Wednesday, June 29, 2005

The Afghan War as a "Loss Leader"

The China National Offshore Oil Corporation's $18.5-billion bid has put Unocal back into headlines, a company whose pipeline politics, many suspected, may have been behind Washington's Afghan War.

Certainly, the official story of hunting down terrorists in Afghanistan made no sense. Why expect Osama bin Laden or any other high-ranking member of Al Qaeda to sit and wait until US troops arrive nearly a month after the 9/11 terrorist attacks? Any intelligent leader of a clandestine organization would have left the country long before October 7, 2001, the beginning of the US invasion. Apparent irrationality of the Afghan War, in terms of effectively fighting terrorists, fueled the suspicion. However, if Washington had been after pipelines in Afghanistan, the last thing it should have done was to attack the country, destroying what little stability its weak state had maintained. So, the idea of a pipeline war doesn't make sense either.

If neither pipelines nor bin Laden was the point of the Afghan War, what was?

The invasion was, first and foremost, Washington's reassertion of power and prestige, necessary because the 9/11 attacks put big holes in them, showing that even the Pentagon itself -- the headquarters of the biggest military in the world -- was not invulnerable to attacks. Afghanistan was simply the most convenient target among all countries -- reportedly about sixty -- in which Al Qaeda was said to have its cells. It was poor, it was diplomatically isolated, it was politically fragmented, and its military force was weak. What better country to invade?

Besides, the main prize that the George W. Bush administration was after was not Afghanistan but Iraq. By now, we know that "barely five hours after American Airlines Flight 77 plowed into the Pentagon, Defense Secretary Donald H. Rumsfeld was telling his aides to come up with plans for striking Iraq -- even though there was no evidence linking Saddam Hussein to the attacks" ("Plans for Iraq Attack Began on 9/11," CBS, 4 Sep. 2002). Therefore, it is best to regard the Afghan War as a "loss leader" in marketing terms, a grand opening sale to draw American suckers into Washington's supermarket of wars.

Moreover, warriors do not need to seize any resource such as fossil fuels to make war economically productive. War itself is a big industry, a very profitable enterprise for friends of a war-making government. Even NGOs, which are ostensibly non-profit and humanitarian, can get a piece of action, too, after the target country's government crumbles. Fat grants to pay for their directors' salaries and aid workers' wages make them addicted to disasters.

Destruction and construction are both big businesses -- sharp arrows, along with big tax cuts for the rich and bubble-inducing low interest rates, in the quiver of an empire in deflationary times. Remember the fear of deflation before the sharp rise in oil prices (cf. Kenneth Rogoff, "Escape from Global Deflation: A Commentary," Nihon Keizai Shimbun, July 17, 2003; and Matthew Davis, "Fighting Deflation in the U.S. and Japan," NBER, 29 Jun. 2005)?

The best war of all in the history of the United States, from the point of view of the power elite, must be the Gulf War, as allies like Japan and Saudi Arabia practically financed the whole venture and US casualties (not counting the victims of the Gulf War syndrome) were very low. Riyadh and Tokyo's refusal to loosen purse strings for the ongoing Iraq War, forcing US taxpayers to foot the bill, may have done as much damage to Washington's prospect of winning the war as guerrillas and terrorists in Iraq.

Considering all this, I'd say, block the Unocal deal. Beijing, one of the largest customers of US government bonds, might get motivated to dump the dollar, monkey-wrenching war finance.

No comments: