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To: sylvester80 who wrote (3963)8/5/2002 9:05:54 PM
From: stockman_scott  Respond to of 89467
 
War games
_________________________________________________

Iraq can play the victim card in a bid to stave off a US attack, but America's momentum could prove unstoppable.

Brian Whitaker
Guardian Unlimited
Monday August 5, 2002

Amid the beating of war drums there has been much talk about what the United States may do to Iraq but very little about what Iraq itself may have in mind. From what can be learned of Iraq's strategy, it consists of two parts: first to try to prevent an attack and, second, if the invasion comes, to make it as difficult and costly as possible for the Americans.

Iraq's first line of defence, therefore, is a political one: to portray itself as a victim of western bullying. Persuading anyone to accept that notion might be rather a tall order, given the history of the Baghdad regime, but in fact Saddam Hussein has not had to work at it very hard because the Americans have done most of the job for him.

For a start, sanctions against Iraq have been badly managed, as even their supporters now recognise. They have harmed ordinary Iraqis and have often appeared vindictive.

More widely, there is the perception of double standards. The US claims that the quarrel with Iraq involves certain unwavering principles, though as far as much of the world is concerned they are principles that the US only invokes when it wants to.

In the eyes of the Arab and Muslim world particularly, Iraq's offences - military occupation, flouting UN resolutions and developing weapons of mass destruction - are similar in nature, if not necessarily degree, to those of Israel. Yet one offender gets embargoed; the other is supported with money and weaponry.

The louder the US beats its drum, the easier it is for Iraq to play the role of innocent victim. Since George Bush came to power, statements from Washington have made clear that the real issue is not UN resolutions or weapons inspections but Saddam Hussein himself.

The latest example came at the weekend when John Bolton, the under-secretary for arms control, said that the US "insists on regime change in Baghdad, and that policy will not be altered whether inspectors go in or not".

It is meant to sound tough, but it is also stupid. The idea that the United States can overthrow any regime it does not like is liable to make people more fearful of the US than of Iraq. In the meantime, all Saddam has to do to win friends is keep his nose clean and sound amenable.

Last week, for instance, Iraq invited Hans Blix, the chief UN weapons inspector, to Baghdad for talks about resuming inspections - only to be met with a brusque rebuff from the US and Britain.

The underlying issues regarding weapons inspections are very tricky, and only a fool would treat the Iraqi offer without a degree of wariness, but such details are not the stuff of headlines. And so Saddam won another propaganda point: Iraq offers conciliation, the west intransigence.

Having gained so much undeserved sympathy around the world, and having seen the US voluntarily isolate itself from most other countries on the issue of regime change in Baghdad, the question for Saddam now is what value this will have in preventing an American attack.

The answer depends partly on whether the US will be obliged to seek approval from the UN security council for an invasion of Iraq. This is something the US wants to avoid if possible, since a less-than-unanimous vote in favour would damage the war's legitimacy. Conceivably, there might even be a Russian veto.

Apart from the five permanent members of the security council - the US, Britain, France, Russia and China - the current (rotating) members are: Bulgaria, Cameroon, Colombia, Guinea, Ireland, Mauritius, Mexico, Norway, Singapore and Syria.

The US would have to work hard on several of these countries to win their support. If it came to the crunch, Bulgaria, Cameroon, Guinea, Mauritius, etc, could look forward to promises of generous American aid.

In the Middle East, where the opposition to war is strongest, the US needs support from some of Iraq's neighbours for logistical reasons. At present, officially, they are all saying no. But Saddam knows as well as anyone how fickle they are. In the end, Jordan and Turkey will probably be bought off - but this, of course, further increases the cost to the Americans of regime change in Iraq.

Interestingly, Baghdad has concluded that there is only one country capable of preventing an American invasion - and the country is Britain. The Iraqi rationale is that the US is largely untroubled by its political isolation so long as it has British support, but to go to war without British backing would be a step too far.

Baghdad may also be mindful of the role played in 1990 by Margaret Thatcher (British prime minister at the time), when she stiffened the resolve of President Bush's father by portraying the invasion of Kuwait as a simple matter of good versus evil: Iraq had invaded a sovereign state and must not be allowed to get away with it.

This time round, a British prime minister is being asked to support exactly what Mrs Thatcher opposed so strongly: the invasion (by America) of another sovereign state. Whether Tony Blair will go along with that is not yet clear, and so Iraq scents an opportunity to drive a wedge between Britain and the US.

There is certainly a serious difference of opinion between the two countries at present. Britain does not want regime change in Baghdad just for the sake of it. Britain also wants a plausible justification and a veil of legality for any attack, while the US has no such qualms and simply wants to get on with it. Iraq is seeking to exploit that gap by denying Britain an excuse to join in, but it will be difficult to do so in the present climate unless Iraq readmits the weapons inspectors more or less unconditionally.

Iraq's fear, however, is that if it does let the inspectors in without conditions, the US will use the inspections to engineer a crisis further down the line. So, one way or another, Iraq is in a trap and the inspections dispute is likely to provide a trigger for war. In skilled diplomatic hands, a solution might be found - but Iraq has never been particularly good at negotiating.

On the American side, despite growing doubts about the wisdom of invading Iraq, and in particular about the economic cost, the Bush administration has not left itself an obvious escape route - so it may be politically easier to press ahead than to draw back and risk a serious loss of credibility. "Sorry, we can't afford a war just at the moment" is not going to play well with American voters.

Militarily, Iraq's strategy is to maximise the cost of an invasion. It has no air power worth mentioning and its missile capabilities are uncertain, but it still has the largest army in the Middle East - more than 400,000 active troops and perhaps a similar number in reserve.

Its 2,000-plus battle tanks would be vulnerable to air attacks, so they may have to be buried up to their turrets and used as fixed gun emplacements - not what they were designed for. Iraq has also learned some lessons from the 1991 Gulf war, and so is unlikely to place its troops in trenches out in the desert.

Instead, there is evidence that it will concentrate them in the cities, forcing the Americans to attack major centres of population. That cynically increases the risk of civilian casualties in bombing raids, but Iraq's calculation is that the world will blame the Americans rather than Saddam Hussein. Placing large numbers of troops in the cities also means they will be on hand to deal with any civilian insurrection should it occur.

Ultimately, this strategy should draw the Americans into street-level combat instead of high altitude bombing. The result, the Iraqis calculate, would be far greater American casualties than occurred in other recent wars, such as the Kuwait war, Kosovo or Afghanistan.

Another tactic would be to foment trouble in northern Iraq, which is not currently under Baghdad's control and is therefore likely to be used by American forces. With two rival Kurdish parties in the region, plus the Turkomans and Assyrians - who do not much like the Kurds - and the mysterious Ansar al-Islam (Supporters of Islam) group, which is claimed to have links to al-Qaida, unrest in the north would not be particularly difficult to achieve.

There are also several tactics from the 1991 war that Iraq might employ. In 1991 it tried to widen the conflict by firing Scud missiles into Israel. These made a political point but achieved nothing militarily, and Israel is much better prepared for such attacks now than it was in 1991.

This time, it is difficult to see how Iraq could widen the conflict of its own accord without undermining its image as the victim of American bullying. On the other hand, popular anger in other countries at the American action could bring turmoil to the region without Iraq doing anything itself.

Although there has been much speculation about Iraqi use of nuclear, chemical and biological weapons, nobody really knows what it has or is able to use. However, Iraq does have one chemical weapon in abundance which it used in 1991 - oil.

Before they were driven out of Kuwait, the Iraqis set 720 wells alight and created some 320 oil lakes. This began as an attempt to prevent an allied landing in Kuwait by sea, but it ended up as wanton destruction. The smoke from the fires gave off toxic fumes and made Kuwait so dark that vehicles had to use headlights even in the middle of the day.

In the right place and in the right weather conditions that could hamper an American advance - though whether the Iraqi regime would set fire to its own oil wells would probably depend on how desperate it was.

None of this suggests that Iraq can actually prevent an American attack or prevent the removal of Saddam Hussein if the US is really determined to do it. But what Iraq can do is create obstacles and up the cost at every step along the way. And Saddam Hussein is betting that sooner or later the Americans will decide that - politically, militarily and economically - they simply cannot afford it.

guardian.co.uk



To: sylvester80 who wrote (3963)8/6/2002 4:46:38 AM
From: stockman_scott  Read Replies (2) | Respond to of 89467
 
Bush's Fancy Financial Footwork

By David Ignatius
Columnist
The Washington Post
Tuesday, August 6, 2002

It's not something George W. Bush talks about much -- indeed, it's a fact that has been virtually purged from his official biography -- but for four years in the early 1990s, Bush was a director of a company that ultimately collapsed under the weight of its junk-bond financing and management mistakes.

The privately held company, called Caterair International Inc., was created in 1989 when Marriott Corp. spun off its airline catering business to investors organized by the Washington investment bank the Carlyle Group. If you haven't heard of it, Carlyle is a sleek financial operation that does its deals with help from a roster of former government big shots such as former defense secretary Frank Carlucci, former secretary of state James A. Baker III and even former president George Herbert Walker Bush. As of 2001, a newspaper article pegged Carlyle's value at about $12 billion.

The Caterair deal was a piece of financial engineering known at the time as a "leveraged buyout." It was financed mostly by high-yielding "junk bonds," of the sort pioneered in the 1980s by Michael Milken, who later served jail time for his financial shenanigans.

Carlyle and its investors paid about $570 million for Marriott's In-Flite Services division, which the hotel wanted to sell so it could concentrate on its core business. The investor group was headed by Frederick V. Malek, a Carlyle senior adviser who had served as director of the 1988 Republican convention -- the one that nominated Vice President George H. W. Bush.

Malek resigned in September 1988 as a high-level adviser in the elder Bush's campaign after disclosure that in 1971, at the insistence of his boss, President Nixon, he had compiled a list of Jews at the Bureau of Labor Statistics, who, Nixon suspected, were part of "Jewish cabal" that was distorting his economic achievements. Several on the list were later transferred to different jobs, but Malek said he had no role in personnel decisions and denied he had willingly engaged in anti-Semitic conduct, arguing that he had been coerced by Nixon's repeated requests. The Malek flap didn't hurt his friend the vice president, who was elected as the nation's 41st president in November 1988.

It was Malek who suggested that George W. Bush join the Caterair board in 1990, according to a 1991 article in the New York Times. "I thought George W. Bush could make a contribution to Caterair," the Times quoted Malek as saying. "He would be on the board even if his father weren't President."

A March 2001 profile of Carlyle in the Times noted that the investment bank "gave the Bush family a hand in 1990 by putting George W. Bush, who was then struggling to find a career, on the board of a Carlyle subsidiary, Caterair, an airline-catering company."

Bush remained on the Caterair board until May 1994, according to a Sept. 17, 1994, article in the Dallas Morning News. He said he resigned so he could concentrate on his campaign for governor of Texas. The paper reported that Bush had previously disclosed that he owned between 1,000 and 4,000 shares of "stock appreciation rights." What intrigued the Dallas newspaper was that Bush had dropped the Caterair connection from his official campaign résumé in August 1994.

At that time, Caterair was staggering under its huge debt load, and because of unforeseen changes in the airline catering business. The Dallas paper noted at the time that in SEC filings, Caterair had disclosed $263 million in operating losses and writeoffs since its 1989 founding.

Bush denied the company's financial problems had any effect on his decision to leave the board. He said its problems were "part of a business cycle" caused partly by the fact that "the airline food business is going from hot meals to peanuts." Through those years the company's CEO was former Marriott executive Daniel Altobello. He continued to issue generally optimistic reports about the company's prospects.

Bush's Democratic rival denounced his role with the company. "George W. Bush says he's a successful businessman, but when his company is facing bankruptcy, he jumps ship and lets his partners sink," said Chuck McDonald, a spokesman for then-Texas Gov. Ann Richards, in a Sept. 16, 1994, comment to the Dallas Morning News.

During Bush's four years as a director, Caterair's problems went from bad to worse to insoluble. Because the company was privately held, there's no public record of his role in board discussions. But Caterair is in some respects an early example of the sort of financial engineering that has subverted so many prominent companies recently.

Carlyle financed the deal, as was the practice at the time, mostly through heavy borrowing. After the buyout, Caterair had about $464 million in long-term debt, according to a 1993 Wall Street Journal article based on the company's SEC filings. That article (dug up for me by Post researcher Robert Lyford) noted that Caterair had trimmed that debt load only slightly, to about $426 million, in the four years since it was founded.

The debt load became so heavy that in July 1993, while Bush was a director, Caterair tried to sell $230 million in new "junk bonds." Its filing with the SEC noted that it had failed to make a profit since it was founded -- losing $21 million in 1990, $26 million in 1991 and $400,000 in 1992. Profitability was difficult given Caterair's huge interest costs, which totaled $46 million a year in 1992. The Journal noted that in its SEC filing, "the company said its heavily leveraged balance sheet could prevent it from making certain debt payments." The company also told the SEC it was seeking waivers from lenders for possible violation of covenants in its credit agreements -- a sign it was in serious trouble.

Finally, in May 1995, a year after Bush left the board, Caterair decided to throw in the towel. The company was acquired by Onex Corp., a Toronto-based leveraged-buyout group that owned part of Sky Chefs Inc., a big catering company run by a unit of the German airline Lufthansa.

Onex paid no cash but agreed to assume Caterair's heavy debts. Caterair's creditors agreed to write off $350 million, and two big New York banks agreed to refinance another $650 million in debt. In other words, the financiers who had backed Caterair took a serious haircut. According to a 1996 article in The Washington Post, "Now every dollar Carlyle paid for 'Craterair' is worth 4 cents."

"They [Carlyle] paid so much for the company, it was sinking under its own debt," Onex's chairman, Gerard Schwartz, told the Journal in 1995. Schwartz himself was something of a junk bond king, and the Onex-Caterair deal was described in a 1997 Journal article as an example of the "merger boom" that was sweeping America in the '90s.

So come on, Mr. President. 'Fess up. Here the U.S. economy is tanking and it turns out you have unknown expertise in junk-bond financing and fancy financial footwork. It's time to put that stellar business experience to work.

© 2002 The Washington Post Company

washingtonpost.com



To: sylvester80 who wrote (3963)8/6/2002 9:37:13 AM
From: Jim Willie CB  Respond to of 89467
 
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