May 1, 2006
Diaz Hendropriyono
Washington, DC
At the time when the Iraq War was launched, the Bush administration expected that one major benefit of the war included the elimination of Iraq’s alleged WMD. The proliferation of nuclear weapons has been the U.S. greatest security challenge. Acting assistant secretary of state for international security and nonproliferation Stephen Rademaker asserted that nuclear, chemical and biological weapons are capable of killing on a massive scale and it is imperative that “such weapons be kept out of the hands of rogue states and terrorists.”
Next, there was a belief that Saddam was linked to Al-Qaeda. Then-Secretary Colin Powell claimed that eliminating Iraq’s WMD defeated the possibility that such weapons could be used by Al-Qaeda’s terrorist networks to attack the U.S. And by defeating Saddam, the U.S. also defeats al-Qaeda’s ally.
Another potential benefit for invading Iraq was to restore democracy in the country. President Bush stated that democracy is a universal idea that is highly valued by any human being. He continued that in many Middle Eastern countries, especially Iraq, poverty is deep and spreading, women lack rights and denied schooling, democracy has failed and totalitarianism has extinguished the hopes of millions in the region. During his remarks at the National Endowment for Democracy, President Bush noted that there were about 40 democracies in the world in the 1970s. The number had become around 120 at the end of the 20th century as Portugal, Spain, Greece, South Africa, and many countries in East Asia and Latin America adopted this belief. The U.S. has been committed to support democracy to be adopted by countries throughout the world.
Fourth, predicting what would happen to oil prices in the aftermath of the War in Iraq may not be an easy task. Joseff Herbert argues that the fluctuation of oil prices would be highly dependent upon the length of the war, the world’s oil markets during the war, and the level of damage suffered to the Gulf oil fields. Nonetheless, the Bush administration was convinced that the Iraq War would bring oil prices down, which was peaking at $37.87 per barrel on March 12, 2003, and would create a more economically healthy U.S. economy. A chief economist at Chevy Chase Trust mentioned that “once the war is launched…I expect big drops in oil prices, and [even] gold prices, a strengthening US dollar and a rally in the stock market.”
With an estimate of 112.5 billion barrels in oil reserves, Iraq is the world’s second largest oil producer after Saudi Arabia. The Bush administration hoped that in the post-war era, with Iraqi’s oil production back in the pipeline, oil prices would significantly decrease. If oil prices could be brought down to $20 per barrel, the U.S. economy would receive a boost between $55 billion and $60 billion a year. This appeared likely. In fact, the Bush administration predicted that oil production in Iraq would exceed the pre-war level of 2.5 million barrel per day and increase to over 3 billion per day by the end of 2003.
The estimate grew more optimistic as it was known that only 15 of Iraq’s 74 discovered oil fields were developed, and only 125 of the 526 oil deposits had been drilled. Consequently, then US-backed Iraqi National Congress leader Ahmed Chalabi stated that “there’s not an oil company out there that wouldn’t be interested in Iraq… [and] American companies will have a big shot at Iraqi oil.”
The fifth benefit that was hoped to be had was an increase in the number of U.S. alliance throughout the world, especially the Middle East. When the war started, the Coalition of the Willing, countries which militarily supported and participated in the Iraq invasion and subsequent peacekeeping duties, consisted of 49 nations. These include the United Kingdom, Australia, Canada, South Korea, Italy, Poland, Romania, Georgia, Japan, Denmark, Czech Republic, and Slovakia, among others.
Although Arab countries did not sound their support for the Iraq War, presumably thinking that it was not wise to be associated with military action and publicly identified with the U.S. action, these Gulf States would actually benefit from the Iraq War. When the war started in March, the world’s major stock markets were heading south. The U.S. Dow Jones industrial average downed 171.85 to 7568.18, the Nasdaq composite decreased 26.92 to 1278.37, and the S&P 500 Index lost 21.41 points to become 807.48. The London’s FTSE 100 index closed 3.1% lower at 3,743. Frankfurt’s Xetra DAX index slid 5.2% to 2,573. The CAC 40 in Paris plummeted 5.7% to 2,726. And while Milan’s MIB30 index slowed 3.1% and Zurich’s SMI dipped 5%, the AEX index in Amsterdam was hit a little bit worse, slumping 6.4%.
However, stock exchanges of nearly every Gulf State within easy reach of Iraq experienced the opposite. The Kuwait Stock Exchange index started the year at 2,352 and had reach 3,397 by the end of April, an increase of 44%. Qatar’s Doha Securities Market was up for more than 20%, while Saudi Arabia’s Tadawul index witnessed a surge of 16% within the same period. Furthermore, the Muscat Securities market in Oman and the EMNEX index in the United Arab Emirates increased by 14% and 9%, respectively. Indeed, two of Kuwaiti’s biggest mobile phone companies immediately established movable transmission towers that could be transferred across the border to start up service in its neighboring Iraq. In addition, Kuwait’s real estate prices had continued to expand fivefold. Dubai’s Jebel Ali port would play a major role as a transshipment hub following Iraq’s Umm Qasr port eventual development. And Qatar was confident that Iraq could become a potential market for its huge reserves once reconstruction starts. It was further expected that Saudi Arabia’s major companies—such as Savola, which manufactures edible oils, and the Zamil Group, which produces air conditioners and other household appliances—were seen to be among the best to gain new businesses in Iraq.
With these benefits anticipated to be gained by Iraq’s neighboring countries, the Bush administration was convinced that the Iraq War would strengthen its relation with these Arab States, and improve economic trade between the U.S. and those nations. More specifically, it was expected that Saudi Arabia’s exports to the U.S. would increase to at least over $20 billion a year and imports from the U.S. rise to over $5 billion a year in the post-Iraq war. The improved trade relation appeared very likely to occur, particularly knowing that the U.S. would topple a regime which owed $9 billion to the Saudi government.
Unfortunately, none of these benefits materialize, making the War in Iraq look like a war without any benefit at all.
For example, it was reported that neither stockpiles of chemical weapons nor evidence of recent WMD production has been found in Iraq. At this point, U.S. chief weapons inspector Charles Duelfer said that inquiries into WMD in Iraq have “gone as far as feasible.”
Furthermore, there was no relationship between Saddam and al-Qaeda. Although President Bush insisted that “Saddam Hussein has longstanding, direct and continuing ties to terrorist networks,” the public seemed to think otherwise. In fact, the Iraqi President himself denied any connection between his administration and al-Qaeda and boldly said “if we had a relationship with al-Qaeda…we wouldn’t be ashamed to admit it.” Additionally, the September 11 commission reported that although there had been contacts between Iraq and Al-Qaeda, there has been no “collaborative relationship” between them. The discord was then exacerbated as former U.S. Ambassador Joseph Wilson admitted that “the CIA was under pressure from the vice president to twist facts to make it appear that Iraq was an imminent nuclear threat.”
Third, the idea of installing democracy in Iraq has also been criticized. There have been several reasons as to why democracy in Iraq is not only undesirable, but also unfeasible. For example, there are still other alternatives to democracy that ensures more stability in the country. Then, with the Iraqi society that is too fragmented, Iraq is actually not ready for democracy. Next, the transition to democracy would be too dangerous and risky that it would take many lives. Also, the government that is created out of democracy is predicted to be too weak to run the country, as Iraqis are still hostile. In short, democracy in Iraq is expected to fail.
The fourth benefit that has not become a reality is the reduction in the price of oil. In September 2003, the price of standard crude oil on NYMEX was $25/barrel. By the following year, the price went up to $60/barrel. On August 29, 2005, it had reached $70.8/barrel. And on fears of Iran’s intensifying dispute with the West, by April 19, 2006, oil price hit a record $74 a barrel. This increased gasoline price in the U.S. to $3.11 per gallon is the highest since 1981 at $3.03 per gallon after adjusted for inflation. Although several factors contributed to the price increase—such as political problems in Venezuela, instability in West Africa, the fear of Iran’s nuclear program, the crippled supply flow of oil from the U.S. Gulf Coast in the aftermath of Hurricane Katrina, and Saudi Arabia’s internal instability—the Iraq War fears have also lifted oil price.
Finally, it is obvious that the last benefit has not materialized either. A few years after the war started, the U.S. is still losing coalition partners in Iraq. Furthermore, the U.S. image in the Moslem countries, especially in the Middle East, has actually continued to worsen since the war began.
“What other kinds of benefits can be gained from the war?” I asked.
Washington, DC
At the time when the Iraq War was launched, the Bush administration expected that one major benefit of the war included the elimination of Iraq’s alleged WMD. The proliferation of nuclear weapons has been the U.S. greatest security challenge. Acting assistant secretary of state for international security and nonproliferation Stephen Rademaker asserted that nuclear, chemical and biological weapons are capable of killing on a massive scale and it is imperative that “such weapons be kept out of the hands of rogue states and terrorists.”
Next, there was a belief that Saddam was linked to Al-Qaeda. Then-Secretary Colin Powell claimed that eliminating Iraq’s WMD defeated the possibility that such weapons could be used by Al-Qaeda’s terrorist networks to attack the U.S. And by defeating Saddam, the U.S. also defeats al-Qaeda’s ally.
Another potential benefit for invading Iraq was to restore democracy in the country. President Bush stated that democracy is a universal idea that is highly valued by any human being. He continued that in many Middle Eastern countries, especially Iraq, poverty is deep and spreading, women lack rights and denied schooling, democracy has failed and totalitarianism has extinguished the hopes of millions in the region. During his remarks at the National Endowment for Democracy, President Bush noted that there were about 40 democracies in the world in the 1970s. The number had become around 120 at the end of the 20th century as Portugal, Spain, Greece, South Africa, and many countries in East Asia and Latin America adopted this belief. The U.S. has been committed to support democracy to be adopted by countries throughout the world.
Fourth, predicting what would happen to oil prices in the aftermath of the War in Iraq may not be an easy task. Joseff Herbert argues that the fluctuation of oil prices would be highly dependent upon the length of the war, the world’s oil markets during the war, and the level of damage suffered to the Gulf oil fields. Nonetheless, the Bush administration was convinced that the Iraq War would bring oil prices down, which was peaking at $37.87 per barrel on March 12, 2003, and would create a more economically healthy U.S. economy. A chief economist at Chevy Chase Trust mentioned that “once the war is launched…I expect big drops in oil prices, and [even] gold prices, a strengthening US dollar and a rally in the stock market.”
With an estimate of 112.5 billion barrels in oil reserves, Iraq is the world’s second largest oil producer after Saudi Arabia. The Bush administration hoped that in the post-war era, with Iraqi’s oil production back in the pipeline, oil prices would significantly decrease. If oil prices could be brought down to $20 per barrel, the U.S. economy would receive a boost between $55 billion and $60 billion a year. This appeared likely. In fact, the Bush administration predicted that oil production in Iraq would exceed the pre-war level of 2.5 million barrel per day and increase to over 3 billion per day by the end of 2003.
The estimate grew more optimistic as it was known that only 15 of Iraq’s 74 discovered oil fields were developed, and only 125 of the 526 oil deposits had been drilled. Consequently, then US-backed Iraqi National Congress leader Ahmed Chalabi stated that “there’s not an oil company out there that wouldn’t be interested in Iraq… [and] American companies will have a big shot at Iraqi oil.”
The fifth benefit that was hoped to be had was an increase in the number of U.S. alliance throughout the world, especially the Middle East. When the war started, the Coalition of the Willing, countries which militarily supported and participated in the Iraq invasion and subsequent peacekeeping duties, consisted of 49 nations. These include the United Kingdom, Australia, Canada, South Korea, Italy, Poland, Romania, Georgia, Japan, Denmark, Czech Republic, and Slovakia, among others.
Although Arab countries did not sound their support for the Iraq War, presumably thinking that it was not wise to be associated with military action and publicly identified with the U.S. action, these Gulf States would actually benefit from the Iraq War. When the war started in March, the world’s major stock markets were heading south. The U.S. Dow Jones industrial average downed 171.85 to 7568.18, the Nasdaq composite decreased 26.92 to 1278.37, and the S&P 500 Index lost 21.41 points to become 807.48. The London’s FTSE 100 index closed 3.1% lower at 3,743. Frankfurt’s Xetra DAX index slid 5.2% to 2,573. The CAC 40 in Paris plummeted 5.7% to 2,726. And while Milan’s MIB30 index slowed 3.1% and Zurich’s SMI dipped 5%, the AEX index in Amsterdam was hit a little bit worse, slumping 6.4%.
However, stock exchanges of nearly every Gulf State within easy reach of Iraq experienced the opposite. The Kuwait Stock Exchange index started the year at 2,352 and had reach 3,397 by the end of April, an increase of 44%. Qatar’s Doha Securities Market was up for more than 20%, while Saudi Arabia’s Tadawul index witnessed a surge of 16% within the same period. Furthermore, the Muscat Securities market in Oman and the EMNEX index in the United Arab Emirates increased by 14% and 9%, respectively. Indeed, two of Kuwaiti’s biggest mobile phone companies immediately established movable transmission towers that could be transferred across the border to start up service in its neighboring Iraq. In addition, Kuwait’s real estate prices had continued to expand fivefold. Dubai’s Jebel Ali port would play a major role as a transshipment hub following Iraq’s Umm Qasr port eventual development. And Qatar was confident that Iraq could become a potential market for its huge reserves once reconstruction starts. It was further expected that Saudi Arabia’s major companies—such as Savola, which manufactures edible oils, and the Zamil Group, which produces air conditioners and other household appliances—were seen to be among the best to gain new businesses in Iraq.
With these benefits anticipated to be gained by Iraq’s neighboring countries, the Bush administration was convinced that the Iraq War would strengthen its relation with these Arab States, and improve economic trade between the U.S. and those nations. More specifically, it was expected that Saudi Arabia’s exports to the U.S. would increase to at least over $20 billion a year and imports from the U.S. rise to over $5 billion a year in the post-Iraq war. The improved trade relation appeared very likely to occur, particularly knowing that the U.S. would topple a regime which owed $9 billion to the Saudi government.
Unfortunately, none of these benefits materialize, making the War in Iraq look like a war without any benefit at all.
For example, it was reported that neither stockpiles of chemical weapons nor evidence of recent WMD production has been found in Iraq. At this point, U.S. chief weapons inspector Charles Duelfer said that inquiries into WMD in Iraq have “gone as far as feasible.”
Furthermore, there was no relationship between Saddam and al-Qaeda. Although President Bush insisted that “Saddam Hussein has longstanding, direct and continuing ties to terrorist networks,” the public seemed to think otherwise. In fact, the Iraqi President himself denied any connection between his administration and al-Qaeda and boldly said “if we had a relationship with al-Qaeda…we wouldn’t be ashamed to admit it.” Additionally, the September 11 commission reported that although there had been contacts between Iraq and Al-Qaeda, there has been no “collaborative relationship” between them. The discord was then exacerbated as former U.S. Ambassador Joseph Wilson admitted that “the CIA was under pressure from the vice president to twist facts to make it appear that Iraq was an imminent nuclear threat.”
Third, the idea of installing democracy in Iraq has also been criticized. There have been several reasons as to why democracy in Iraq is not only undesirable, but also unfeasible. For example, there are still other alternatives to democracy that ensures more stability in the country. Then, with the Iraqi society that is too fragmented, Iraq is actually not ready for democracy. Next, the transition to democracy would be too dangerous and risky that it would take many lives. Also, the government that is created out of democracy is predicted to be too weak to run the country, as Iraqis are still hostile. In short, democracy in Iraq is expected to fail.
The fourth benefit that has not become a reality is the reduction in the price of oil. In September 2003, the price of standard crude oil on NYMEX was $25/barrel. By the following year, the price went up to $60/barrel. On August 29, 2005, it had reached $70.8/barrel. And on fears of Iran’s intensifying dispute with the West, by April 19, 2006, oil price hit a record $74 a barrel. This increased gasoline price in the U.S. to $3.11 per gallon is the highest since 1981 at $3.03 per gallon after adjusted for inflation. Although several factors contributed to the price increase—such as political problems in Venezuela, instability in West Africa, the fear of Iran’s nuclear program, the crippled supply flow of oil from the U.S. Gulf Coast in the aftermath of Hurricane Katrina, and Saudi Arabia’s internal instability—the Iraq War fears have also lifted oil price.
Finally, it is obvious that the last benefit has not materialized either. A few years after the war started, the U.S. is still losing coalition partners in Iraq. Furthermore, the U.S. image in the Moslem countries, especially in the Middle East, has actually continued to worsen since the war began.
“What other kinds of benefits can be gained from the war?” I asked.
