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June 19, 2006
The Iraq War and the End of Economics

By Ahmed Amr.


The Iraq War and the End of Economics
By Ahmed Amr

Three long years into this war of choice, most Americans and Arabs are still trying to figure out why George Bush wasted so many chips playing Iraqi roulette.

If the nasty Mess on Potamia wasn't about the phantom weapons of mass destruction, it certainly had nothing to do with spreading the blessings of democracy to the region. 'Liberating foreigners from the yoke of repression' is the last refuge of scoundrels without a good alibi for an unprovoked unilateral war of aggression against a sovereign state.

The United States had fifteen long years to encourage the development of a model democracy in Kuwait - which remains a family ruled oil plantation with a rubber stamp parliament. Uncle Sam could have leaned on the Saudis to get with the program. So far, the custodians of the oil plantations in the kingdom of oil have managed to stage male only elections to contest half the seats in a few city councils.

By now, it should be clear to one and all that war in Iraq has done nothing but create more willing and eager adversaries in the 'war on terror.' As a result of Bush's escapade, a nasty sectarian civil war has converted Baghdad into the most dangerous city on earth. There is no other place in the planet where fifty mutilated bodies are dumped in the municipal morgue on a regular daily basis. Every Iraqi is a potential victim in a chaotic landscape where a guy wearing a cop uniform by day moonlights as a member of a death squad by night.

The occupation army led by American forces has abandoned its legal responsibility to ensure the safety of their colonial subjects and focused their effort on 'force protection.' These days, Washington is more concerned with conducting behind the scenes haggling with Tehran to come up with a face saving exit strategy. Most likely, Bush will try to work out a deal where he ends up ceding Iraq to theocrats beholden to the clerics in Iran in exchange for a pledge from Tehran to forget about joining the nuclear club.

To achieve this spectacular result, Cpl. Michael Estrella made the ultimate sacrifice. As White House press secretary Tony Snow put it, the twenty year old marine from California became "just a number" - number 2500 to be precise. No one is counting the number of Iraqi casualties - but some are forecasting that the dollar tab for this venture will eventually add up to a trillion plus in borrowed greenbacks.

Regardless of the very tangible and tragic outcomes of what has been called the greatest strategic debacle in American history, our media savants have yet to ponder the reasons why Bush went out of his way to sell the war to a gullible and vulnerable post-911 America. The clues to the answer are abundant. Just look at the line up of the countries that supported the president's march to war. The Saudis wanted it. The Israelis and AIPAC put their neo-con operatives on the front lines of the effort to manufacture bogus WMD intelligence to market the war. The Kuwaitis and Qatar were more than happy to provide a launching pad for the invasion. And Tony Blair, the prime minister of an oil exporting country, was willing to stake his political future on the outcome.

And here is another clue. The countries most dependent on Gulf oil supplies were much less enthusiastic about the ill fated venture. Why exactly did the Germans, the French, the Indians and the Chinese attempt to prevent the outbreak of hostilities?

A third clue might help. The United States can satisfy nearly 70% of its total energy needs domestically. Of the 21 million barrels of oil consumed by Americans on a daily basis, less than 3 million are imported from the Gulf region. And we don't get any kind of discount as payback for our military intervention in the region. We pay $70 a barrel just like everybody else - double the pre-war price.

Add to these three clues one vital statistic - an American trade deficit that amounted to $804 billion in 2005. For every dollar of imports, America manages to export 53 cents worth of goods and services. In fact, contrary to popular belief, the United States is a trading wimp that has run up exponentially rising trade deficits for thirty consecutive years. Why are the folks in Washington constantly harping about the joys of the global economy when American producers have consistently demonstrated their inability to compete in world markets? The evidence of their lack of competitiveness is littered in thousands of communities from sea to shining sea which have been blighted by the loss of three million manufacturing jobs since Bush set foot in the White House.

The above clues tell the entire story of why Bush went to war and why he managed to line up so much Democratic Party support for his venture. Start with the trade deficit. Every twenty four hours, Uncle Sam exports two billion dollars in newly minted currency to settle the daily trade deficit.

So, each and every day of the week, the world delivers to our harbors cars, toys, consumer electronics, oil and a thousand other necessities to maintain 'our way of life.' In consideration, we give them paper money. And they still come back the next day and get another box of American currency backed by nothing more than - you guessed it - Arab oil. Take a moment here to digest the most brilliant imperial venture in human history - a feat that defies economic gravity. America has the sweetest deal with the kleptocratic custodians of the oil plantations in the Gulf. For their part, the House of Saud and the Kuwaitis have agreed to price their oil in dollars, to accept payment only in dollars and to 'recycle' a good portion of those "petro-dollars" into American capital markets - buying up corporate stocks and the bonds the United States government issues to finance the $400 billion annual budget deficit.

In exchange, the American government provides protection to the ruling dynasties against all comers - domestic and foreign. Incidentally, one of the domestic threats against these police states is the very democracy that Bush has no intention of spreading. The nightmare scenario for the wizards in the State Department is the day common folks in Saudi Arabia and Kuwait get the right to hold their governors accountable for where the oil revenues go. The oil-for-dollars-and-only-dollars policy forces oil importers around the globe to hoard American dollars. China and Japan now have an estimated $1,700 billion ($1.7 trillion) in US dollar reserves. Given their trade history with the United States, they definitely are not holding on to these dollar reserves to buy American products. Rather, those dollars have intrinsic value because they are directly convertible into Arab oil. That's why they call them petro-dollars. Conveniently enough, the rise in oil prices has further increased demand for the dollar - at a time when the American trade deficit is going through the roof.

The business of America used to be business. Now, the United States government has figured out a way to produce real tangible wealth out of paper and green ink. It is a venture that dwarfs anything ever imagined by Bill Gates, Andrew Carnagie, John D. Rockefeller or Henry Ford. America's biggest business is the US Mint. We have become a currency exporting economy - a new economic phenomenon that undermines every economic theory postulated since Adam Smith. Someone should tell Francis Fukuyama that before we ever get to the end of history we will first have to take a stroll through the end of economics.

Now here's the bad news. The "Arab-oil-for-American-dollars" racket is no longer a cost free proposition. With the mounting tab in blood and treasure from Bush's dice game in Iraq, the more sober pencil pushers in the CIA and the State Department will soon realize that their currency exporting venture has gone from being a virtual El Dorado to a resource hogging sink hole.

Make no mistake, when the politicians in Washington talk about our 'national interests' in the region - they are talking about maintaining our lucrative currency exporting franchise. Cpl. Michael Estrella's ultimate sacrifice and the death of 2,499 of his comrades was part of the price America was willing to pay to sustain our two-billion-dollar-a-day trade deficit. That is why I have long argued that we can best support our troops by either bringing them home or paying them like the corporate mercenaries who are compensated at a rate of $1000/day for much less hazardous duties.

It is really unfortunate that the ordinary people caught on both sides of this conflict are paying the price for Bush's wild eyed gamble in blood. Perhaps what is more tragic is that the people in the Middle East have come to believe that this is about a western religious crusade instead of an exercise in imperial voodoo economics - aided and abetted by their dynastic rulers who are Machiavellian enough to pose as 'defenders of the faith.' On the flip side, many Americans have developed increasingly racist attitudes towards their colonial subjects who are portrayed by the mind warping media titans at CNN and FOX as irrational culturally inferior sub-humans resisting our noble efforts to civilize them with an infusion of our democratic values.

The 'culture clash' nonsense is nothing more than a convenient diversionary ruse by both Arab and American elites. Consider the fact that Prince Walid Ibn Talal is the third largest investor in Rupert Murdoch's News Corp, the media conglomerate most likely to infect the public square with pro-war jingoism and anti-Arab racism. Not to be outdone, Murdoch - the man who made bigotry respectable again - is reportedly buying into Rotana, the Arab media giant owned by Walid Ibn Talal - who is reputedly a front man for the Saudi Royals.

Both Arabs and Americans need to clear their minds of this culture clash trash and start asking a few basic questions. Why are two hundred thousand American soldiers permanently garrisoned in Iraq, Kuwait, Qatar and Bahrain? Why did the Saudis and Kuwaitis support the invasion of Iraq? Where do Saudi and Israeli interests converge? What role does the trade deficit play in formulating American policy in the region? Why do other nations hold huge dollar reserves when they obviously have no intentions of buying American products? Where do the oil revenues go? What would be the economic consequences of the emergence of democratic governments in the region that refused to price their oil in dollars? Ponder that last question and try to visualize what the 'end of economics' will look like.

Ahmed Amr is the editor of NileMedia.com

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