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COMMENTARY
Spoils of war: The case of the Iraqi
campaign
By Ehsan Ahrari
"To
the victor belong the spoils," goes the old adage. But
the United States is a different type of victor. Its
spoils do not include permanent occupation of a
vanquished nation; it is content with having a
long-term, if not a permanent, influence in determining
the form of government and the nature of economic
policies of the vanquished, a la Japan and
Germany. Those types of "spoils" are likely to come out
of the US invasion of Iraq. Even though there are
expectations that the US will end up occupying Iraq for
many years, observers outside the US government -
including this writer - don't believe in that
possibility.
So, what are some of the economic
arguments related to the George W Bush administration's
present Iraq campaign? Let's get away from the
oft-beaten path of "it's all about oil". The United
States did not invade Iraq solely for control of oil.
However, the integration of Iraqi oil into the world
economy is likely to be one of the major consequences
stemming from this invasion.
If one examines the
distribution of oil reserves worldwide, only a handful
of such regions come to mind. The Persian Gulf tops the
list. It is the most troublesome region from the
viewpoint of US foreign policy. Then there are Russia
and the Caspian Sea, the North Sea region, Venezuela and
Mexico. Of these, Russia is still open for great power
maneuvers that have been evolving, especially since
President Vladimir Putin came to power. Given the
multidimensional nature of US-Russian affairs, oil is
not the driving factor. But the fact of the matter is
that the United States has been able to make its
presence felt in the geopolitics of Caspian Sea oil. In
fact, it can be argued that, at times, Washington has
been able to outmaneuver Russia in the contentious
politics of the routing of oil and gas pipelines, as was
the case in the construction of the Baku-Tbilisi-Ceyhan
(BTC) pipelines.
North Sea oil is not exactly a
major variable in the heady geopolitics of oil. Besides,
it is owned by European states that are not a focus of
manipulative Machiavellian politics of great powers -
Norway and the United Kingdom own the majority of the
reserves and production, while Denmark, the Netherlands
and Germany have smaller oil and gas holdings. Of the
two Latin American oil states, only Venezuela has become
a turbulent source. And the jury is still out as to how
long or whether President Hugo Chavez will be able to
ride out the storm of political instability that has
become a regular phenomenon of the politics of Venezuela
for the past year or so.
Then there is OPEC -
the Organization of the Petroleum Exporting Countries -
which caused a considerable amount of panic in the
economic palaces of the Western powers in the 1970s. Its
membership cuts across several continents. Even though
OPEC will never re-emerge as a potent entity in the
coming years, its dismantlement has been a cherished
wish of all top managers of the Western economies. Three
African members of OPEC - Algeria, Nigeria and Libya -
were the price hardliners of the 1970s. As such, they
opted for maximum and intermittent price increases.
Today, all three of them are very much subject to US
pressure and influence, especially Muammar Gaddafi, who
desperately wants to avoid becoming a victim (if not the
next victim) of the Bush administration's newly acquired
doctrine of regime change. The Nigerian oil industry has
been in a state of turbulence and has consequently been
underproducing because of ethnic violence in the
oil-rich Niger Delta.
By remaining in Iraq, or
at least by ensuring a supplicant status for the
post-Saddam Hussein Iraq, the US may be able to exert
pressure on Iran and Saudi Arabia for moderate price
increases and for a regular refrain from lowering
production to create upward pressure in oil prices. Of
the two Persian Gulf states, Saudi Arabia has not
practiced production manipulation for price escalation,
but after King Fahd bin Abdel Aziz's demise there will
be no guarantee what type of oil policies that country
will follow. Before the US invasion of Iraq, it could
have been assumed that Saudi Arabia would follow an
independent oil policy. As an important oil-producing
Arab state - Iraq - is about to become a US colony, all
bets are off as to how independent any other oil state
in the Persian Gulf is likely to be in determining its
oil policies in the coming months and years.
In
all likelihood, the United States will make sure that
the Iraqi oil industry is well integrated into the
Western-dominated international oil business in the
coming months. Then international oil entrepreneurs may
determine the quantity of Iraqi oil production by coming
up with composite figures, and by manipulating those
figures strictly from the perspective of international
supply and demand, and not necessarily on the basis of
what is the optimal amount of production, strictly from
the Iraqi vantage point.
Come to think of it,
that was what the international oil companies used to do
during the colonial era that ended in the middle of the
past century. What implanted Iraqi government will
openly disagree with Washington for at least the next
five to 10 years on making its oil policies responsive
to world oil markets conditions? Admittedly, such a
scenario is not totally devoid of a big chunk of
controversy; it falls well in the realm of possibility,
nevertheless.
In the aftermath of the US
invasion of Iraq, Iran feels extremely insecure.
Thousands of US troops are already stationed on its
borders with Afghanistan. With Iraq in the process of
becoming another supplicant state of its neighborhood,
Iran's maneuverability is virtually non-existent. More
to the point, the very nature of the international oil
market is such that there is no chance of any member of
OPEC exploiting it, as was done in the 1970s. But the
United States is not likely to leave anything to chance.
What about the spoils of the Iraqi invasion for
the US economy? There is less certainty in that realm.
The US Congress has already approved the Bush
administration's desired US$80 billion. Out of this, $62
billion will go the coffers of the Pentagon to replenish
funds depleted as a results of wars in Iraq and
Afghanistan, $8 billion for the reconstruction of Iraq
and foreign aid, more for homeland security, and about
$3 billion to help America's struggling airline
industry.
One virtual certainty is that US
companies will reap a bonanza as a result of their
preferred status in bidding for reconstruction
contracts. The only minor shadow of doubt stems from the
French and Russian objections when the matter is
considered at the United Nations in the near future.
These countries are very keen on ensuring that their
respective economic interests are well taken care of.
The European Union as an entity is likely to exert its
influence for its own share of the economic spoils. No
one can make any categorical statements about how
dominant the US economic interests are likely to remain,
once all the aforementioned actors start to maneuver in
the forum of the UN. No wonder President Bush was never
really too warm to the proposition of allowing the world
body much voice on the issue of Iraq.
So history
is about to repeat itself in Iraq. There is no old-style
imperialism anymore. Now its altered face emerges in the
form of "liberation". An Iraqi named Adel made the most
insightful, though equally ominous, comment to the New
York Times' Dexter Filkins about what is about to happen
to his country. He said, "We don't want the Americans to
stay for a long time. We seem to be going from one
crisis, Saddam, to another, occupation."
The
greatest element of uncertainty is what the spoils of
Iraqi invasion are for the US economy in the coming
months. According to budgetary forecasts, the federal
deficit is expected to approach $400 billion this year
and next.
If the Keynesian economists are right,
in order to boost the economy, the Bush administration
will be forced to increase the pace of domestic
spending. The current president remembers all too well
the fate of his father after the Gulf War of 1991. So
that particular variable, more than pure economic
arguments, will drive US economic policies in the coming
months. From the US perspective, if the war is to be
over within a matter of a few more days to weeks, the
chances of negative spillover effects on the US economy
can be minimized. Even then, how long will it be before
US occupation forces are pulled out of Iraq? What if
there remains a high degree of insurgent movement
challenging the authority of the implanted government?
And who will bankroll the US occupation? If Iraqi oil
becomes a source of financing it, then we are back to
the old arguments about Iraq becoming a liberated
nation, an occupied one or, worse still, a US colony.
An effective way to find solutions to the
preceding troublesome questions is for Washington to
consider the use of the UN and/or the Arab League in the
formation of a succeeding government in Iraq. But the
chances are that the influential neo-conservative
advisors to Bush will strongly advise him to refrain
from using that option, since the involvement of those
organizations, singly or collectively, will not allow a
dominant voice for the United States in determining the
nature of the next Iraqi government. In fact, Secretary
of State Colin Powell has already stated on March 26
that the US is not going through the entire course of
regime change not to have a dominant voice in the
post-Saddam Iraq. But if the post-Saddam Iraq is to
emerge as a "liberated" nation, it has to be liberated
from all semblances of colonialism, blatant as well as
those that are wrapped up in the supposedly benign term
"liberation".
Ehsan Ahrari, PhD, is an
Alexandria, Virginia, US-based independent strategic
analyst.
(©2003 Asia Times Online Co, Ltd.
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