This past week has seen the Bush administration in the U.S. admit that it was 'misinformed' about WMD prior to its invasion of Iraq. The President has spoken three times in public on the War, more than any other time even prior to the invasion or immediately after. It was Election week in Iraq, and his poll numbers were down, so it was time to come clean. Sort of.
He still justified the war, democracy, nasty dictator, American interests , war on terror. Wait lets go back over that list, American interests. What could those be? Well an issue that the American media has not covered, nor has much of the media in the rest of the world, is the whole issue of Why America needed the war in Iraq. And while it has to do with oil, it was not oil perse that was at issue. It was Petrodollars.
On Guns and Butter:
An Alternative Perspective on the Reasons for Invading Iraq
by Anthony Haynes
The Canadian Institute of Strategic Studies (February, 2004)
Much of the commentary on the Iraq War has assumed that weapons of mass destruction (WMD) were the primary reason for the Bush administration’s decision to go to war against Saddam Hussein. This reason appears problematic as US weapons inspectors prepare to leave Iraq. By now it should be clear that the administration’s claims about Iraq’s reconstituted WMD were more the result of supposition than hard evidence.
An alternative explanation for Washington’s determination to be rid of the Baathist regime may be found in its interest in maintaining dollar hegemony through the continued recycling of petrodollars. According to this theory, the Bush administration aims to maintain dollar hegemony by arresting momentum towards the Organization of the Petroleum Exporting Countries (OPEC) switching to the euro as an oil transaction currency. Such a change in the oil transaction ‘currency of choice’ would have a devastating effect on the US economy.
The first step in this notional strategy would include invading Iraq and reversing Saddam Hussein’s policy of pricing Iraq’s vast oil reserves in euros. In effect, the Iraqi dictator’s fate was sealed when Saddam decided to convert Iraq’s oil reserves from US dollars to euros in November of 2000, realizing a huge profit as the euro subsequently appreciated dramatically against the US dollar. The events of September 11, 2001 provided the Bush administration with the perfect opportunity to pursue its ‘strong dollar’ policy and reverse any movement by OPEC towards pricing oil in euros.
As President George W. Bush stated during his press conference following the capture of Saddam Hussein in December of 2003, “We have a strong dollar policy. We expect the markets to determine the dollar exchange rate, but we have a strong dollar policy.” Likewise, US Treasury secretary John Snow has been advocating the same policy since the dollar began its accelerated slide against other major currencies.1 Currency traders have long viewed Snow’s comments as doublespeak - especially given the dollar’s continued slide vis-à-vis major trading partners. The President, however, was being quite honest about his government’s strong dollar policy.
By ‘strong dollar’, Mr. Bush was referring to the US dollar as the standard global trade currency. It was also a veiled reference to the currency that OPEC should be using to price its oil transactions. As such, it was likely Mr. Bush’s intention to avoid a potential devaluation of the US dollar while the euro gained global pre-eminence as a standard trade currency. According to this view, the risk of losing dollar hegemony far outweighed the risk of further upheaval in the Middle East.
While it is a coincidence that both The Wealth of Nations and the Declaration Of Independence were published in the same year (1776), it is no surprise that both Adam Smith3 and Alexander Hamilton4 were proponents of the mercantilist system of power politics. If the ends of mercantilism were the unification of the nation state with its industrial, commercial, financial and military resources, it follows that, in foreign affairs, its ends must be to increase the power of one nation against other nations. For more than two centuries before Smith’s Wealth of Nations, Europe was governed by the beliefs and practices of mercantilism. The mercantilist state of Smith and Hamilton’s time was protectionist, autarkic, expansionist and militaristic. Indeed, the security of 19th century Britain was largely dependent on economic ties to its far-flung colonies, the latter being protected by the guns of the Royal Navy. It was a US naval squadron under Commodore Oliver Hazard Perry that compelled feudal Japan to open its doors to trade with the United States.
With wide experience in economics and politics, Friedrich List5 later wrote extensively on protectionist and militaristic political economy. President Eisenhower, in one of his farewell speeches in 1961, stressed the importance of the military-industrial complex.6 He also took great pain to point out its potential abuses – namely its potential to distort America’s economic and security priorities. From the time of the Declaration of Independence through to the Cold War and today, America’s willingness and ability to wage war has always been tied to its macroeconomic policies (the example having been set by her western European predecessors). Hence, the present-day US administration would readily deploy its military might to advance its economic policies.
The Bush administration has taken great care to justify its war on Iraq. The always stern but media-savvy Defence Secretary Donald Rumsfeld rebuffed any and all doubts as to the dangers posed by Saddam Hussein’s regime in the run-up to the war. Secretary of State Colin Powell presented a seemingly detailed review of Iraq’s WMD program to the United Nations Security Council. Equally gripping were Mr. Rumsfeld’s musings on the loose associations between Al Qaeda and Iraq.
Was the war in Iraq waged to further US economic policy, and not simply to remove a dangerous dictator and his exotic weapons? One could certainly argue that there were other tyrants to confront at the time the US moved against Saddam. Mr. Clark posits in his essay that President Bush had failed to provide a rational explanation as to why Iraq’s dormant WMD program poses a more imminent threat than North Korea’s active nuclear weapons program. He points out that shortly after the congressional resolution on Iraq, it became clear that Kim Jong-Il was processing uranium (a clear violation of the Non-Proliferation Treaty and the 1995 Agreed Framework) that would give the North Koreans a nuclear weapons capability by late 2003. In a recent book entitled, The Price of Loyalty, former Bush administration Treasury Secretary Paul O’Neil implies that Mr. Bush was directing his cabinet to find a way to effect regime change in Iraq soon after taking office.
Mr. Clark published his essay in January of 2003. In it he drew attention to the UN’s inability to find a reconstituted WMD program in Iraq, despite over 400 unencumbered inspections. Further weakening the administration’s claims was the intelligence community’s belief that Al Qaeda was more likely to acquire WMD from the fledgling states of the former Soviet Union, or even acquire them from a destabilizing or destabilized Pakistan.
Mr. Clark’s essay discusses at some length the “macroeconomics of petrodollars and the unpublicized but real threat to the US economic hegemony from the euro as an alternative oil transaction currency.” While he employs published reports (largely European and Asian) to support his arguments, he draws attention to the fact that the US media had not taken up the story.Critics of President Bush’s foreign policy typically view his administration as a cabal of aggressive, neo-conservative hawks recklessly advocating global military intervention to topple real and imagined enemies of the United States. While this might indeed be the case, one should not discount the possibility that this invasion was planned and carried out in an attempt to maintain a strong dollar policy – a policy that was vital for the economic security of the United States.