The True Economic Cost of Iraq
By Larry Johnson on November 18, 2007 at 7:51 PM in Current Affairs
We are in economic trouble on the national security front and the President and the Congress are acting the role of Nero, who is rumored to have fiddled while Rome burned. The problem goes beyond our failure to raise taxes to pay for the war in Iraq. That war is costing us between four billion and twenty one billion a month (see War Costing $720 Million Each Day, Group Says). Not only are we running up our nation’s debt–but our nation’s status as the global economic superpower is at risk.
Take a look at the following articles:
Saudi Minister Warns of Dollar Collapse
An Economy on the Brink of Snapping
This is not coincidence. This is consequence. The relative strength of the dollar has allowed us to “finance” the war in Iraq by borrowing money from other countries. But the party is over. While we have something approximating full employment in the United States–notwithstanding anemic job growth over the last five years–the collapsing real estate market, the credit crunch, and the rising cost of oil points to the likelihood that the United States could be battling the twin plagues of inflation and recession as the 2008 Presidential campaign heads into the fall.
The ability of the United States to raise money to finance the war in Iraq and our other national priorities will be dramatically curtailed in the coming months. We can no longer rely on raising funds willy nilly by selling U.S. Treasury bonds to other countries. There are clear signs that other countries are no longer eager to snap these up.
Vietnam and Qatar are signaling they no longer have great confidence in the U.S. dollar (Dollar’s Double Blow from Vietnam and Qatar).
And then there are the Chinese. Last month the Daily Telegraph also carried this ominous warning:
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Blog – Dollar to collapse?
Fistful of dollars – China’s trade surplus reached $26.9bn in June Two officials at leading Communist Party bodies have given interviews in recent days warning – for the first time – that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Our “fuck-the-world, we’ll-go-it-alone” attitude is likely to bite us in the ass. Our weakened economic clout does not give us much leverage with the Chinese, Russians, Saudis, Iranians, Vietnamese, and Venezuelans. Consider the possibility that Iran and Russia could potentially challenge the Saudis’ status as the largest oil producers within five years. That would certainly put a crimp in our effort to isolate Iran and delay its ability to develop nuclear weapons.
Of course the neocons insist that we should not worry about the costs. Freddy Kagan, co-author of the surge, said recently:
Either you think the war in Iraq supports America’s national security, or not,” said Frederick W. Kagan, a resident scholar at the American Enterprise Institute. “If you think national security won’t be harmed by withdrawing from Iraq, of course you would want to see that money spent elsewhere. I myself think that belief, on a certain level, is absurd, so the question of focusing on how much money we are spending there is irrelevant.
Spending millions of dollars a day in Iraq is not making us safer. In fact, we are spending our way towards bankruptcy. As we weigh the future of our policy in Iraq, we better have a broader focus than the simple question of withdrawing U.S. troops and ending the sectarian strife. Will the rising cost of oil and the decline of the dollar produce a dynamic that weakens us economically and leaves us less able to project force overseas? Could our economic profligacy be the equivalent of the Vandals sacking Rome? Perhaps. But instead of crazy foreigners ravaging us, we must acknowlege that we are doing this one to ourselves. The buck stops here.
by Ronald Scott
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