Jude Wanniski Peace Scenario:
A Peace Scenario
Memo To: Website Fans, Browsers, Politicians
From: Jude Wanniski
Re: No War With Iraq
This is the Polyconomics client letter of February 7. I’ve written several client
letters on the topic since then, with greater detail and nuance, but this report still
holds up. Thursday, I will run the War Scenario.
* * * * *
We continue to find ourselves in the very small minority of financial advisors
who continue to believe there will be no war in Iraq. The core reason is that once
President Bush committed himself to a United Nations solution to the problem
of Baghdad’s weapons of mass destruction he significantly diminished his
ability to act alone. He had to commit himself to the UN path in order to get the
support of the Senate Democrats for his resolution to use force if diplomacy
failed, and then he had to agree to a UN Security Council Resolution, #1441,
which determined that if Iraq were found to be in material breach of #1441 it
would face “serious consequences,” which is the reason all 15 members of the
UNSC – including Syria – could vote for it. The administration hawks wanted
the resolution to contain the words, “all necessary means” to force compliance,
but had to settle for the notion that if there was a disagreement on a second
resolution authorizing “all necessary means” they could persuade the President
to forget the United Nations, going it alone.
The President could of course do that, but I believe there is no chance he would
do so without a “smoking gun,” clear evidence that Saddam Hussein presents a
genuine threat to the region and the world unless he is removed from office asap.
Without such evidence, all it takes is for one of the permanent members of the
UNSC to abstain from voting on a new resolution presented by the United
States. France, Russia and China do not have to veto a resolution of this kind to
kill it; they only need abstain. When in 1999 the UN acted to set up UNMOVIC
to replace the discredited UNSCOM inspection team, Russia and China
abstained, but because it was merely a procedural resolution, they would have
had to exercise their veto authority to kill it. This makes the politics of getting a
new resolution much more difficult. It would certainly mean that in the next few
days Hans Blix of UNMOVIC and Mohammed al-Baradei of the IAEA would
have to fail in their mission to Baghdad, to persuade Iraq to address the
remaining WMD concerns.
Now Iraqi scientists who have thusfar refused to be interviewed by inspectors
without a government “minder” in attendance are stepping forward with clear
government encouragement. This is almost certainly the way the inspectors can
be confident that the gaps that remain in the records will be explained, while at
the same time holding out the possibility a smoking gun will appear from these
interviews. The administration continues to say Iraq could develop a nuclear
weapon in a year or so, but Baradei confirms what I’m told by Gordon Prather,
that it would take several years at least for that to happen if there was no
continuing inspection process, and that it would be impossible if there was a
continuing monitoring system in place. In the next few weeks, Dr. Prather
believes Baradei will report to the UNSC on the crisis in North Korea and that
this will force the action to move away from Baghdad to Pyongyang.
The reasoning lies in the recent pronouncements of Defense Secretary Donald
Rumsfeld, who says it is impossible for inspectors to find hidden WMD if a
government really wants to hide them, which is his rationale for regime change.
Now he could just as easily have made that “needle-in-a-haystack” argument in
1991 when the inspection process began in Iraq. If it is now allowed to be
controlling as Rumsfeld insists only “regime change” will do the job,
Pyongyang knows it might as well kick the inspectors out and prepare for the
Bush Pentagon to come after him when it has polished off Saddam. If Saddam
did not believe this inspection regime would enable him to avoid his own regime
change, he would not be cooperating at ever-increasing levels.
The French have correctly argued that the UN has only the two diplomatic tools,
sanctions and inspections. If the inspection process is aborted now because
President Bush wants pre-emptive action in Baghdad (“the game is over,” he
said yesterday), the international rule of law and the superstructure of compliance
that has evolved at the United Nations will crumble. If, on the other hand,
President Bush shows a willingness to proceed with the UN and the inspectors
as Iraq demonstrates active cooperation, the diplomatic process could resume in
North Korea. If North Korea can’t be budged, the UNSC would have a clear
case of “material breach” in a fresh resolution, which would either mean a
pre-emptive strike against North Korea or movement in Japan to protect itself
with a nuclear program of its own.
Even a casual reading of the news relating to the Iraq decision facing the
President indicates a host of other difficulties flowing from a go-it-alone
decision. The cost of the war is being minimized by a great many commentators
who believe it will be manageable once Saddam is removed, but that assumes
terrorism directed against the United States will subside, when it should be clear
that it would dramatically increase. The reason I believe the dollar is weakening
against the euro is that the risks to commerce in the United States going-it-alone
are much greater than if the U.S. and Europe were joined at the hip. The price of
gold goes up when there is a decreased demand for dollar liquidity, and it has
jumped as high as it has relative to the euro/gold price and yen/gold price
because of the market’s estimation of where business risks are higher. This is
what leads me to think the cost of the winning the war against Iraq would be
small compared to the costs in lost federal, state and local revenues and the
necessity of higher spending and increased taxation.
There is progress being made in signing up “a coalition of the willing” even
without a UN resolution, with Turkey now agreeing to allow the US to open a
second point of entry from its soil. But when you read the small print, you find
Turkey insisting their troops outnumber U.S. troops by 2-to-1, and that they do
not intend to commit more than 40,000 to the effort. The people of Turkey are
still opposed by 10-to-1 margins. Now the Kurds are having a fit because they
suspect Turkey is agreeing to these conditions because we have given them
assurances they will be able to carve out a dominant role in northern Iraq in a
post-Saddam Iraq. And while Germany does not have a veto in the Security
Council, it does have one in NATO, where it has joined France in refusing to
have NATO support a US/Turkey operation in Iraq.
Jude Wanniski |
