Postwar shock and awe in the global economy
By Helena Cobban©
from the April 10, 2003 edition, The Christian Science Monitor
CHARLOTTESVILLE, VA. - Anyone concerned about the future of the United
States needs to start thinking about how this potentially great country
can rebuild its ruptured relations with the rest of the world.
The entanglement the US and Britain have gotten themselves into in Iraq
is going to be both lengthy and expensive. The quick and easy military victory
there that was promised by many in the Bush administration didn't materialize.
Instead, given the punishment that the US-United Kingdom forces have inflicted
on Iraqis already - and will continue to inflict as long as this war continues
- deep currents of distrust and hostility will likely run through Iraqi
society for years to come.
So even if US-UK forces should win a decisive victory on the battlefield,
the ultimate goal of building a stable democracy in Iraq will still be far
away. Indeed, it may never be won in the foreseeable future. But if a democratic
Iraq is still to be sought, it would be hubristic indeed to imagine that
the US and UK could dominate this process alone. These two powers will certainly
need the large-scale involvement of big-time aid disbursers like the UN,
Japan, Germany, and France, and close coordination with Iraqi neighbors like
Iran, Turkey, and Syria.
Make no mistake: Launching this war without clear UN authorization was
a hugely risky decision. The dream of a rapid US-UK victory on the battlefield
was predicated wholly on the accuracy of the prediction that most ordinary
Iraqis would immediately welcome coalition soldiers as liberators, and that
Mr. Hussein's regime would quickly crumble. Neither happened. Now, the US-UK
forces could find themselves stuck in the date-groves and marshes of Mesopotamia
for years to come. The consequences of that situation will be felt throughout
the American and British economies, and throughout the global economy.
How bad might it get? Well, when Israel invaded Lebanon in 1982 and was
unable to escape the imbroglio that resulted, Israel immediately felt the
economic burden of maintaining its huge deployment in Lebanon. By 1984, Israel's
annual inflation rate topped 370 percent. It was tamed only through broad
cuts to social programs and a huge injection of US emergency aid. And Israel,
remember, lies right next door to Lebanon: maintaining that deployment involved
nothing like maintaining the globe-circling supply lines that link the US
Business Week has been looking thoughtfully at the economic consequences
of the war. "Inflation isn't the worry this time," concludes the magazine's
April 14 edition. "Instead, the real threat is to the rapid productivity
growth of the 1990s, which may be tough to sustain in an unsettled and hostile
But don't rule out the possibility of serious inflation. On April 3, the
US Congress approved bills that would give Bush around $80 billion of extra
funding to cover war-associated costs. The $2.5 billion that those bills
earmarked for postwar reconstruction is certain to be a serious underestimation
of that cost. The final tab for the war and the postwar deployment is likely
to end up far higher. All this new government spending will be financed
through borrowing that will suck investment out of the productive economy
and force interest rates up again.
The burden of maintaining the Iraq deployment will also take money away
from needed social programs at home and overseas. Salih Booker, executive
director of the Africa Action group in Washington, D.C., recently warned that,
"The war in Iraq is sure to have an overwhelmingly negative impact on Africa....
Africa is the poorest region in the world, and it is extremely vulnerable
to external shocks."
Is there an alternative to Washington's pursuit of a strongly "go-it-alone"
stand? British Prime Minister Tony Blair favors a much stronger UN role
in postwar Iraq, including in postwar governance there. So, too, do Sens.
Joseph Biden (D) of Delaware and Chuck Hagel (R) of Nebraska, both senior
members of the Senate Foreign Relations Committee.
Of course, any significant UN role in helping to govern postwar Iraq would
need a new resolution from the Security Council - where the US will veto
any decision it disagrees with. National Security Adviser Condoleezza Rice
warned April 4 that because the US and British forces have "given life and
blood to liberate Iraq," it would be "only natural" that the coalition should
have the leading role there afterward.
That view seems unnecessarily combative and unilateralist. Governing Iraq
is going to be difficult, lengthy, and expensive - and will require enormous
amounts of international goodwill.
Of course, the voice of wisdom always cautioned against launching this
war without having clear prior UN authorization to do so. But it's never
too late to learn. Let's hope President Bush can learn the perils of unilateralism
before many more lives are lost in Iraq - and before his continued military
adventurism completely wrecks the US and world economies.
• Helena Cobban is the author of five books on