Long Siege of Iraq Would Be Worst Scenario for the West

Economic statesmanship needed to avoid global recession

IT has been clear from the onset of the current crisis in the Middle East that the worst scenario for the West would be a drawn-out economic and military siege of Iraq. Iraqi President Saddam Hussein could then hope that high oil prices and scarce oil supplies would undermine the solidarity of oil consumers. He could savage the Saudis for seeking protection from foreigners, attacking their legitimacy as protectors of Islam's holy places. And he could rally poor Arabs against the region's monarchies - whose wealth is widely resented - adding to the political tensions endemic to the region. Unfortunately, this is what could evolve, unless the US and its allies remain firm in their resolve not just to condemn, but to defeat, Iraq's aggression.

President Bush's handling of the crisis so far has been extraordinary, if not extraordinarily successful. He orchestrated broad international condemnation of Iraq's invasion and annexation of Kuwait, drawing on a career's worth of high-level political contacts around the world. He moved swiftly to deny Iraq the fruits of its aggression, first through an asset freeze and then through a United Nations-sanctioned trade embargo. He is building a multinational military force around a United States core which will be more than capable of defending the oil fields of Saudi Arabia and the Gulf emirates.

But President Bush - and the rest of us - are up against a formidable foe. Saddam Hussein has amply demonstrated not only his ruthlessness, shrewdness, and staying power, but also his lack of sophistication or understanding of the West.

The Iraqi president has shown he does not accept international rules and limits. He used chemical weapons on Iranian armies when they appeared near to a breakthrough, as well as on Iraqi Kurds when they sought to distance themselves from Baghdad's control. He has reportedly sought to build nuclear weapons and has aggressively pursued the goal of amassing the largest, best equipped military force in the Gulf.

However, Saddam Hussein is not invulnerable. His economy is a shambles, badly damaged by a decade of mismanagement and war. He has too much debt and too little money. His country imports three-quarters of its food and will be badly squeezed by a blockade. His military has yet to demonstrate that it is capable of sustained offensive operations - the three-hour invasion of Kuwait does not count, and the victory over Iran consisted mostly of letting the Iranians destroy themselves against massed defensive positions.

Saddam's goals are clear, if usually cloaked in obscure Arab rhetoric. In the short run he needs money, higher oil prices, and debt forgiveness to revitalize his economy and to produce a ``peace dividend'' for his people and his armies. But in the long run he wants to control the economic and political assets of the region. The Gulf countries possess nearly two-thirds of the world's oil reserves. If Saddam realizes his ambitions, Iraq would gain effective control of oil prices and, thus, of a world economy which still runs on oil.

It is this that is unacceptable, more than the ouster of the Kuwaiti regime and Iraq's annexation of that country. And this means that even some sort of brokered restoration of the status quo ante - withdrawal of Iraqi troops and the return of the al-Sabah government, accompanied by a financial and territorial settlement - would be inadequate. The Iraqi leader would have made his point, and none of his neighbors would be safe.

Unfortunately, Western leaders have only bad alternatives. To confront Iraq militarily risks setting off a wider conflagration. To rely on economic sanctions is to hope that Saddam is responsive to the suffering of his people and to ignore the accumulated evidence that such sanctions rarely work at all and never work quickly. To hope for a disgruntled officer to turn on the Iraqi president is to forget that he eliminated many such officers and has survived many such attempts.

Some early lessons can already be drawn from the crisis:

The cold war may be ending, but regional conflicts will persist. When the Soviet Union was a global power, the potential for a regional war to be transformed into a confrontation between the USSR with the United States often worked to defuse the conflict. But the Soviet Union's desperate economic and political situation had undercut its international influence, whether in concert with or in opposition to the US. This may be a formula for a more, rather than less, dangerous world.

The Middle East is inherently unstable; the Arab-Israeli conflict is only one, and perhaps not even the most important, source of that instability. Yet the rest of the world has important interests in the region which are at risk when either of the two potential Gulf powers - Iraq or Iran - are dominant. Under such circumstances, the US and its allies cannot afford to disengage from the area.

The US has become too dependent on foreign oil and foreign money.

Countries that have failed to rectify domestic economic imbalances in the 1980s - and this includes the US as much as the Soviet Union and others - will now face much more difficult circumstances. Currency, commodity, money, and capital markets will be more volatile; energy prices and interest rates will be higher, and economic growth weaker; risk capital is likely to be even scarcer.

Considerable economic statesmanship (which has been noticeably absent over the past decade) will be needed to avoid a repeat of the global recession of the 1970s.

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