Markets love a predictable war
By Mano Sabnani, Business and Financial Consultant
First published in TODAY
22-23 Mar 2003

So, the war is finally here. The media have various names for it. War in Iraq. Iraq in War (advancing from Iraq in crisis!). Iraq at war. What it really is is a US-led pre-emptive strike against a perceived terrorist state, Iraq. In short, a US strike on Iraq. It is different from the previous war involving Iraq in 1990/91.

That event, known as the Gulf War, had its origins in the invasion of Kuwait by Iraq, led by a younger Saddam Hussein. The United Nations Security Council then voted for action by coalition forces, led by the US, to liberate Kuwait. There was no directive to remove the regime of Saddam Hussein, so the coalition forces had to be satisfied in creating a no-fly zone over the south of defeated Iraq and a demilitarised zone between Iraq and Kuwait. George Bush senior, father of the present President George Bush, had to allow Saddam Hussein the dictator to run or mis-run his country for another 12 years.

The context of the action against Iraq this time around is very different. Iraq has not been on the offensive, although it is suspected of having covertly built up its military capabilities, in spite of close UN supervision. For the US, the action against Iraq could be seen as part of its extended war on terrorism and the need to reduce the threat of weapons of mass destruction being used by terrorist groups. After the horrific events of September 11, 2001 in New York, President Bush had alerted Americans to the likelihood of a long, arduous war against global terrorism on many fronts.

The priority in this war was the urgent need to find and take action against Osama Bin Laden and the Al Qaeda terrorist group, prime suspects for the September 11 incident. That action is now history. Afghanistan, which Harboured Osama, was invaded and the Taliban government of that country removed. Osama seems to have escaped but the Al Qaeda movement seems partially crippled, with the loss of several key leaders.

Most of that action took place in the first half of 2002. In the second half, the attention shifted to Iraq. The country had been under UN surveillance for more than ten years in respect of its arms build-up. The US has been deeply worried about what has been going on within the borders of Iraq; in particular its build up of chemical and biological weapons. Iraq has been less than open and the US has moved against it, despite the absence of a UN sanction. It is an precedented pre-emptive strike against a perceived terrorist state, aimed at removing the present leaders.

The US has forced a change of government in Afghanistan and it will do the same in Iraq. It is a matter of time. After Iraq, it will turn its attention to North Korea, perceived as a renegade state that poses a serious threat to South Korea and Japan. The US approach is to go on the offensive to clear the world of these threats. In the process, it hopes to ensure its own security and that of its friends and allies. Pre-emptive action is the new doctrine.

How will the US-led strike on Iraq go? It will be short and sharp. Why? Well, despite Saddam's rhetoric and his regime's covert development of weapons, chemical, biological and conventional, some of mass destruction capability, he is a sitting duck in comparison with the well-known capabilities of the allied forces under US leadership. The writing on the wall suggests Saddam Hussein and his regime could be history in a few weeks.

He does not have many friends, even among Middle East leaders. There is some
sympathy in Tunisia, Libya and Yemen. Iran and Syria dislike Saddam Hussein but they are also not friendly wih the US and its allies, making them basically defensive of their own interests. The Iraqi people are also not really with Saddam Hussein, given his strong-handed approach all these years. In particular, the Shi'ite Muslims in the South and the Kurds in the North feel oppressed. So, when he finally goes, not many Iraqis are really going to cry.

Instead, we could see many cries of joy, not different from the scenes in Afghanistan after the collapse of the ultra-fundamentalist Taliban regime. For Iraq, the joy will be in the ability of individuals to speak their minds Freely after so many years under a totalitarian regime. Economically, it will mean much reduced military expenditure and better uses of the country's rich resources for economic development. Gross Domestic Product, the total output of goods and services, is expected to improve by leaps and bounds in the post-war years.

In short, the peace dividend will be tremendous. Effort will be needed to keep the country united on a democratic, capitalist platform. But the resultant payout will have ripple effects far beyond Iraq's borders. Its neighbours Iran, Syria, Jordan, Kuwait and Saudi Arabia will be prime beneficiaries of a stable, prosperous Iraq, but the rest of the Gulf region should also see better times. If the US can broker a quick settlement of the Palestinian question, then we could see the emergence of a much more stable and development-oriented Middle East. Now, that is something the world has not seen since the end of the second World War nearly 60 years ago.