[A-List] US imperialism: Iraq

["annewilliamson" <annewilliamson@xxxxxxx>]

                Gary North's REALITY CHECK

Issue 222                                    March 11, 2003


                      ENVY IN ARABIA

     There is an old military slogan: "The process of
revising the strategic plan begins when the enemy initially
returns fire."

     Investment plans are subject to similar revisions.

     Newsletter forecasts are not expected to survive the
first 40 minutes of the war.

     What can I write today that will not seem like utter
foolishness in two weeks?  Answer: just about anything I
write, since no one will care what I have written here in
two weeks.  People will be too absorbed in the war.

     My suggestion: before March 17, make whatever
portfolio adjustments you think are vital.

     Here is my take on what is about to unfold.


ENVY VS. JEALOUSY

     We live in an age of political envy.  This is not the
same thing as political jealousy.  Jealousy is manifested
in this statement:

          You have what I want.  I want to take it
     from you.  I will be better off after I take it
     from you.

Political jealousy then concludes: "Let's make a deal.  I
won't attempt to take everything you own if you will buy me
off in advance."

     Political envy is very different.  Envy is manifested
in this statement:

          You have what I want.  I know there is
     nothing I can do to get what you have.  So, I
     will destroy what you have.  This way, what you
     have will no longer bother me.

     This is the outlook of the ugly person who throws acid
in the face of the good-looking person.  The acid-thrower
is no better looking, but he has pulled the good-looking
person down to his level.

     It has taken two thousand years of preaching against
envy to restrict its influence in the Christian West.  But,
as Christianity waned in the 20th century, we began to see
the rise of envy.

     The politician who calls for extortionate taxes on the
rich or on corporations, even though he knows that the
wealth of the rich is re-invested to provide jobs and tools
to the less rich, is an example of the politics of envy.
The politician would rather that the economy have low
growth or no growth rather than allow the rich person to
retain most of the income that is produced by his capital.

     We are told -- correctly, I think -- that the typical
Muslim in the Middle East resents the wealth of the West.
He is therefore willing to support a movement that will get
even with the West, even though the act of getting even
will make everyone poorer, including the Middle East.

     This is envy, not jealously.  Jealousy was manifested
three decades ago when the heads of state in the OPEC
countries of Arabia confiscated the capital of the West's
oil companies by nationalizing the facilities that the
companies had paid for.  They broke their contracts in the
name of the people.  They confiscated the lion's share of
the oil revenue.  They did not want to bankrupt the
companies.  They wanted a bigger piece of the action.

     In my view, the war in Iraq is an attempt by the oil
companies to get back some of that lost percentage, and to
influence the marginal price of oil by controlling the
output at the wellhead in the country with the second-
largest known oil reserves.  Western oil companies are not
interested in destroying the nation of Iraq.  They just
want a larger piece of the action.  They will soon get
American taxpayers to foot the bill for their economic
strategy.


THE ENVY FACTOR

     The most important single economic question over the
next two weeks, as distinguished from the far more
important moral and judicial questions, is this: Will
Saddam blow up the oil fields?

     If he is envy-driven, he will.  He sees that the
United States will replace him.  He is wanted, dead or
alive.  He is now defined as a terrorist, and President
Bush used this phrase in his post-9/11 speech regarding
terrorists.

     If I were Saddam, I know what I would do.  Sometime
between now and March 17, I would get into my SUV or the
equivalent and head for the Jordanian border.  I would then
go to Syria.  I would have no doubt that I could live a
comfortable life in Syria.  This assumes that I had
squirreled as lot of money away in my Swiss bank accounts -
- a safe assumption, I think.

     By doing this, I would thereby call President Bush's
bluff.  Without me in power, there would be no legitimacy
for a pre-emptory strike against Iraq by the United States.
By leaving, I would save the lives of tens of thousands of
my people, plus the infrastructure of the country.  When
it's a matter of flight vs. fight, and the army on the
other side of the border is the U.S. Army, I would pack my
bags.

     But I am not Saddam Hussein.  He gives the impression
of being willing to die with his boots on.  He seems
willing to go down shooting.  He may think that he will
attain some sort of glory in doing so.  If he dies with his
boots on, he is probably correct: he will gain enormous
glory throughout the region.  "Saddam lives!" will become
for disaffected Islamic radical youths what "Che lives" was
for New Left college students a generation ago.  But the
Muslims will be far more fanatical about their slogan.
They will not wind up selling corporate bonds, the way
Jerry Rubin did before dying in a freak accident.  Saddam
will be seen as a martyr.

     He won't give Bush the satisfaction of running him out
of power on the cheap.  This is why I think he will order
the destruction of the oil fields.  A man looking to save
his own skin would get out now.  But he is sitting right
where he is.  If he is willing to do this in the name of
retaining power long enough to get shot by some Special
Forces team, then I don't think he will hesitate to take
the economic future of Iraq with him.  I don't think the
survival of the oil fields for the sake of the post-Saddam
regime is part of his overall strategy.

     I could be wrong.  Maybe he is willing to die with his
boots on, but not set the oil fields on fire.  Maybe he
sees honor as dying as a sacrifice for his people.  I hope
this is his attitude: the attitude of a warrior.  But what
I have seen so far is not a warrior but a tyrant.  I think
he is more motivated by sticking Bush (American voters)
with a large bill for the privilege of conquering Iraq.

     If he is driven by envy, he will order the destruction
of the oil wells.

BATTLEFIELD TACTICS

     If this war is really over oil, then the tactics of
the American military must be to capture the oil wells
before any other objective.  American troops will be
parachuted into the fields, well by well, with the
objective of capturing the fields before they can be blown
up.

     Whether the fields are captured by American troops or
blown up by Saddam, this will leave Baghdad without a
source of income.  At that point, the US military could
starve Iraq into submission.  But the escalating political
outcry would be loud and clear from all over the world: get
out now.  So, I don't expect a strategy based on mass
starvation.  The siege is no longer the popular military
tactic that it was in the days before gunpowder.  Even the
Bible has a section on the rules of siege warfare
(Deuteronomy 20).  But not these days.

     I do not know enough about desert military tactics to
know whether northern Iraq must first be secured by
American forces stationed in Turkey.  All I cam say is that
this battlefield advantage was supposedly worth $26 billion
of American taxpayers' money.  Whether Turkey's newly
elected head of state will call for another vote on this
issue before March 17, as the Administration has requested,
is unknown to me.  My bet is that the new premier will take
his time.

     Whether Turkey's refusal to let our troops in will
force a delay of a week or two is problematical.  My sense
of the President's rhetoric is that the war will not be
delayed for anything short of authorization of deployment
inside Turkey.  If Turkey votes by March 17 to let us in,
then the invasion could be delayed for another week.  If
Turkey again votes no, or refuses to vote, then I think the
war will begin on schedule.  The generals will deploy the
ground troops by some other method than invasion through
Northern Iraq.

     In my REMNANT REVIEW for February, I speculated that
the war would begin sometime around March 15.  Recently,
the March 17 deadline has been floated by Washington.
Supposedly, this date has something to do with weather in
Iraq.  A March 17 invasion would reduce the effects of
spring's sand storms.

     This deadline tells me that the generals' strategy
does not assume a victory in a week or two of fighting.  It
tells me that the generals have built in enough time for a
more drawn-out ground war than Gulf I required.  They want
more time, so they scheduled a mid-March invasion.


A $50 BILLION OIL FIELD PRICE TAG

     I have seen various estimates of what it will cost
Western oil companies to re-build the decayed
infrastructure of the Iraqi oil industry.  An estimate of
more than $50 billion is common. Anglo-American oil
companies have said they are ready to make the investment.

     Understand what this means.  They will not subject
themselves to another Ghadaffi-like confiscation of their
property.  Once bitten, twice shy.  When he nationalized
British Petroleum and Bunker Hunt's holdings in 1971-73,
which was followed by similar actions by Arabia's OPEC
nations in 1973, the West's oil companies got the message:
contracts mean nothing to Islamic politicians.

     This time, there is only one way that the West's
companies will make the financial commitment to rebuild,
with or without fires: the presence of U.S. troops to
enforce the new agreements, which will be signed in the
presence of an occupying military force.

     This is the politics of jealousy, not envy.  "We want
what Saddam has.  What he has used to be ours.  We are
going to get it back.  We will keep a bigger slice of the
pie."  The politics of jealousy is now about to meet the
politics of envy in a head-on collision.

     I think Iraq's production will be taken off-line,
beginning in one week.  As to how long it will remain off-
line depends on the outcome of rival military tactics.
Fires will stall production for months.


OPEC'S MOMENT OF TRUTH

     Throughout oil company boardrooms, senior executives
are mentally telling the Administration, "Send them a
message!"  When 250,000 US troops are stationed in Iraq,
the message will get through: "No more Mr. Nice Guy."  OPEC
will know that there are limits to oil prices that are
acceptable to the West.

     I don't think $10 is in anyone's agenda.  But $70 oil
would cause a worldwide recession.  So, I think the Powers
That Be have decided that oil in the $20 to $30 range is
acceptable to the American public.  Above this range, it
gets risky.  Like any oligopoly, the oil industry wants
high prices sufficient to line the pockets of the industry,
but not so high that the consumers revolt, either
economically (less driving) or politically (more voting).

     The Middle East's oil nations can see what is coming.
The United States is not going to pull out of Iraq.  Our
troops will have to remain there in order to assure the oil
companies that their investments are safe.

     The presence of permanent US troops in Iraq will
create a nightmare for the existing oligarchs: the Great
Satan is now a permanent resident of the region.  They will
be caught between the US and al Qaeda, the crusaders and
the Assassins.

     I am not optimistic.  But I am not sufficiently well-
versed in regional politics to say anything definitive.
So, I will rely on a recent statement by an old
acquaintance of mine, Prof. Ibrahim Oweiss.  Three decades
ago, he and I would chat at meetings of the Committee on
Monetary Research & Education.  He was then a professor of
economics at Georgetown University.

     Prof. Oweiss always impressed me as a scholar.  He did
not make outlandish statements, which was rare back in the
early OPEC years.  So, when I recently read the following,
I was taken aback.  He opposes the war in Iraq.  He sees
disastrous effects.

     "The doors of hell would be open. . . . The
     repercussions could include sabotage and
     revolutions in the streets," said Ibrahim Oweiss,
     a former professor at Georgetown University in
     Washington.

     "Many regimes could possibly be affected.  It is
     a ticket for instability in the entire region and
     no one can predict what that instability would
     lead to," he added.

     "The anguish could lead to the creation of many
     (Osama) bin Ladens and this is going to be a very
     serious matter.  This is an invitation to
     creating terrorism," he said.

http://uk.news.yahoo.com/030226/80/du55l.html


CONCLUSION

     I don't expect this war to be settled so rapidly as
the Gulf War was in 1991.  The problem of sabotage in the
oil fields is very great.  Armed resistance by civilians is
likely.  The political fall-out regionally to systematic
bombing of Baghdad will be much worse than the last time,
when the Arab states were officially on-board.  They are
all opposed today.

     There was no al Qaeda in 1991.  Osama bin Laden was
being funded indirectly by the CIA by way of Pakistan.
American troops were in Saudi Arabia, but it was not clear
then that this was going to be permanent.

     I don't think this war is going to be a stimulus to
the American economy.  It is going to be a drain.  The
economic uncertainty imposed by war preparations will not
be reduced in the dramatic fashion that Gulf War I was.

     Fires in the oil fields will send a message: no easy
or rapid resolution of the production system.  I am
convinced that Saddam will order this sabotage.  Therefore,
a US blitzkrieg is tactically necessary to avoid this:
almost instantaneous occupation of the oil fields.  If this
is not accomplished, then the other OPEC nations had better
agree to make up the shortfall.  But what's in it for them
to do this?  The West will be paying top dollar.  The goal
of an oligopoly is to maximize net revenue.  A high oil
price, which can be blamed on the United States, is just
what the regional oiligarchs want.

     I recommend that you don't count on a sustained
recovery of the U.S. stock market in the second half of
this year.

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