into the trap of setting off an implosions of derivative defaults, what Warren Buffet has called "financial weapons of mass destruction".
The militant right in the US has committed suicide with the war on Iraq. It has given itself a fatal dose of poison in an attempt to cure the Saddam virus.
The link between war expenditure and the Federal budget and the Bush tax cut is complex. The size of the invasion force was arrived at more by the constraints of logistics and the new "trasnsformational" doctrine, championed by Rumsfeld, behind the war plan. The myth upon which the war plan was based was that there would be instant domestic rebellion against Hussein, at least in the Shi'ite south - not concerted Iraqi guerilla resistance. The plan for a two-front, north-south attack on Baghdad was foiled by Turkey, the support from whom the US had been overconfident and did not secure with sufficient bribing. Washington was also unwilling to pay the political price of accommodating Turkish interests in a post-war Iraq at the expense of the Kurds. The Rumsfeld war plan was a fast moving, light forward force to enter Baghdad triumphantly with little resistance after a massive "shock and awe" air attack and wholesale surrender by the Republican Guards.
The plan was flawed from the start, a victim of Washington's own propaganda of the war being one of liberation for the Iraqi people. Instead, the invasion acted as a unifying agent for Iraqi and pan-Arabic nationalism and elevated Saddam to the role of hero and possibly martyr for the Arab cause in a defensive battle by a weak nation against the world's sole superpower.
The Democrats can do nothing, for it is their party that cut the Bush tax cut by half, and with the exception of a few brave voices, the Democrats went along with the fantasy war plan.
Geographically, without the northern front, Iraq is a big bottle with a narrow bottleneck in the south and one lone seaport which could be easily mined. The long supply line of over 300 miles from the port to Baghdad is along open desert, vulnerable to easy guerilla attacks at any point. The US war machine requires massive supply of fuel, water, food and ammunition. The fuel trucks are 60 feet long and cannot be missed by even an untrained fighter with a long range rifle with an explosive bullet. As the weather turns hot this month, US troops will find nature a formidable enemy. If these factors weren't enough to frustrate US war plans, even Lieutenant General William Wallace has openly admitted that US troops were not effectively prepared for the enemy it is now fighting.
Now the war is threatening to spill over to Syria and Iran and is creating political instability in all Arab regimes in the region. NATO is weakened and the traditional transatlantic alliance is frayed. This war has succeeded in pushing Russia, France, Germany and China closer, in contrast if not in opposition to US interests worldwide, a significant development with long term implications that are difficult to assess at present. Globalization is dealt a final blow by this war. The airlines are dead and without air travel, globalization is merely a slogan. The freezing of Iraq foreign assets is destroying the image of the US as a financial safe haven. The revival of Arab nationalism will change the dynamics in Middle East politics. The myth of US power has been punctured. The geopolitical costs of this war to the US are enormous and the benefits are hard to see.
This war will end from its own inevitable evolution, even without anti-war demonstrations. It will not be a happy end. There is yet no discernible exit strategy for the US. After this war, the world will have no superpower, albeit the US will remain strong both economically and militarily. But the US will be forced to learn to be much more cautious, and more realistic, about its ability to impose its will on other nations through the application of force. The UK will be the big loser geopolitically. The British military has already served notice to Blair that Britain cannot sustain a high level of combat for indefinite periods.
The invasion of Iraq represents a self-inflicted blow to US imperialism. Anti-war demonstrations all over the world and within the US will raise public consciousness on what the war really means, and for what it really stands. The aim is not to simply stop this war, but the forces behind all imperialistic wars.
Saddam is not insane, his record of rule is not pretty, but it is typical of all regimes afflicted with garrison state mentality. That mentality has been created by a century of Western, and most recently US, imperialism.
Americans, even liberals and radical leftists, cannot possibly sympathize with the natural need for violence in the political struggle of nationalists in their struggle against imperialism. They harbor a genuine sense of repugnance for political oppression unfamiliar to their own historical conditions. Be that as it may, only Iraqis are justified in trying to rid Iraq of any leader not to their liking, not a foreign power, no matter how repugnant the regime may seem to foreigners. Moral imperialism is imperialism nonetheless.
Further, this invasion is transforming Saddam into a heroic fighter in defense of Iraqi and Arab nationalism and as a brave resistance fighter against the world's sole superpower. The only people in the entire world buying the liberation propaganda are Americans, and even many Americans who supported the idea of regime change in Iraq are rethinking its need and feasability. The populations in most Arabic nations are increasingly wishing they had Saddam as their leader.
In a world order of nation-states, it is natural for all citizens to support their troops, but only on their own soil. Support for all expeditionary or invading forces is not patriotism. It is imperialism. All nations are entitled to keep defensive forces, but offensive forces of all countries must be condemned by all, socialists and right-wing libertarians alike. Some of the most rational anti-war statements and arguments in the US at this moment are coming from the libertarian right, not the left.
The real enemy is neo-liberalism. The war on Iraq is part of a push to make the world safe for neo-liberalism. This war is a self-destructive cancer growing inside US neo-imperialism. Just as the Civil War rescued Abraham Lincoln from the fate of an immoral segregationist politician and projected him in history as a liberator of slaves, this war will rescue Saddam from the fate of a petty dictator and project him in history to the ranks of a true freedom fighter. That has been Bush's gift to Saddam, paid in full by the blood of the best and bravest of Iraqi, American and British citizens. "