US should come to terms with Iraq reality

Americans should be patient and understand the occupation of Iraq is not going to end anytime soon, former Secretary of Defence William Cohen said in an interview.

Cohen describes Iraq's economy in graphic terms - a basket case
Cohen describes Iraq's economy in graphic terms - a basket case

Increased attacks on US troops and key infrastructure and the ever growing threat of sectarian war are all ominous signs that suggest an extended stay.

“The fact that Iraq is an economic basket-case coupled with the complex and largely untested task of nation-building means the US will be committed for at least 5 years,” Cohen told at a conference in Virginia late last week.

“If we pull out, there will be anarchy and score-settling.
Look at Bosnia as a point of reference. We are still there some eight years after the end of the war,” he added. 

Domestic battle

Though Cohen is no longer in government, his involvement in the Balkans on behalf of the Clinton administration makes him well qualified to recognise the enormity of the task ahead.

The real battle, however, will not be fought in Iraq but on the domestic political front, he said. 

Bush was counting on Iraqi oil for the reconstruction budget

Bush was counting on Iraqi oil 
for the reconstruction budget

Four and a half months after President George Bush proclaimed an end to major fighting in Iraq, US soldiers are dying at a rate of more than one a day and the cost of the occupation for the army alone stands at $4 billion a month.

Analysts estimate that reconstruction of the shattered country will likely cost anywhere between $100 and $300 billion over the next three years.

The greater proportion of this astronomical sum, the administration reasoned before the war, would be met by Iraqi oil sales, private sector investment and Saddam Hussein’s assets frozen after the first Gulf conflict in 1991.

This looks increasingly unlikely.


Oil exports remain at half their pre-war level, attacks are increasing and the effective protection of the pipeline running from Iraq to Turkey has proven almost impossible.

The outlook for private investment is equally poor.

American companies, who until the bomb attack on the UN headquarters in Baghdad last Tuesday were clamouring to set up business in the battered capital, are now much more

“I went to Iraq to see what business could be done and I ended up coming home again,” Charles Kestenbaum, a senior associate for business development at Washington-based C & O Resources, said.

“Local employees refuse to go to work they are so scared. They are frightened for their lives.”

Disrupted oil supplies mean the US is having to look elsewhere tofinance the occupation

Disrupted oil supplies mean the
US is having to look elsewhere to
finance the occupation

Power and water supplies in Baghdad are intermittent at best, there are no functioning banks and the cost of insurance is rising with each resistance attack.

Those that do not enjoy military protection are forced to hire
private security guards.

Moreover, there are no courthouses, no arbitration procedures for companies to rely on to resolve disputes and communication is by satellite phone only.

Budget deficit

The interim budget for the provisional Iraqi government in 2003 is expected to be some $3 billion in the red. With sovereign debt of over $100 billion, how will the already impoverished country cover its deficit?

The answer, according to Cohen, is that the US taxpayer will foot the bill.

The true burden to be borne by the US electorate is impossible to predict as the international community is scheduled to meet in Madrid for a donor conference in October, during which donations will be sought to pay for the rebuilding effort.

Still, it is unlikely that anywhere near the amount needed to get Iraq back on its feet will be raised from an international community that was largely against going to war in the first place.

The US economy is also not in the greatest of shape.

US economic recovery

Tax cuts and historically low interest rates have encouraged a tepid rebound in the world’s largest economy, which has to some extent diverted the focus of the American public away from Iraq.

How sustainable the US recovery is remains open to conjecture.

US consumer debt hovers at $80,000 per household – a historic high.

US government figures

Some economists are already saying the market looks expensive.

Were interest rates to rise – and if bond futures are anything to go by they look set to do so – the  prospect of a correction exists.

A rise in interest rates, just when US consumer debt stands at historic highs … the figure was $80,000 per household at the end of 2002… could crimp consumer spending and plunge the country back into recession.

The relatively low mortality rate of American soldiers in Iraq coupled with a strengthening domestic economy means the Bush administration has a window of opportunity to reduce US involvement and boost international participation.

If he fails to do so, he will face a far tougher battle at home persuading the US electorate that the decision to invade Iraq was a worthwhile campaign.

Source : Al Jazeera

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