Postwar shock and awe in the global economy

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 and Iraq.

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 world."

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 international relations.

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