April 5, 2006
It’s
high five time for many in the anti-war punditry. No, the war hasn’t
ended. The death toll in Iraq is rising like the NASDAQ in the late
nineties. But American public opinion is beginning to give in to the
reality principle: not only is a majority of Americans finally realizing
that this war is no good, but the finger is beginning to point clearly
towards Pennsylvania Avenue with over 40% of Americans favoring
impeachment (a surprising result given that the mainstream media isn’t
even discussing impeachment).
While the hermetic
circles around George Bush and Tony Blair are drowning in their platitudes
(corners, tipping points, milestones, God, etc.) further out the
sacrificial priesthood is getting cold feet. Bill Kristol blames Rumsfeld
for botching it. William F. Buckley blames Iraqis for being too stupid to
prosper under American tutelage. Francis Fukuyama describes his fellow
travelers along with the Bush bandwagon as (gasp) "Leninists" who fail to
understand that history cannot be rushed towards its inevitable end in
U.S. style liberalism (but only nudged gently by "realistic Wilsonianism,"
whatever that means.) Christopher Hitchens, apparently exhausted from his
long engagement to liberate Kurdistan by any means necessary, is now
calling for the U.S. to make peace with Iran’s nuclear ambitions. And
Andrew Sullivan blames the Iraq quagmire on American narcissism (no
kidding!)
Hard not be feel a
sense of glee amidst all this frantic backpedaling. After all, however
cheap it is to say "we told you so," we told you so. The danger, however,
is to fall for the comfortable belief that the political struggle over the
war was primarily a war of ideas; as if all the antiwar camp lacked was a
clinching argument, one that now, with major neocons throwing in the towel
(sort of,) we have finally found. Sadly, it was never really about ideas.
Behind the apparent sparring of arguments, a ruthless political war was
fought over the usual fault lines -- power and money.
Forget the
ideologues. Did the warmongers achieve their ends? In asking this, we
should pay no attention to the blather about WMD, exporting democracy and
the rest of the marketing brochures regularly churned out by the White
House’s creative team. We should focus on the money. Three questions: Who
among the powerful groups behind the Bush administration pushed for the
war? What did they stand to gain? What did they gain?
Such questioning of
the interests and motives behind the war has been done before, including
by me. A growing body of evidence, and even greater body of speculation
built on that evidence, has been compiled over the last three years. Based
on it, here is the short answer to the first question: In connection to
the war in Iraq, there are two main groupings of interests in the current
White House. The upper echelon, Bush, Cheney, and Rice, is closely
connected to Big Oil, and so are dozens of administration officials.
[1] On the level directly below the top, the launching of
the war was handled by neo-conservatives such as Wolfowitz, Feith, Libby,
Bolton, and Cambone; the neocons were mostly brought to the White House by
Cheney. The neo-conservative team in government was supported by a strong
cast of characters on the outskirts of government, including Perle,
Wurmser, Ledeen, Gaffney, and many others. The so-called neocons drew
their power from two constituencies, the defense industry and the Israel
Lobby. [2]
Three observations
are needed to finish the picture. First, the defense industry is the
dominant economic force in Washington, a position that is inherently tied
to the size of the defense budget. Cheney, Bush and many other top
officials have deep ties in the defense industry. [3]
Second, it is a mistake to view the connection to Israel as a purely
ideological affair. In so far as it is a factor in American politics,
"Israel" stands for the small elite of military, business and political
figures with close ties within the U.S. Third, there is a silent element
in this picture: the larger part of the U.S. ruling class outside the
directly involved industries. While there is no evidence I am aware of
there has been a push for war outside the oil and defense industries and
the Israel Lobby, it is quite improbable that the war could have be
launched without at least the tacit acceptance of the broad
corporate/capitalist class. [4]
Since we are talking
of a picture, let’s draw one. Based on the existing state of the public
record I propose the following diagram of "the standard model" of the
politics of the Iraq War.
So far, I have
sketched the generally accepted answer (generally accepted, of course,
outside the mainstream,) to the first question. [5] The
usual procedure is to follow now with the second question—the motives for
the war -- and either stop there or follow with the third question -- an
assessment of the results. Both questions are usually answered
qualitatively, by piecing together fragments of public evidence and
speculating on what it all means. However, on this occasion I would like
to reverse the order of the questions and to answer the third question
quantitatively.
For that, we should
follow the lead of the two radical economists Nitzan and Bechler and turn
our gaze to the stock market. In all societies, the sport that consumes
the greater part of the energies of the ruling class is the internal
jockeying for positions. Capitalism is unique in creating a universal
measuring rod for the rise and fall of the different "fortunes" of ruling
class groupings. The word 'fortune’ has a double meaning: one the one
hand, it refers to fate, the unpredictable vicissitudes that brought one
to one’s current position, and on the other hand, it is the quantified
extent of one’s wealth. The transformation of the former into the latter,
or more accurately, the measurement of the former by the latter, is a
defining trait of capitalism. In the capital markets, fortune as capital
-- market capitalization -- is the ruling class’s perception of fortune as
position. [6]
We need to assess
the success of three segments within the U.S. centered ruling class, the
oil industry, the defense industry, and the economic and political
leadership of Israel. That can be approximated through relying on common
stock market indexes. We need to chose indexes for the stock market
performance of each segment, compare the three among themselves, and more
importantly, to the broad U.S. market. The comparison answers a simple
question. Have the fortunes of each of the three groups involved in
pushing for war in Iraq improved or declined since the war began? The
results are visualized in the simple chart below. Clearly, all of our
three groups of warmongers have done well, significantly better than the
broad capitalist class. Among the three, the oil industry is the big
winner, and Israel’s ruling class a close second.
The challenge is to
connect the evidence of the markets to the qualitative assessment of the
effects of the war in Iraq. In doing that, there is no alternative to
speculation. But the stock market evidence should anchor us. We now have a
solid idea of just what we are trying to understand.
The good fortunes of
the defense industry are easily ascertained from Wall Street data. Over
the last five years, an investment in a basket of defense industry stocks
would have netted over 50% in total returns compared to less than 3% for
the broad S&P. [7] The rise in the relative value of
defense stocks does not merely record the good sales these companies had
in the last few years. Stock market value is capital markets’ perception
of future earning power. What Wall-Street is saying, in other words, is
that changes that occurred in the last five years, roughly corresponding
to Bush’s reign, have dramatically increased the future money making
prospects of the defense industry relative to the rest of U.S. capital.
[8]
Explaining the
success of the defense industry is straightforward. The defense industry
makes money selling weapons and other goods and services to security
forces. Security related sales go up with international political
instability. Sales shoot to the stars during wars, and do particularly
well in protracted wars. It is undisputable that the defense industry did
particularly well in recent years. Boeing, General Dynamics,
Northrop-Grumman, Raytheon and hundreds of other companies are thriving
thanks to Pentagon and "Homeland Security" contracts. However, the gains
of the defense industry go far beyond existing sales to the U.S.
government. First, the climate of national insecurity promoted by the Bush
administration has been instrumental is eviscerating what little public
oversight there was over defense budgets. Second, the persistent hostility
of the neo-conservative White House to international bodies and treaties,
including the UN, the NPT, even the WTO, etc., is also positive for future
defense industry profits. By there very nature, International bodies seek
to mediate and contain conflicts. However lopsided they function, their
weakening promises more armed international conflicts and more arm races
involving clients of the U.S. defense industry.
The defense industry
was the neocons’ major backer and the expense clearly paid off: the Iraq
war was, still is, a phenomenal commercial success. The defense industry
took little risk by promoting its pro-war agenda. The worse that could
have happened would have been a quick victory in a short war without much
international fall-out. That would hardly have been a disaster for the
defense industry. But the way things turned out -- the protracted and
internationally disruptive war that still rages -- probably exceeded their
most optimistic expectations.
It is comparatively
more difficult to quantify the return on the Israel Lobby’s investment in
neo-conservatism, not, as one might think, because the Israel Lobby has
supposedly ideological rather than financial goals. On the contrary, I
believe much of the current (left and right) analysis of the Lobby is
marred precisely by the failure to treat it as a capitalist institution.
The Lobby is above all an elite clique, well established in a series of
institutional settings that cater to and are sustained by wealth. It
should not be forgotten that AIPAC’s fundamental lobbying tool is the
equivalent of investment advice -- telling their rich clients whom to shun
and whom to fund. The problem is that the financial relations the Lobby is
enmeshed in are more complicated and are not transparently tracked by
commonly available financial data. Nevertheless, the U.S. Israel Lobby
usually defines its policy goals in deference to the wishes of the ruling
class of Israel. We can therefore ask how the latter group has fared. Here
is the short answer: since the war in Iraq began, an investment in the one
hundred largest companies quoted in Tel-Aviv would have netted close to
150% in profits, a result that is twice better than the U.S. defense
industry and almost three times better than the broad U.S. market.
Is it meaningful?
Politically and economically, Israel is capitalist oasis. Among developed
economies Israel is second only to the U.S. in income inequality, capital
concentration and the interweaving of money and politics. A handful of
families with deep political ties own much of Israel’s wealth.
[9] The Israeli stock market is therefore a highly
meaningful gauge for the way Israel’s leadership perceives its future
prospects. Admittedly, Israel’s stock market reflects a broad array of
concerns and expectations. It is impossible to strictly isolate the
effects of the war in Iraq. Nevertheless, geopolitical risk is usually a
major factor affecting prices, especially in a small country in a
politically unstable area. We can say with some confidence that Israel’s
elites’ self-assessment of risks and prospects has improved markedly over
the period covered by the war in Iraq. [10]
What did Israel
expect from the war in Iraq and what did it get? There is some evidence
that at least some neocons imagined a peaceful Iraq ruled by Ahmed Chalabi
signing a peace treaty with Israel and rebuilding the Kirkuk-Haifa oil
pipeline. [11] Was that a reasonable expectation? Did
the neocons actually believe there was the slightest chance of that
happening? It is difficult to say. On the one hand, given all that we know
today -- indeed, knew already before the war -- this was a true pipedream.
But one should never overestimate people. The leading neocon and war
architect Douglas Feith was described by Gen. Tommy Franks as "the f---ing
stupidest guy on the face of the earth." Likewise, one cannot read the
famous "Clean Break" document. [12] authored by Perle,
Feith and other neocon eminences, without gagging at the ignorance of the
writers.
On the other hand,
one should never underestimate people either. Perhaps the reasoning put
forth by the authors was empty rhetoric. Far more important are the
specific goals the "Clean Break" document advocated: breaking away from
the internationally sanctioned "land for peace" framework of Oslo,
tightening relations with the U.S. based on "shared values," destabilizing
Syria, and overthrowing Saddam Hussein. In the last three years each and
every one of these goals have been successfully if incompletely advanced.
The Iraq War removed Saddam Hussein from power; his was the last Arab
regime that openly challenged Israel. The Bush White House is in the
process of destabilizing Syria, the other Arab regime that hasn’t been
fully reconciled to U.S. domination. The war has put the U.S. eyeball to
eyeball against the strongest challenge to Israel’s regional ambitions,
Iran. During the same period, Israel was able not only to crush the
Palestinian Intifada while world attention centered on Iraq, but also to
impose on the world a de facto renunciation of the principles of U.N.S.C.
242 and Oslo. Finally, the U.S.’s "war on terror" embraces Israel as a
natural ally in a broad cultural clash of civilizations. Mission
Accomplished!
What could be the
worst outcomes for Israel from the Iraq War? Some suggest that a
fragmented and failed state in Iraq would eventually threaten Israel more
than Saddam Hussein’s regime. That could happen, in the sense that
anything could happen. But such concerns are hard to reconcile with
Israel’s strategic record. Israel has often welcomed and exacerbated
internal strife among its neighbors. In its first decade it sought to
destabilize both Egypt and Jordan with military raids. Later on, it
successfully destabilized Lebanon and contributed to turning it into a
failed state divided between warring communities. In the last few years
Israel has successfully destabilized the Fatah dominated PA in the
Occupied Territories, and is currently engaged in promoting anarchy
against the rule of Hamas. If Israel’s leaders welcome anarchy less than
twenty miles away from Tel-Aviv, can one believe they would lose sleep
over anarchy in faraway Iraq? It is far more likely that a failed state
and/or civil war in Iraq is and always was an acceptable if not actively
welcome prospect. Civil war in Iraq is also an opportunity to further
weaken Arab nationalism by helping the Kurds, similar to the way Israel
used the Phalangists in Lebanon. [13]
The failure of the
U.S. plans in Iraq does pose some challenges to Israel. The most important
one is the gains Iran made as a result of the fall of Saddam. However, it
is noteworthy that the Israel Lobby responds to this challenge -- without
a doubt in consultation with Israeli leaders -- with pressuring the Bush
administration to adopt a more aggressive and confrontational posture
against Iran. [14] That is not the attitude of a lobby
chastened by blowback from the failure of the war in Iraq. On the
contrary, it shows a lobby that seeks to replicate in the Iranian case the
very model that led to success in Iraq.
Many in Israel warn
of the deteriorating perception of Israel in Western public opinion as a
result of the war in Iraq and Israel’s role in inflaming Muslim rage. Such
deterioration in public opinion is undeniable. Furthermore, Israel’s
economy is heavily dependent on international trade and investment, and
would suffer badly if it were subjected to systematic pressure of the kind
used against South African Apartheid. The Tel-Aviv stock market, however,
doesn’t seem to be terribly concerned with such a possibility. While
Israel’s economy was affected by the escalating conflict with the
Palestinians, the threat of negative repercussions has apparently receded,
not increased, in the last three years. Of course, capitalists may be
completely wrong and a global sanctions campaign just around the corner.
The stock market cannot predict the future. It does tell us however with
unique honesty what the ruling classes believe: they are doing well and
have significantly increased their global power and influence in recent
years.
Let’s now turn our
attention to oil. As far as I know, there is no direct link between
neo-conservative ideologues and the big oil companies, yet the oil
industry is so far the biggest winner. Moreover, oil companies’ executives
did not share the full neo-conservative dreams. The neocons that took over
"nation building" in Iraq were keen on creating, in Naomi Klein’s words,
"a free market utopia." [15] For the last thirty years,
however, the business model of Big Oil is based on collusion with state
oil companies, not on free competition. Free competition in commodities
tends to depress prices and profits. The OPEC oil cartel’s very purpose is
to maintain price levels, and thereby protect their own profits as well as
the profits of the oil companies. Nevertheless, U.S. oil companies were
major supporters of the Bush administration, which in return has shown
great concern for their welfare. Bush’s aggressive foreign policy in Iraq
and elsewhere was supposed to remove the threat of oil development in the
Middle East and South East Asia falling to French, Chinese and Russian
companies. At the same time, war and destabilization would drive prices
(and profits) up. A double whammy. [16]
Since the U.S.
invaded Iraq, the price of oil doubled and oil companies profits soared.
More interesting is what the stock market reflects about the oil
industries future prospects. In the last three years, a basket of oil
stocks returned 127%, or 78% above the S&P 500. For the full Bush period,
oil stocks beat the S&P 500 by over 100%. Clearly, market participants are
not terribly worried about a free market in Iraqi oil any time soon. While
the price of oil is up, the neocon plans for transforming Iraq into Milton
Friedman’s Disneyland have fallen flat on their faces. According to the
digging of journalist Greg Palast, the man who put the kibosh on the
neocon plans was none other than their patron Dick Cheney, with help from
oil executives and James Baker’s law firm. [17]
The usual
explanations for the failure of the occupation are the incompetence of the
Pentagon and the Bremer led CPA, the lack of adequate forces and the lack
of peacekeeping skills in the U.S. military, and the difficulty of the
task under the best of circumstances. All explanations are valid. The
White House showed a lot of incompetence. The resources committed were
never adequate, and the task was such that even had the administration
done everything right, failure could still be the result.
[18]
But when one
considers the different segments of the ruling class behind Bush’s war, an
alternative picture emerges. Those aspects of the neoconservative agenda
that were crucial and agreed upon concerns of powerful constituencies were
carried out quite successfully. Those include among others the
destabilization of the Middle East, the invasion of Iraq and Afghanistan,
the toppling of Saddam, the tightening of relations with Israel, the
ditching of the Oslo framework, the weakening of the NPT and the U.N. But
a tug of war emerged when the different war constituencies pulled in
different directions. The success of the neocons was cut at the point
where their goals went against the consensus that was acceptable to all the war
backers.
The conclusion is
unpleasant but unavoidable. Notwithstanding their newfound penchant for
meae culpae, neo-conservatives led a revolution in U.S. foreign policy
that delivered the goods that mattered to the people who mattered. For the
constituencies behind the war in Iraq, failure was indeed not an option,
for the simple reason that they took no risk. That many neocons today
admit "failure" does not reflect the real payoff of the war. Some neocons
were useful idiots; others were cynical collaborators. It matters little
who was which. Theirs is a job well done. The discrediting of the neocons
and their cheerleaders, even their complete purging from any position of
influence, would not undo the sour but enduring fruit of their labor.
Gabriel
Ash
is an activist and writer who writes because the pen is sometimes mightier
than the sword and sometimes not. He welcomes comments at:
g.a.evildoer@gmail.com.