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To: PROLIFE who wrote (2207)	4/26/2003 11:50:07 PM
From: calgal	Read Replies (1) \| Respond to of 3592

The U.N.'s Iraq Follies (Cont.) They're all back! The French, the Russians, Hans Blix! Saturday, April 26, 2003 12:01 a.m. EDT French audacity has it charms, but sometimes even they get carried away. Consider President Jacques Chirac's transparently self-interested generosity Tuesday in suddenly proposing that U.N. sanctions against Iraq be "suspended." At least the French are figuring out that it doesn't look good for them to fight openly to maintain Saddam-era sanctions on newly free Iraqis. But in proposing merely to suspend, rather than lift, sanctions, the French also suggested leaving the U.N. in control of Iraqi oil revenues. A final lifting of sanctions would then have to wait for a clean bill of health from . . . Hans Blix and his U.N. weapons inspectors. Really. At least the French are smoother spin-artists than the Russians, who don't even bother to conceal their Iraq agenda. "We are not at all opposing lifting of sanctions. What we are insisting on is that Security Council resolutions must be implemented," Russian U.N. Ambassador Sergei Lavrov asserted. In other words, the two countries that did the most to erode sanctions against Saddam Hussein's dictatorship are now joined at the pocketbook in attempting to maintain them in some form on a newly free Iraq. They were only too happy to do business with Saddam. But now they're just as pleased to use sanctions as leverage to get some Iraqi affirmation of their odious debts and oil contracts from the Saddam era. If Iraqi redevelopment is held back in the meantime, so what? The polite word for this is blackmail. And on Manhattan's east side, it doesn't hurt their cause that the corrupt oil-for-food program helps the U.N. itself (the 2% or so its bureaucracy skims off the top for "administrative" expenses) or that the U.N. is desperate to prove its own relevance in post-Saddam Iraq. President Bush has for now delegated this thorny little problem to Foggy Bottom, which at least seems wise to the game. Sanctions should be lifted rather than suspended, U.S. Ambassador to the U.N. John Negroponte said this week. But we hope Mr. Bush is also prepared to make a moral issue of the sanctions, and from the Presidential bully pulpit if need be. Holding hostage the only major source (oil) of hard currency for a newly liberated people isn't exactly an attractive position. But the French and Russians may get away with it so long as the U.S. remains reluctant to rebut the idea that either its occupation in Baghdad or any new Iraqi government require any kind of U.N. imprimatur. Mr. Bush could start by pointing out the extent to which the oil-for-food program served as little more than an instrument of Baath Party control. One reason American relief workers haven't been able to administer oil-for-food is because the Baath workers who previously ran it all melted away. General Tommy Franks's description of it as "oil for palaces" was entirely apt. The money intended for food and medicine went instead to finance, among other things, Uday Hussein's Olympic Committee. As this truth leaks out, even the French may find this hard to defend. There is also a strong legal case to be made that the sanctions can simply be declared null and void, having been imposed on a regime that no longer exists. Russian oil companies and their lawyers are blustering that they will challenge any new oil sales. But the idea that it will be difficult to find buyers for Iraqi oil absent a U.N. seal of approval isn't credible; oil is a commodity and a slight price discount should find enough willing buyers. The other U.N. game of the moment is to get Hans Blix and his U.N. weapons inspectors back into Iraq. No one should deny Mr. Blix a tourist visa, if he wants to see for himself the wreckage of Saddam's rule. But Mr. Blix has made clear his hostility to the war so many times in recent weeks that one suspects he has a vested interest in not finding the weapons he didn't find the first time around. The search for chemical and biological weapons is also about future security even more than past vindication. Something happened to Saddam's stockpiles of anthrax and botulinum toxin, and it's vital that the U.S. learn if they were destroyed or moved somewhere else. That news is likely to come from interviewing Iraqi scientists and generals, and the U.S. needs to get that information first before it gets to U.N. inspectors (and perhaps other intelligence services). Having liberated Iraq, the U.S. has no reason to be defensive about removing the U.N.'s sanctions and oil-for-food chokeholds over the Iraq economy. As for the validity of Saddam's debts and oil contracts, that should be up to a new Iraqi government to decide. Once that principle is established and declared non-negotiable, French and Russian behavior is likely to improve in a hurry. URL:http://opinionjournal.com/editorial/feature.html?id=110003415

To: PROLIFE who wrote (2207)	4/27/2003 10:07:44 AM
From: calgal	Respond to of 3592

A Wirtschaftswunder for Iraq The German model for economic reform. URL:http://www.opinionjournal.com/editorial/feature.html?id=110003417 Sunday, April 27, 2003 12:01 a.m. EDT We don't suppose many Iraqis have heard of Ludwig Erhard, but the late German economist may hold the key to the successful reconstruction of their country. The cigar-chomping Erhard was a national hero in Germany, where his free-market policies laid the basis for that nation's postwar economic miracle. In the early 1990s, his how-to book, "Prosperity for All," found new readers in former Communist countries eager for their own Wirtschaftswunder in the wake of the Cold War. We bring this up because none of the grand plans for rebuilding Iraq will work without a growing economy rooted in private property rights and a stable currency. Iraq hasn't had either for decades since nearly everything was controlled by the Baath Party. A U.S. Treasury team is working on a reform for Iraq, and it could do a lot worse than follow the Erhard model. The U.S. is already airlifting greenbacks to replace, at least for now, the discredited "Saddam" dinar. The money will be used to pay the Iraqi police, oil workers and civil servants needed to run the country--at wages set by the Americans in consultation with local officials. The longer-term decision on what currency the new Iraq should adopt will be left to Iraqis, the U.S. says, but for now the dollar is the de facto currency. There's a good case to be made for keeping the dollar permanently (just ask Ecuador, El Salvador, Panama or East Timor, which have stabilized their economies by dollarizing). But if Iraqis decide it's more politic to introduce a currency of their own, it would be instructive to look at what is arguably history's most successful currency reform--the creation of the Deutsche mark and elimination of the Reichsmark in 1948. As instituted by the U.S. occupation forces and implemented by Erhard, some 500 tons of Deutsche marks were printed in the U.S. and secretly shipped to Germany. All Reichsmark accounts were fixed at 1 to 1 for the first 60 marks (40 immediately and 20 more within 60 days). Beyond that, the exchange rate was one Deutsche mark for 10 Reichsmarks, and for very large amounts 0.65 Deutsche mark for 10 Reichsmarks. A 1-to-1 ratio was maintained for wages, rents and pensions. The currency reform took place on Sunday, June 20, and West Germans formed long queues to exchange their old marks for new ones. The next day Erhard did something even more radical: He abolished most rationing regulations and canceled price controls. The effect was immediate: Prices stabilized, goods appeared on the shelves, and hyperinflation stopped. The German economic miracle was born. As retired General Jay Garner moves into one of Saddam's palaces in Baghdad, it's worth noting that General Lucius Clay, military governor of the U.S.-occupied zone, initially was furious at Erhard's reforms. When Clay told Erhard that all his advisers thought the economist had made a "terrible mistake," Erhard is said to have replied, "Herr General, pay no attention to them. My own advisers tell me the same thing." Along with a currency decision, Iraq must also decide whether to have a central bank or, as it did from 1932-47, a currency board. Under a currency board, the local currency is linked to a stable currency such as the dollar. The advantage--especially for a developing country--is that, unlike a central bank, the currency board doesn't have the option of printing more money, thereby adjusting the exchange rate. The exchange rate is fixed. Johns Hopkins economist Steve Hanke, the world's expert on the subject, favors a currency board for Iraq--though he says no one except the Pentagon has called even to inquire about the prospect. Central banks don't work in countries prone to corruption and without a strong rule of law, he says, and unlike Erhard's Germany, Iraq "has no tradition of the rule of law." Postwar Bosnia and Montenegro both have stable currencies today, thanks to currency boards linked to the euro. The Iraqis who hid the $600 million that U.S. troops discovered this week in Saddam's palaces in Baghdad understood the value of a stable currency. (There's a reason no one stashed dinars.) The Kurds in northern Iraq understand this too. They've long been using a pre-Saddam dinar nicknamed the "Swiss" dinar, after Switzerland's reputation for financial honesty. Sound money isn't the only reform Iraq needs, but without it nothing else is possible.