Nearly a year after the war on Saddam Hussein became more important than the war on terrorism, the Iraq saga continues its role as the thinking person’s nonfictional soap opera.
In the last week alone, Secretary of State Colin Powell treated us to an impressive speech that outlined the need for war against Iraq. Two days later, The London Times revealed that one of his sources, a British “”intelligence dossier,”” contained text plagiarized verbatim from magazine articles and included information that was over a decade old. Whoops. Understandably, the story has been downplayed in U.S. newspapers — page A8 of the New York Times, well behind the latest terror alert, or in the case of the San Diego Union-Tribune, unreported altogether.
College students usually get kicked out of school for plagiarism. Will the British government fire the junior aides who created “”Iraq: Its Infrastructure of Concealment, Deception and Intimidation””? For that matter, will the international community start to question the accuracy of other U.S. and British “”intelligence data”” on Iraq? Although the first scenario seems more likely than the latter, neither will actually happen. There are just too many reasons to want war with Iraq to let a little academic dishonesty get in the way.
The most common arguments go something like this: Hussein allegedly gassed Kurds, “”his own people,”” at Halabjah, Iraq, in 1988. That the U.S. Defense Intelligence Agency reported that the victims’ corpses looked as if hydrogen cyanide killed them — something found only in Iranian gas during the Iran-Iraq War, whereas Iraq instead used mustard gas — seems unimportant to the Bush Administration and the U.S. public. That the crime is not 15 years distant and that it didn’t irritate the Reagan administration is also unimportant.
Hussein is also suspected of making weapons, which is another no-no. That the United States gave North Korea $95 million for its nuclear program in April 2002, according to the BBC — not only after the “”Axis of Evil”” speech, but in doing so, also scrapped the clause from the 1994 Agreed Framework that required inspections for weapons-grade plutonium — is also unimportant. And isn’t the United States the only country to have actually used nuclear weapons against civilians? Again, unimportant.
Quite simply, the current popular arguments supporting and opposing war in Iraq are tired and flimsy. Military action in Iraq is not solely about liberating Iraq’s people; it is not solely about stopping the spread of nuclear or biological weapons; and it is not solely about gaining control of Iraq’s oil, though the last point is likely an important reason for invading Iraq. More than anything, it is to save the United States from financial ruin.
Many arguments have been overlooked in the Iraq saga. We are never allowed to forget that Hussein allegedly “”gassed his own people”” 15 years ago, but hardly anyone remembers what Hussein actually did in November 2000. It was then that Hussein stopped accepting U.S. dollars as payment for Iraq’s oil exports.
When Hussein made the move, the euro had declined 30 percent since its January 1999 debut and it didn’t show much promise as a reserve currency. It took 82 cents to buy one euro. Radio Free Europe, one of the only organizations to report Hussein’s switch, spent much effort trying to understand why Hussein would take such an economic hit just to irk the United States. Later, he also converted his $10 billion U.N. oil-for-food escrow account to euros.
Since then, circumstances have changed. The U.S. Treasury quietly shed its “”strong dollar”” policy in March 2002. Almost immediately, the euro began gaining on the dollar, moving well beyond parity in November 2002. It now takes about $1.09 to buy one euro. Essentially, Hussein has profited greatly from the switch, even after subtracting currency exchange fees, and may profit even more if the dollar continues to slide.
CNN reported last year that, in light of political tensions with the United States, North Korea ended dollar-denominated trade on Dec. 1, 2002. Other countries, including Iran and Venezuela, have also considered switching to the euro as their reserve currency.
At this point, “”disaster”” for the United States is not a military attack from Iraq. Rather, it is the possibility that other nations — specifically nations of the Organization of Petroleum-Exporting Countries — will follow Hussein’s lead and switch to euro-denominated trade accounts.
OPEC has considered replacing the dollar many times in the past, especially during dollar weakness. The most recent revival of those considerations happened at its April 14, 2002, meeting in Spain.
A dollar is worth a dollar largely because it is the international standard in oil transactions. If OPEC nations were to suddenly switch to the euro and divest themselves of U.S. dollars, the sudden glut of dollars on the world market would force the dollar to drop even further and quicker than it already has. The quick inflation of the dollar would cause even more foreign investors to abandon the U.S. stock markets and dollar-denominated assets, simply to retain what value remains.
At home, a run on the banks could follow. Eventually, current U.S. deficits would be unserviceable in devalued dollars and the nation would go into default. The nationwide social upheaval resulting from a currency collapse would pose a far greater problem for the government than trying to clean up a bombed U.S. city or military base.
By conquering Iraq and installing a friendly regime, the United States will be able to guarantee that Iraqi oil exports are again dollar-denominated. A military victory would also communicate to OPEC the possible consequences of a switch to the euro. Any switch would be made at the other nation’s peril.
In fact, by gaining control of Iraq’s oil production, the United States can also increase production to the point of breaking OPEC. Currently, OPEC sets production quotas and price controls to ensure maximum profits. Iraq now operates at two-thirds of its capacity, producing about 2 million barrels of oil per day, according to the National Review; a new government could produce triple that within three years. If Iraq’s oil is mainly directed to the United States, we need less oil from other OPEC nations, meaning OPEC will lose its dominance over U.S. oil imports. If Bush’s gamble on Iraq succeeds, we can enjoy more oil for less money, at least for a while.
The United States quickly and predictably punished Iraq in the Persian Gulf War. It could happen again soon. However, a currency collapse would not be as easy to conquer.
Our economy can handle a gradual shift away from the dollar as the world’s reserve currency, but not an abrupt one. The world can topple the United States’ hegemony whenever it wants to, simply by abandoning the dollar standard en masse. This has not happened because other countries recognize that the disadvantages still outweigh the benefits of doing so. But many countries are becoming more willing to flee from U.S. assets, especially as the dollar continues to lose value. Our government is rightly afraid that more countries may soon abandon the dollar.
Knowing this aspect of the Iraq problem helps one understand why the Bush Administration so adamantly pursues military action in Iraq, despite domestic and international objection. The alternatives appear less attractive and less predictable than a war with Iraq. Right now, it is more acceptable to pursue the war at all costs than it is to admit the flaws in our monetary system and either fix them or let the system collapse from those flaws.
Indeed, one of the goals of the Constitution is to “”ensure the domestic tranquility.”” Not surprisingly, a war in distant Iraq seems as if it would provoke less unrest in our country than a domestic currency crisis. Our Constitution also states that it intends to “”secure the Blessings of Liberty to ourselves and our Posterity,”” but not to anywhere else in the world. It belongs to the United States first, period. If a foreign war helps keep our country internally calm, it is OK with the Constitution; any quarrels with deities, morality and the like are legally irrelevant. And knowing this angle should give both pro- and anti-war Americans a lengthy pause to think about our future in Iraq and at home.
