Submerging Markets™

TWO MEMORABLE SEPTEMBER 11ths James S. Henry

Many of us have our own strong private recollections of September 11, 2001.  I happened to have been at  Boston's Logan Airport that morning, boarding a prop plane for an American Eagle flight to Long Island's Islip Airport. It was leaving around 8 am from Gate 22,  at roughly the same time that Mohammed Atta and four other reputed Saudi hijackers of Flight 11 were taking off from Gate 26 at the very same terminal, along with 86 other passengers and crew.  We must have passed each other, but I didn't notice them. I do have a distinct recollection that security at the check-in  that morning was very lax, but other than that, my own flight was uneventful -- until we landed in Islip and heard the shocking news that two planes had just hit the twin towers. So "death  reached by and took another....."

My heart goes out to all who lost loved ones on that awful morning. May we redouble our efforts to establish a Truth Commission, and determine the full story, yet untold.

***

But it is important to put our 9/11 in context. This was not the only September 11th that is etched indelibly in my memory -- let alone the most important case of international terrorism.  

I also distinctly recall the Chilean coup of September 11,  1973  very clearly.  I was at­tend­ing a graduate economics course at Harvard  taught by a protégé  of  Chicago Professor Milton Friedman. One of my fellow  students was Sebastian Pinera, a member of one of Chile's oldest fami­lies, the future owner of the airline LanChile,  and right now the leading conservative candidate  in Chile's upcoming December 2009  Presidential elections. 

Sebastian had somehow  gotten word  halfway through  the class that Allende  had been ousted.  He was  absolutely jubilant -- “We won!,”  he cheered.                                                        

The profes­sor, a prominent econometrician from the University of Chicago,  shared Sebastian's de­light. Like   many other American  econo mists, he saw the overthrow as a victory for the neoliberal doctrines preached  by leading Chicago economists like Friedman and Arnold Harberger,  who both later consulted directly for Pinochet’s  junta.

Over  the next twenty years, these “Los Chicago Boys” came to       exert  a strong influence on Chilean  economic policy.   The label was  perhaps a little  un­fair  to Chicago -- there was certainly no shortage of Harvard  disciples of  brutilitarian free-market doctrines.

  For example,   Jose Pinera,   my classmate’s brother,  was also  Harvard- trained.  He eventually became one of the main architects  of Pinochet's labor policies,  which included a  ban on strikes and  closed shops,  the privati­zation of all pension funds, and sharp cuts in  real wages, jobs, and  unemploy­ment benefits.  

In hindsight,  Pinochet’s little laboratory conducted the first in a series of   experiments by the New Right  that culminated in the neoliberal programs of Margaret Thatcher  and  Ronald Reagan  in the First World, and a lengthy list of Third World imitators.  Among  First World democracies, their programs were  mod­er­ated  somewhat by the need for popular support. But  in countries like  Chile, Brazil, Mexico,  and Argentina,  where the lines between rich and poor were starker  and the political systems were basically rigged, much  less time was wasted on democratic  niceties.  

 To their credit, a few principled  conservatives were bothered by  the resulting dirty little al­liance between dic­tatorship and  liberal economic reform. But  many others -- including Sebastian, who opposed  holding plebiscites on Pinochet  in 1980 and 1988 --   got lost in the thorny thicket of distinctions between “authoritarian” and “totalitarian”  regimes. 

  In Chile’s case,  the resulting repression produced at least 3197 murders, disappearances and extra-judicial killings (about the same number as 9/11 in this country). [i] There were also thou­sands of secret arrest s and tortures (including 35,000 identified victims of torture and abuse ). All told, Chile spent six­teen long  years without  free elec­tions, in what  had previously been  one of Latin America’s  most  democratic coun­tries.

Of course we now know that all this state terrorism was tolerated, supported and indeed encouraged by the Nixon Administration and its dictator friends elswhere in Latin America -- presumably on the cocka-mamie theory that othewise we'd have Fidel running Santiago.  In fact the narrowly-elected Allende would have held elections when his term was up, and he probably would have lost.

 However, these points are pretty general -- repression is very concrete. As Herr Friedman reportedly told General Pinochet at a Santiago audience in l975,  “When you cut the tail off a dog you don't cut it off inch by inch. You cut it off at the root.”  I   remember a 1974 lecture by another Chilean economist, Orlando Letelier, who was killed  in l976 by a car bomb  planted by the DINA, Pinochet’s secret police, in Washington D.C.  And I remember  Victor Jara, a  talented Chilean guitarist whose music I greatly admired.   When the junta seized power he was arrested and transported  to a soccer stadium in Santiago where “political”  prisoners were held. The police took him out in front of the crowd  and they cut off his hands.........

***
 

 

 The overthrow of Salvador Allende's elected Popular Unity government in September  1973  was greeted with jubilation by Chile's propertied  classes.  He’d been elected with a 36 percent plurality  in l970, and  the Popular Unity coalition’s  support in­creased to 44 per­cent in the March 1973 Congressional elections. But   the  elite  was  eager for a change by any means.  From l968 to l973, at first under the Christian Democrat  Eduardo Frei Montalva and then Salvador Allende,   government spending as a share of GNP had in­creased from fifteen  to forty percent.  A third of  large farms and many  pri­vate companies had been nationalized at  low prices;   there was   700 percent infla­tion and frequent shortages of consumer goods; Chile’s foreign debt  had reached the un­precedented  level of $2.5 billion. Foreign investment dried up and  flight capital was pouring into  accounts at Bankers Trust, Chase and JPMorgan, Chile’s leading creditors.

The good old CIA, multinationals like ITT, and the USG certainly played a prominent role in 1970-73 coup activity that followed -- with a hefty dose of financial chicanery, in order to, in Nixon’s words’ “make the economy scream.” But intervention had not started there.

For example, according to former CIA agent Philip Agee, who had been stationed in Uruguay in the early 1960s, future Bush Pioneer and Presidential Library trustee John M. Hennessy, Chairman of Credit Suisse First Boston (CSFB) from 1989 to 1996, had been the Assistant Manager at Citibank’s Montevideo branch in 1964, and reportedly helped to transfer substantial funding to the campaign of Eduardo Frei Montalva,  who was running for President against Allende that year. Frei won the election, and served as President from 1964 to 1970.  In the early 1970s, Hennessy later became Assistant Secretary of the Treasury for International Affairs in the Nixon Administration, reportedly coordinating economic pressures against Allende’s government.[ii] In 1974, having succeeded at that Hennessy returned to Wall Street, where he became Managing Director of First Boston Corp., which was later acquired by Credit Suisse.    

In any case, despite the CIA’s involvement, the sufficient conditions for the 1973 coup against Allende were provided by a “Francoist” alliance of military officers, the Catholic Church’s hierar­chy, the top ten percent of landowners and industrialists, and the next twenty per­cent of the income distribution, the so-called “middle class.”  Immediately after the coup  these folks began to get what they thought  they wanted.

LOS CHICAGO BOYS
 

The junta turned to a small band of inexperienced but supremely self-righteous  economists, “los Chicago boys,” so named because their mentors University of Chicago economist and future Nobel laureate Professors Milton Friedman and  Arnold Harberger.

After Pinochet took power, there was actually a prolonged period when several different economic camps competed for the junta’s favor. But Friedman and Harberger,  who was Dean of the Chicago Economics Faculty,  seem to have tipped the balance when they visited Chile in March 1975. Since the 1950s, with the support of the Rockefeller and Ford Foundations, Harberger had developed a close relationship between the University of Chicago  and Chile’s Catholic University, where he had taught as a Visiting Professor.  With support from the Rockefeller and Ford Foundations, scholarships were provided for bright young Chileans who wanted to study economics.  Many of these Chicago-trained economists returned to Catholic University to teach, and later served in Pinochet’s government.

 Their trip was sponsored by the Chilean businessman Javier Vial, head of the business group BHC, one of the country’s largest conglomerates, the eventual owner of Banco de Chile, the country’s largest private bank at that time, and 60 other companies. He was also a very strong supporter of Pinochet’s dictatorship, on personal terms with the General.[iii]  Friedman reportedly got $30,000 for the three-day trip. His wife Rose  reportedly objected to the visit because Pinochet’s hard right regime and the goose-stepping Chilean military  reminded her of Nazi Germany.  But Professor Friedman tried to assuage her guilt by requesting the release of two Jewish political prisoners who were supposed in the custody of Pinochet’s police.

 Just one month after the visit, in April 1975,  the junta introduced an orthodox monetarist “shock plan,” along the lines that Friedman and Harberger had recommended.  And Professor Friedman’s  Chicago-trained protégé Sergio de Castro replaced Fernando Leniz as Minister of the Economy. Other key neoliberals  on Pinochet’s economic team included Pablo Baraona, President of the Central Bank, Alvaro Bardon and Jorge Cauas Lama at Treasury, Rolf Lüders as Treasury Minister and Minister of the Economy, and Juan Carlos Mendez as Director of the Budget.  Unfortunately the two Jewish prisoners were never located.

 This tiny band’s shared vision of Chile’s future was one that later became common among neoliberal Third World governments -- sort of a low-wage, export-oriented  Asian tiger, complete with weak unions, low inflation, privatized pension funds, and a minimal state --  apart from the police, the military, and the national copper company, of course, whose income went to the military. 

To pursue this anti-Marxist utopia they started out with a sharp recessionary  shock. They banned strikes, abolished price con­trols for  food and housing, and slashed tariffs from 100 percent to 10 percent in just two years. The  junta also intro­duced Latin America’s most radi­cal  privatization program ever. In l973-74, more than  250 nationalized companies were re­turned to  their former owners and 200 more were sold off at bargain prices.  These were not the  mid­dle-class privatiza­tions  of France, Japan, or  the UK, where the buyers  included  millions of small investors.  Like other developing countries,  Chile had a very  thin capital market, and hard times had  made it even thinner. So the big buyers at this fire sale were a handful of closely-held   grupos  like  Javier Vial and Cruzat-Larrain, which owned most of the local banks,  and also had very strong ties to foreign  banks.[iv]

All these changes set the stage for the dictatorship’s 1977-81 phase,  which was de­scribed at the time by the Wall Street Journal’s neoconservative editorial page in even more glowing terms than it reserved for the Argentine junta --   as “the Chilean economic mira­cle.” Indeed, during this brief period, when the economy was recovering from the sharp recession that los Chicago Boys had engineered, growth averaged  5-8 percent a year. 

 But what was perhaps most miraculous was the regime’s inability to foresee  that its  economic policies -- in addition to increasing poverty and inequality --  were about to cave in on each other, completely bankrupting the country and forcing  the national­iza­tion of the entire private sector. 

THE CHICAGO ROAD TO SOCIALISM -- AND BACK
 

By l977,  the junta had wiped out  any organized political opposition  and achieved most of its early economic goals. But the neoliberal  ideologues  pushed  it on to new extremes.  Under José Pinera’s 1979 radical right “Plan Laboral,” the government abolished closed shops for unions and tried to privatize everything from  health care and pensions to education. The 1980-81 pension fund privatization, which substituted a “fully funded” system administered by privately-managed pension funds – managed by institutions like Citigroup and Aetna, which came to dominate the highly-concentrated private system -  for the old “pay-as-you-go” government system,   was probably the most successful of these reforms. [v]  Many others succeeded only  in cutting social spending, while sacred cows like mili­tary spending and the nationalized copper company were  spared. 

The copper company was fa­mous because of the uproar provoked when Allende seized it from Anaconda in 1971. But Pinochet kept it nationalized --  a secret law  gave the military  ten percent of its profits.  So even under the junta, Chile’s largest  enterprise and exporter remained “socialist.”

In any case, the junta’s most important  neoliberal experiments -- and worst mistakes -- concerned macroe­conomic policy.  Here the point man was  Sergio  de Castro,  the los Chicago Boy who became Pinochet’s second Finance Minister in l979. Like Argentina’s “Wizard”  de Hoz,  De Castro was a strict believer in the monetarist view that the best way  to fight inflation in “small” economies like Chile  was  by  eliminat­ing tar­iffs, deregulating capital and trade, and maintaining a fixed exchange rate.[vi]   So he fixed Chile’s peso at 39 pesos to the dollar and held it there  from July l979 until June l982.   With copper prices in a slump and the size of the state sec­tor shrinking,  this was only possible be­cause foreign banks were willing to lend money hand-over-fist to Chile’s private sector.  Foreign  banks were sympathetic to  Pinochet’s conservative economists, much as they had been to the Argentine junta’s de Hoz;  they were also flush with cash and  very compet­itive, given Chile’s high real domestic interest rates.  

So, just as in Argentina,  many domestic borrowers took advantage of  fixed exchange rates and the temporary generosity of their foreign bankers to make lucrative  back-to-back deals.  For example,  Javier Vial, the sponsor of Friedman’s 1975 visit, and Chile’s richest man by 1978, acquired control over Banco de Chile in the late l970s and used it as a front to borrow heavily from foreign banks like Bankers Trust and  Chase. When he was its President,  Banco de Chile, in turn, reloaned the dollars to Vial’s many other private companies, including sev­eral that were based in Panama, like Banco Andino.  All these shenanigans be­came public af­ter Vial’s empire cracked in 1983.  In 1997, after a 14 year investigation, he was sentenced to 4.5 years in jail for bank fraud, and former Economy and Treasury Minister  Rolf Lüders, who’d owed 10 percent of BHC, was sentenced to four years.[vii]  Chile had gotten  stuck with his debts when the bank failed and was nationalized.   All this was no surprise to his foreign bankers -- as one former Bankers Trust officer who had personally  handled Vial’s Panama accounts told me, “We knew he was lending to himself, but  no one wanted to pull the plug.” [viii]  

As a result of de Castro’s policies,   Chile’s private foreign debt boomed  during  the “miracle” years.  In  l981 alone,  $6 billion of new credits were issued by foreign banks, a huge amount for this small economy, mainly  to  the leading domestic private banks like Banco de Chile, Banco de Santiago,  Banco Internacional, and Banco Colocadora, whose grupos,  in turn, owned a huge equity stake in Chile’s private sector.  From l980 to l982, private  foreign debt doubled; by l982  the total foreign debt had ap­proached $20  billion,     two-thirds of  it private.  The Central Bank re­peatedly warned  that it was not responsible  for the  private debt, but  it  al­lowed the spree to continue.  Given   all the “cheap” dollars and low tariffs, im­ports  also soared --   luxury imports became  Chile’s equivalent of flight capi­tal.  

A NEOLIBERAL CRISIS

The whole situation  finally began to  unravel in  May  1981  when Crav, a leading sugar company, failed.  The real crunch came in the summer of l982  when the Latin American debt panic dried up new loans, forcing  Chile to devalue and tighten interest rates, a lethal combination.  By January 1983 unemploy­ment   was thirty  percent,  and the six top private banks and the country's two largest pri­vate “grupos,” Vial  and Cruzat-Larrain, had also both folded. 

At this point Finance Minister de Castro began to get  intense pressure from foreign banks  like Chase and Bankers Trust to “nationalize”  the private foreign debt.  For a while he stuck to his free-market principles, reminding them of his  earlier warnings -- that such a move  would be no more justified than Allende’s nationalizations, and that this was, after all, private foreign debt, freely contracted, presumably with compensation for the risks of default built into the interest rates.  

But  the great big banks were not concerned with  such abstract princi­ples -- any more than they are today.   In January 1983,  they  quietly cut off  all Chile’s foreign trade credit lines – to the point where oil tankers en route to Santiago started to turn around and head home.   De Castro was forced to resign, and his replacement quickly declared that, indeed, the junta would as­sume responsibility for the private foreign debt (though not its offshore flight assets!) after all.  In the words of one Chilean banker, “Pinochet achieved what Allende only dreamed of -- the complete so­cialization of  our private sector.”[ix]   

Nor was this  the end of the story. When Pinochet’s fourth Finance Minister, a de Castro protégé named Hernan Buchi, took office in l985, he had to em­bark on  yet another, even larger  round of privatizations, simply  to rid the government of all the debt-ridden companies that the government had just acquired through the forced nationalization.  

(To his credit, General Pinochet did support the compulsory nationalization of Chile's largest banks -- as compared with the far more generous, CEO-friendly bailouts that the US Treasury has recently employed.)

Subsequently,  foreign bankers, the World Bank, Wall Street, and the IMF all gave Buchi  and the Pinochet regime rave re­views for their brilliant privatization strategy,  designed to attract foreign investment, boost savings,  and downsize Chile’s state.  But they never seemed to acknowledge why his privatization program  had been necessary  and possi­ble  in the first place  -- because  in 1983, neoliberal policies had produced a disaster, and   the junta and Chilean taxpayers had been forced by its  foreign credi­tors to take the fall for so many bad debts.

Finally, capping it all,  whom do you suppose were the main beneficiaries of Chile’s latest round of priva­ti­za­tions?  To  avoid the insider-trading outrages that had characterized many of the 1970s privatizations – helping groups like Vial and Cruzat to grow quickly --   Buchi did offer low-cost loans to workers and pension funds to help them buy stock.  By l988 worker-owned funds owned 14 percent of the privatized shares,  not a bad achievement in worker control for an ostensibly right-wing regime.

But two other kinds of investors became even more important.  The first were  foreign  investors, especially Sergio de Castro’s old friends, the foreign banks. In l986, under the  Central Bank’s “Chapter 19” program,  they  were al­lowed to swap their  (dubious) nationalized loans for equity in state-owned companies that were  priva­tized on very  fa­vorable terms.  

 As a result,  Bankers Trust obtained forty percent  of Provida, the country’s largest pension fund, plus  Pilmaiquen, a power plant, for   half its book value;   Aetna Insurance bought the country’s second largest pension fund;   Chase, MHT, and Citibank  also acquired major  local interests. Already by 1990,  a handful of foreign-managed pension funds   controlled seventy percent of  Chile’s pension system,  its largest pool of  capital.  Alan Bond, the er­ratic  Australian investor whose  financial em­pire  later collapsed,  was even permitted to buy the fa­mous telephone company that ITT  had fought Allende so hard for.  COPEC, Chile’s oil company, which had been privatized for a song to Grupo Cruzat-Larrain in 1976, had since turned into a debt-ridden conglomeration of fishing, mining, forestry, and finance companies, including half of Banco de Santiago.   When Cruzat cratered in 1983, Chile’s government re-acquired ownership of the now-heavily indebted COPEC, which was also by then Chile’s largest private enterprise. Four years later, it reprivatized COPEC to Grupo Angelini, another leading Chilean private conglomerate, again at fire-sale prices. And so the cycle continued.....[x] 

All told, this  “Chapter 19”  debt-equity swap program was credited  by its supporters -- especially the banks -- with reducing Chile’s debt by more than $2 billion. Of course it was a little ironic for the banks to be praising this achievement. Many others saw  the program  as a dead give-away.  By assuming  all the pri­vate foreign debt in the first place, Chile had rewarded bad lending.   And after a decade of tight-fisted government  many of the  privatized assets had actually been in pretty good shape.  Except for the copper company and a few military sup­pliers, the only ones the government retained were “dogs” no one else wanted.  It made little sense to let foreigners trade du­bious loans for valuable equity  at rock-bottom prices  -- maybe even less sense than Allende’s    nationalizations.  It seems that Chile hadn’t really eliminated state intervention; it had merely inverted its class bias.

The other key investor in Buchi’s  privatizations was the good old Chilean elite -- like Sebastian and his brother.   As we’ve seen, while the government nationalized  private debts,   it didn’t touch  private foreign assets.  And Buchi now offered flight capitalists  a gener­ous tax amnesty  if they brought their money  home.  His “Chapter 18” program  allowed them to buy   debt from the banks and swap it for  government bonds or equity in state companies at very  favorable prices.  By l990,  this program had brought in another $2 billion. Again, the banks and their clients  naturally sang Chapter 18’s praises. However,  it re­warded tax evasion and effectively swapped for­eign  for domestic debt that may  well prove more costly to service in the long run. Such criticisms meant little to the  officials in charge of the program, however -- some of them even benefited  from it personally. Soon after he left government, for example, Jose Pinera be­came president of an electric utility that had been privatized. And his brother ended up owning the privatized national airline – which he proceeded to turn into quite a profitable enterprise, even while serving in Chile’s Senate.

So the  circle was complete:  having been bailed out of their foreign debts by the government,  Chile’s  elite and the foreign banks now bought back their assets at less than fifty- sixty cents on the dollar, often with the very same flight dollars  that the original loans had financed! 

Here we have one of the purest cases of abusive banking,  one that poses the ques­tion of the foreign banks’ responsibility very clearly. For  Chile’s  1983 debt crisis obviously had little  to do with  inefficient public enterprises, excessive public debts,  godless Marxists, welfare-state liberals,   or  all the other usual suspects blamed by neoliberals.   At that point, fully two-thirds of  its  foreign debt was  private, and Pinochet and Co. had long since elimi­nated much of the state’s inefficiency, not to mention the political opposition.  Yet by the end of l983,  Chile  had ended up with one of the highest per capita foreign debts in the world, as well as  one of the developing world’s largest state sectors.

And this “Chicago road to socialism,” it seems, was taken in part because there was no  political opposition, no ac­countability – no one to say “enough” to the foreign banks, the domestic elites, their unregulated domestic banks, and the generals. So perhaps democracy had its uses, after all; perhaps  “free markets” alone were not sufficient. 

One could almost imagine the righteous tail-cutters in Chicago, taking a break for a micro-second from their round-the-clock crusade for more-perfect markets, experiencing perhaps just a momentary tremor of self-doubt.

*** 

 

---

 

[i] As of 2001, Chile officially recognized the existence of 3197 disappearances and extrajudicial killings  between September 11, 1973 and March 11, 1990, when the elected government  of Patricio Aylwyn assumed power. See “Korean Panel To Cooperate with Chile To Reveal Truth over Mysterious Deaths,” Korean Herald, February 7, 2001.  

 

[ii] See Morton Halperin, Jerry Berman, Robert Borosage, and Christine Marwick, The Lawless State.  The crimes of the U.S. Intelligence Agencies. (New York: Penguin Books, 1976), 16.

 

 

[iii]  For more about Vial, see “La Nueva Derrota,” Que Pasa, November 10, 1997; S. Rosenfed and J.L. Marre, “Chile’s Rich,” NACLA Report on the Americas, May/June 1997.

 

 

[iv]  See “Milton Friedman: Gurú a regañadientes, “ Revista Qué Pasa, February 28, 1998.

 

This account of the l973-78 period benefited greatly from  an excellent paper by Paul E. Sigmund, “Chile: Privatization, Reprivatization, Hyperprivatization.” (Princeton University, unpublished, July 1989).

 

 

[v] See, for example, Rodrigo Acuña R. and Augusto Iglesias P., “Chile's Pension Reform After 20 Years,” The World Bank -  Social Protection Discussion Paper No. 0129, December 2001.  Chile’s pension reform, which substituted a privately-funded system for the traditional “pay as you go” government system, was enabled by the fact that its military government could simply mandate the substitution. Subsequent attempts at privatization in more democratic countries like Argentina and Uruguay proved much less successful. 

 

 

[vi] This theory, espoused by arch-monetarists like Colombia University’s  Robert Mundell, argued that this policy would constrain inflation to the world rate by making a large share of the money supply endogenous.  It basically ignored exchange rate specu­lation and capital flight.

 

 

[vii]  For Vial’s and Lüder’s October 28, 1997 sentences, see “La Nueva Derrota,” Que Pasa, November 10, 1997, available at www. quepasa.cl/revista/1386/18.html..

 

 

[viii] "Chile Military Analyst,"  Sao Paulo, 2.21.89; “Miami Banker,” 5.91.

 

 

[ix] Raul Fernandez, former Director of Public Credit for Costa Rica, International Bank of Miami,  4.22.88. 

 

 

[x] See the account of COPEC in S. Rosenfed and J.L. Marre, “Chile’s Rich,” NACLA Report on the Americas, May/June 1997.

"SO MUCH FOR THE WALL...."Israel's Strategic Blunders, Round TwoJames S. Henry

Almost everyone except the bovine US President -- who also believes that US-backed forces are winning in Iraq, Afghanistan, and the "GWOT," despite mounting evidence to the contrary -- now acknowledges that Israel has suffered an important strategic setback at the hands of Hezbollah.

Indeed, the "soul-searchers" reportedly include a majority of Israelis, many members of the IDF, leading US and Israeli security analysts,  and Prime Minister Ehud Olmert himself. As one leading Israeli journalist put it today, "This is not merely a military defeat. This is a strategic failure whose far-reaching consequences are still not clear." 

☮ Lessons (Re-) Learned?

 In hindsight, both Israel and the US should now (re)-learn some very costly lessons about the risks of taking on a highly-motivated, well-trained and adequately-armed guerilla army on its own turf. They also have now an opportunity to remember some important lessons about the limitations of purely-military solutions to such conflicts.    

▣ As in the case of  the US strategic bombing campaign in Vietnam, Nato's air war in Kosovo (1999), and, indeed, the Allied air war against the Nazis during World War II, Israel's month-long air war against Hezbollah has largely failed to accomplish its strategic objectives. In particular, Hezbollah's ability launch dozens of missiles into northern Israel went utterly unscathed, with the largest single number of missles launched on August 12, the day before the ceasefire.

▣ Given the elaborate ground defenses, arsenal, and trained force that Hezbollah was able to pre-position in South Lebanon, its ground forces also avoided the knock-out blow that Israel and Washington had hoped for.

▣ By far the most effective "weapons" on the ground were not Iranian-supplied long-range missiles, drones, cruise missiles, or even Katushyas, but a combination of disciplined ccombat training and tactics,  heavy investments in combat engineering, remote sensing, and other defensive equipment, and sophisticated anti-tank missiles, many of which appear to have been supplied by Russia, by way of Iran and Syria.

▣ On the other hand, proponents of anti-missile defense systems, "smart bombs," 60-ton Merkava tanks,  border walls/electronic fences, and "infowar" clearly have some work to do. None of these systems performed very well for Israel during this conflict.   

▣ The widespread bombing campaign exacted a horrific price from Lebanon's civilian population, uniting most political factions within Lebanon against Israel rather than against Hezbollah, at least temporarily.

▣ Only part of this campaign's horrific civilian toll in Lebanon can be explained by Hezbollah's propensity to "swim" in the civilian sea -- part was simply due to targeting mistakes on made by the Israeli Air Force and its intelligence sources, and part was due to deliberate choices made to go after "dual use" targets,  including oil refineries, bridges, power plants, and transportation vehicles.

▣ The Summer War has also greatly boosted political support for Hezbollah on the "Arab street" throughout the Middle East, converting initial criticisms by the Saudis, Egypt, Jordan,  Kuwait, and other conservative regimes into widespread expressions of support. We suspect that much of this official support is insincere, but it probably reflects a genuine fear that these regimes have of their own people. 

▣ Syria, which had been under strong political pressure to continue its detachment from Lebanon, has been "reaccredited" by Israel's excesses during the conflict -- able to assume the self-righteous role of Lebanon's protector against foreign aggression. On the other hand, the Baathist regime may also now be in a stronger negotiating position with respect to the West.

▣  Iran's hardcore anti-reformers have so far only been strengthened by Hezbollah's performance to date in this conflict, and by Israel's costly tactics. Nor were they discouraged from pursuing their nuclear development program. Their only real challenge now will be to replenish Hezbollah's sorely-depleted missile arsenal, and to find ways around the "ceasefire's" prohibition on Hezbollah repositioning.

▣ Most important, Hezbollah's ability to define victory as "not losing" against one of the world's most powerful armies has certainly not encouraged other radical groups around the planet to lay down their arms and pursue peaceful alternatives.

▣ For every Hezbollah fighter that was killed by the Israelis in the last month, the heavy bombing campaign probably generated several new recruits -- not only in Lebanon, but also in Afghanistan, Iraq, Kashmir, and the West Bank.

• In short, as a result of this strategic setback, Condi Rice's Panglossian "birth pangs of democracy" are likely to prove more prolonged and painful than ever.   

WAS THERE ANY ALTERNATIVE?

▣ At a tactical level, clearly Israel and the US both need to do much work to do regarding the failures of their intelligence operations with respect to Hezbollah's arsenal and military preparations. We can add this to the lengthy list of their  other intelligence failures in the last decade alone.

▣ The preference for high-altitude offensive bombing,  naval shelling, and open-field tank/ heavy vehicle warfare over hard-slog ground offensives also needs to be reexamined. To the extent that this reflects a preference for arms-length "hi-tech warfare," and a reluctance to sacrifice infantry for the sake of defeating dedicated militants like Hezbollah, this may indeed rise to the level of the same "morale/ will to die"  handicap that has crippled other many colonial armies,  in places like Vietnam, Algeria, China, and (long ago) the US itself.      

▣ At a strategic level, the notion that the "enemy" simply consists of a finite stock of "fanatical terrorists," motivated primarily by "Islamo-fascist" dogma, or -- as Benjamin Netanyahu put it last week -- "12th century religious doctrines," is simple-minded and unhelpful. Among other things, they were clearly very professional, highly-trained soldiers. Unless military planners come to appreciate the political implications of what they do, and the real nature of their enemies, they may lose the war both on and off the battlefield.

▣ Another key point here is that the "Islamofascist" categorization, and the tendency to lump all "Islamic radicals" and "terrorists" together, has blinded both the US and Israel crucial schisms -- for example, the Alawite-Sunni rivalries that have been so important in Syria, Shiite-Sunni rivalries in Iraq, Bahrain, and Lebanon, and secular - religious rivalries in Palestinine.  

▣ True, it is now very late in the day, and the long-term failure of Israel and its enemies in the region to make any progress at the bargaining table may indeed mean that this overall story is headed for a terrible climax.

From this angle, however, perhaps the one good thing about this strategic disaster is that it may remind Israel and the US that, whatever the final outcome of any attempt to solve the problems of the Middle East by military means,  it will not be cheap, easy, or devoid of surprises.

• (c) JSH, SubmergingMarkets, 2006     

 
     

 

 

         

 

"IRAQ'S MOMENTOUS ELECTION, ONE YEAR LATER"Iraq War Supporters Are Running For CoverJames S. Henry

For those who have not been paying attention in class, the so-called "Iraq War" has recently been setting new records for violence, brutality, and terror -- with at least 379 to 1300 iraqi fatalities in the last week alone, in the wake of the bombing of the 1,062-year old Al-Askariya shrine at Samarra.

Nor did the apprentice Iraqi Army -- with its 20,000-man force, trained by the US military at the phenomenal cost of $15 billion to date, or $750,000 per soldier -- prove to be much help in quelling the violence. This is not really surprising --  after all, this Army shares the same divided loyalties as the population at large.

While a few senior US military officers have issued  Westmoreland-like statements assuring us that "the crisis has passed," and that this is not -- I repeat --  not a "civil war," it is hard to know what else to call it.

A few journalists have speculated that, ironically enough,  all the increased violence and polarization may undermine the Pentagon's "hopes" to reduce the number of US troops in Iraq to 100,000 by year end.

Those "hopes," however,  are vague. One suspects that they have always been mainly for public consumption,  including the morale of US troops. We only began to hear about them last fall when opposition to the war really soared in the US.

The Pentagon's not-so-secret hope -- among senior planners, at least -- is different. This is to turn Iraq into a neutered or even pro-US -- better yet for cosmetic purposes,  "democratic" -- regime right in the heart of the Middle East, complete with permanent basing rights,  immunity for US personnel from war crimes prosecution by the International Criminal Court, and, naturally enough, the occasional juicy construction, security, arms, and oil contract for friendly US and UK enterprises  -- at least so long as they are not owned by Dubai. 

ALL AGAINST ALL?

It is this vision that is most threatened by the recent surge in Iraqi violence.  Clearly this is no longer just a "foreign terrorist/ dead-ender-led insurgency" against the US and its apprentice army.

Nor has the US-guided constitutional process, and continuous interventions by our heady Ambassadors in Baghdad -- safe behind the walls of the world's largest US embassy -- succeeded in stabilizing the country.

Rather, Iraq is now engaged in a complex, multi-sided bloodbath, fought along age-old religious, ethnic, and clan lines by well-armed groups. While American battle deaths continue, almost all the casualties are now Iraqis felled by Iraqis.

Furthermore, this inter-Iraqi violence goes well beyond the suicide bombings that still garner most of the media's attention. It escalated sharply in the last year, long before the Samarra bombing, and even as the vaunted constitutional process was unfolding.

For example, as reported by the Guardian this week, the former director of the Baghdad Morgue recently fled the country, fearing for his life after reporting that more than 7000 Iraqis had been tortured and murdered by "death squads."

According to the former head of the UN's human rights office in Iraq, most of these victims had been tortured by the Badr Brigade, the military wing of SCIRI, the Supreme Council for the Islamic Revolution in Iraq.

As we reported over a year ago on this site, SCIRI is not just some fringe element. It is one of Iraq's two key Shiite-led political factions, and one of the principle victors in the December 2005 parliamentary elections. Unfortunately, our expectations have been fulfilled. Upon acquiring power, SCIRI has behaved exactly as anyone familiar with its history -- but apparently not the US military -- would have expected.

TOUGH LIBERALS?

Meanwhile, among America's befuddled liberal intelligentsia, hard-nosed realism has been sorely missing.  The December election and its January 2005 predecessor were events that most neoliberal observers --  for example,  the American Prospect  -- could not praise highly enough:

Iraqis have concluded one of the most successful constitutional processes in history. Rarely, if ever, before has an important country moved from tyranny to pluralism so quickly, with so little bloodshed, and with such a quality and degree of popular participation.

This assessment was spectacularly wrong. Iraq's constitutional process has not led to "pluralism," much less staunched the bloodshed. 

Rather -- no doubt with ample assistance from Iranian secret agents,  "foreign fighters," and other officious intermeddlers  --  the process has exacerbated social and religious  divisions --  divisions that Iraq was always noted for mitigating.

The continued US presence has also helped to legitimize the extremists, letting them fly the "national liberation" flag. We have reached the point where country's armed private militias are expanding faster than the US-trained police and army. 

In this perilous Somalia-like situation, with US troops viewed as part of the problem, and shot at by all sides, it is harder and harder to justify incremental American casualties.

Indeed, about the only thing that all Iraqi factions  -- apart from some Kurds and the country's dwindling minority of remaining secularists -- agree on now is the desire for the US military to leave.  We should respect their wishes.

TOO FEW TROOPS?

By now, even arch-conservative pundits like William F. Buckley have agreed that the Iraq War was a costly mistake, and that a US withdrawal is called for. 

Meanwhile, however, some die-hard US neoliberal defenders of the war -- including tough-guys like the New York Times' Tom Friedman and Vanity Fair's Christopher Hitchens -- are still denying the existence of Iraq's deep-seated, historically-specific obstacles to democratization and unified self-rule, as well as the overwhelming opposition in Iraq to the US presence.

Of course, admitting that local history actually matters might require one to study Middle Eastern history a little more closely, or perhaps even learn Arabic.

It might also interfere with certain pet theories, like the "inevitable triumph of technology and free markets over local markets, nations, peoples, customs and practices," or the "inevitable struggle to the death between Islamic extremism and Western democracy."

From the standpoint of these and other warhawks, our only mistake in Iraq was really quite simple -- the Bush Administration sent in too few troops.

On closer inspection, this claim spins itself into the ground faster than a Halliburton drill bit. 

• One key reason why more troops were not available was the fact that the war's supporters -- not only the Bush Administration, but also leading Democrats like Hillary Clinton, John Kerry, and Joe Lieberman,  and their pundit camp followers -- failed to persuade anyone other than Mad Tony Blair that a variety of cockamamie  theories about "democratizing the Middle East," the "connection" between Saddam and al-Qaeda,  and WMDs had any validity whatsoever.

• Second, while a handful of Pentagon skeptics did support larger troop commitments before the invasion, they were in the minority -- and not just because of Rumsfeld's desire to fight the war with a high-tech army. Most of the war planners and pro-war enthusiasts alike were swept away by Friedman-like naievete about the enthusiasm of ordinary Iraqis for US-backed "liberation." They systematically underestimated the Iraqis' nationalism and their resentment of occupation -- especially by  armies of "Christian" nationals from the US and the UK. In retrospect, it is easy to say that even more troops were needed to maintain order and suppress resistance. But the larger US presence would have provoked even more resistance. 

• As most US commanders agreed, the "more troops" answer is flawed from a technical perspective, given the nature of the insurgency. It would have provided more targets for suicide bombers, without delivering a remedy for their simple IED and sniper tactics.  While more troops might have provided better border interdiction, Iraq has a larger land mass than Vietnam, and twice as many neighbors. For the "more troops" claim to work with any certainty,  the number would have had to rival Vietnam proportions -- at least 500,000, probably for several years. The US military manpower system has already experienced great strains trying to sustain its 133,000 commitment to Iraq with a volunteer army -- to be effective, the "more troops" approach might well have required a military draft. 

Apart from New York's Congressman Rangle, who may have just been tweaking the establishment's chin for his black constituents, not even the most aggressive neoliberal warhawk has ever proposed that. 

Ever since WMDs failed to turn up and Saddam's connection to al-Qaeda turned out to be a canard,  the neoliberal warhawks have been running for cover -- worried, quite rightly, that history will not take kindly to their dissembling, and their collaboration with the Bush Administration's neoimperialists.  

For much of the last three years this cover story was provided by the expectation of "nation building," "democratization," and the "training of the Iraqi Army" --  achievements that always seemed to be, conveniently enough, just around the corner.   

As the last week's events have dramatized, these are all more mirages in the desert. We've run out of time and excuses.  

   (c)SubmergingMarkets, 2006.

 

 

IRAQ AND 'NAMCostly Lessons LostJames S. Henry

News Flash - Leading Conserv. Dem. Wants US Troop Pullout From Iraq Within 6 Mos. News Flash - New Vietnam-Era Transcripts: Eerie Resemblance to Iraq

Each Veterans Day, my family takes pride in the fact that generations of Henrys and Shelburnes have served proudly in almost every honorable American war, from the Revolutionary War and the War of 1812, to the Civil War, World War I, World War II, and Korea. While we have always admired the courage of principled pacifists, whenever there were genuine threats posed to the US, our choice was to answer the country’s call.

Some members of my family also chose to serve in Vietnam. But I did not, because I did not consider Vietnam to be an honorable war. When my draft number turned out to be 365, I seized the chance to become active in anti-war protests, and to write a book about the problems of returning veterans and the Veterans Administration.

As we will review below, Vietnam was a war that no one who had any choice in the matter – and millions of US draftees and unemployed working-class youth did not have much choice – had any business helping to wage.

Iraq is in the same category -- right up there with other ignoble US military adventures, like the Indian Wars, the 1846-48 Mexican War, and the brutal Philippines- American War of 1899 to 1916, when an occupation army of 126,000 US troops required 17 years to put down Filipino rebels fighting for independence, at a cost of 4324 American lives, 20,000 Filipino insurgent lives, and at least 250,000 Filipino civilian lives.

One might have hoped that the US would have learned from these costly adventures, and the Vietnam blunder in particular. Instead, we seem to be repeating many of the very same costly mistakes in Iraq, and adding some new ones -- for example, the creation of a world-class training camp for terrorists, one that makes the Taliban’s Afghanistan look like a 4-H Petting Zoo, and largely offsets all the advantages gained by the success of the multilateral effort in that country.

As conservative national security authorities like former National Security advisor Brent Scowcroft, former Marine Corp General Anthony Zinni, and former Lt. Col. William Odom have come to recognize, Iraq is a strategic blunder of Vietnam proportions. Odom's September 2004 remarks on German TV are especially worth repeating:

“When the President says he is staying the course, that makes me really afraid. For a leader has to know when to change course. Hitler did not change his course: rather he kept sending more and more troops to Stalingrad and they suffered more and more casualties.

“When the president says he is staying the course it reminds me of the man who has just jumped from the Empire State Building. Half-way down he says, ‘I am still on course.’ Well, I would not want to be on course with a man who will lie splattered in the street. I would like to be someone who could change the course.

“Our invasion of Iraq has made it a homeland for al-Qaeda and other terrorist groups. Indeed, I believe that it was the very first time that many Iraqis became terrorists. Before we invaded, they had no idea of terrorism.”

LESSONS LOST

Once again, those who are paying the highest price for misguided US strategy are not the war’s organizers, but thousands of ordinary US servicemen and tens of thousands of ordinary Iraqis.

Just as in Vietnam, the number of civilian casualties in Iraq is highly uncertain -- the Pentagon, learning at least one lesson from Vietnam, “does not do body counts.” But no independent observer doubts (1) this number is at least 10-50 times the number of US fatalities, and (2) the great majority of Iraqi fatalities have been caused by US-led coalition forces.

It also turns out that, just as in the case of Vietnam, the US has become engaged in a series of horrific war crimes in Iraq, many of which are only just now coming to the surface. Each day we are reminded of the barbaric deeds of suicide bombers. But can anyone doubt that the insurgents would gladly exchange their explosive belts and “improvised explosive devices” for the 500-pound bombs, white phosphorus, Gatling guns, and air-to-ground missiles, now routinely employed by the US military?

The results of the insurgents’ violent deeds are also not shielded from our eyes by “no-go” zones and the rigid censorship that applies to embedded journalists.

Finally, once again, a tiny elite has manipulated and lied our country into launching a costly, aggressive foreign war. This is not only of interest to historians --
if lying to Congress to launch the most blatant unilateral act of aggression since Hitler invaded Poland is not an impeachable offense, I don't know what is.

There is a growing body of evidence – from Richard Clark, Paul O’Neil, Scott Ritter, and Joe Wilson on down to the latest revelations by the British Ambassador to Washington – that the Bush Administration had Iraq in its gunsights from January 2001 onwards.

Belated Democratic complaints about “being lied to” notwithstanding, it was also clear to many independent observers in late 2002 and early 2003 that the Administration’s claims about WMDs and the specific risks posed by Saddam’s regime to the US and its allies were puffed up.

POUNDING THE WAR DRUM

To a journalist, the most disturbing question is how the US “Fourth Estate” – mainstream journalism– was persuaded to go along with all of this. In fact the Fourth Estate has almost always supported US wars, at least initially, including those with blatant neo-imperial ambitions like the Mexican War, the Spanish-American War, the Philipines occupation, and the Vietnam War.

In the case of Iraq, there's little doubt that the press got swept up in the country's revanchist mood after 9/11.

But the press was not simply swept along. As the New York Times’ Thomas Friedman – one of the earliest drum-beaters, like his colleague Judith Miller -- admitted in a brief moment of candor in Ha’aretz in April 2003,

"(This) is the war the neoconservatives wanted…(and) marketed. Those people had an idea to sell when September 11th came, and they sold it. Oh boy, how they sold it. This is not a war that the masses demanded. This is a war of an elite. I could give you the names of 25 people (all of whom sit within a 5-block radius of (my Washington DC) office, who , if you had exiled them to a desert island a year and a half ago, the Iraq war would not have happened."

In the aftermath of Vietnam, virtually all its higher-level organizers and media proponents "failed up" -- they transitioned smoothly to respectable post-war careers. McGeorge Bundy went to the Ford Foundation, Robert McNamara to the World Bank, Henry Kissinger to a lucrative consulting career. Pro-war journalists and publishers like Joe Alsop and Henry Luce also continued to prosper.

The American Left has an unfortunate habit of
turning the other cheek,
partly because it has often suffered from “witchhunts” itself. This time around, for the sake of future generations, we need to be much less forgiving. But we will let the punishment fit the crime.

Those academics, pundits, reporters, professional experts and anchor-people
-- like Bernard Lewis, Thomas Friedman, Charles Krauthammer, Wiliam Kristol, Judith Miller, Robert Novak, Richard Perle, and Bill O'Reilly --
who went out of their way to hype this war must simply
be compelled to answer questions about it for the rest of their professional careers.

TURNING POINT?

The good news now is that we are fast approaching a watershed in US foreign policy, when our country finally acknowledges that the only question worth debating is precisely how high the scaffold should be for the politicians, national security “experts,” and war-mongering pundits who dragged us into the Iraq War mess in the first place.

Just a year after his reelection, a beleaguered US President is wandering the planet from Buenos Aires to Brasilia to Panama to Taiwan, accusing his critics back home – with no apparent sense of the irony -- of being “irresponsible.”

Meanwhile, leading members of the US Senate just now, at long last, beginning to tilt toward the anti-war movement, declaring what many of us have been saying since well before April 2003 – that this war was premeditated, and based on rather transparent distortions and outright fabrications.

Given next year's mid-term elections, a few of these cautious souls in the Congress may even be thinking the unthinkable -- that the only way to really “win" this War, compel the Iraqis to take charge of their own destiny, get back to the job of fighting global terrorism, diminish the domestic demand in Iraq for "foreign fighters," regain support among the Iraqi people, and truly support our troops is by withdrawing them as quickly as possible, and in any case no later than the end of 2006.

DISHONOR IN VIETNAM

At the risk of digging up some painful memories, it may be useful to recall that Vietnam was an undeclared, illegal, completely one-sided war, fought against popular forces and a Third World army in a tiny, distant, impoverished country.

The war was fought for reasons that kept shifting over time, and eventually proved to be false, based on a combination of negligent misjudgments, willful distortions, and outright lies. As a result, after more than a decade, and hundreds of billions of dollars, more than 58,200 Americans, 1 million Vietnamese combatants, 3-4 million Vietamese civilians, and 50,000 - to 300,000 Cambodian civilians killed by US bombs essentially died for nothing.

As Henry Kissinger himself admitted in a 2003 documentary, if Vietnam had been permitted to “fall” to the Communists immediately after World War II, it would have made virtually no difference to the outcome of the Cold War or US national security interests.

Indeed, today, "Communist" Vietnam today has one of the highest economic growth rates in Asia, and is one of the largest per capita recipients of US foreign investment and World Bank finance -- indeed, apart from the emerging bird flu epidemic and its one-party state, the country is a World Bank poster boy.

All this did not prevent leading US politicians and high-minded national security experts from “selling” the war hard, essentially for their own political and bureaucratic self-interests:

The first bogus justification for the war was the notion that Ho Chi Minh’s national liberation movement was nothing but the creation of a global Communist conspiracy, and that Vietnam was just another "domino" in this grand design.

This myth, largely concocted by US policymakers like Walt Rostow, John Foster Dulles, and McGeorge Bundy, was belied by thousands of years of Vietnamese history, the intense Sino-Soviet rivalry (exploited so adroitly by Henry Kissinger), and the many wars and skirmishes waged among China, Vietnam, Cambodia, and Russia. It was also belied by the fact that the US carried almost the entire burden of the war alone, evidently because (except perhaps for Australia and South Korea) its allies in Europe and Japan perceived no such global threat.

Especially under the Imperial Presidencies of Kennedy and Johnson, there was also the myth that the US was bringing "democracy" to the Vietnamese people. This was belied by the long string of corrupt, incompetent, and unpopular "South Vietnam" regimes that the US collaborated with, paid for, and helped to install.

For a time there was also the claim – in retrospect, almost preposterous – that North Vietnam’s pipsqueak Navy had launched an unprovoked attack on the US Navy in the Gulf of Tonkin in August 1964.

We now know that this attack never occurred – that the intelligence pertaining to it was either manipulated from on high to begin with, or, at a minimum, badly mishandled at lower levels. Whatever the truth, the incident was exploited by the Johnson Administration to ram a war resolution through a complacent US Congress.

Finally, there was the Nixon Administration's bloody-minded rationale that despite the dubious nature of all the other justifications, and the complete absence of any winning strategy, our national "honor" and “credibility” – and of course, Nixon’s reelection in 1972 -- required us to extend this murderous endeavor another five-seven years, at a cost of 1 million more Vietnamese and 25,000 more US lives, plus untold collateral damage in Cambodia and Laos.

Since it is now known that the Nixon Administration understood from its very first days in office in 1969, that a victory over the insurgency was impossible, and that a US withdrawal was inevitable, all this extra suffering was simply due to cynical face-saving – and a desire to avoid the (silly, but politically loaded) question, “Who Lost Vietnam?”

DISHONOR IN IRAQ

Now the US is embarked on yet another dishonorable Imperial adventure. The Iraq War is also based on a remarkably similar series of shifting rationales, distortions, and outright lies.

At first the Bush Administration and some Democrats, claimed that Saddam was part of al Qaeda’s global terrorist conspiracy. That claim appears to have been slayed by the facts.

However, more recently, there has also been an effort to portray Iraq’s insurgents as nothing more than “terrorists,” “foreign fighters,” and “Saddam loyalists.” Undoubtedly all these groups have seized on the opportunity presented by the US invasion. But the majority of the insurgents appear to be ordinary Iraqis – including some Shiites as well as Sunnis – who are opposed to the US occupation, and to the prospect that the “new Iraq” will be turn out to be nothing more than a Shiite-dominated theocracy or a Balkanized

We’ve also seen the Bush Administration’s shrill attempts to claim that Saddam’s regime was somehow linked to 9/11, or that his beleaguered regime – crippled by two long wars and more than a decade of international boycotts -- was somehow on the verge of deploying nuclear weapons and other WMDs for use against the US and its allies.

Unfortunately, despite more than two years of searching, no evidence whatsoever has turned up to support either of these pre-war claims. This is important, because these are the only justifications for the US-led invasion that come anywhere close to justifying it, from the standpoint of international law, or the enforcement of UN resolutions – no matter how reprehensible Saddam’s government was to his own people.

Absent WMDs and any al-Qaeda links, the justification for the war has shifted to the notion that we are fighting for Iraqi “democracy.” As noted, this noble aim alone could not justify a US invasion, from the standpoint of international law -- Venezuela, for example, may not like the way elections are conducted in Florida, but that doesn't permit it to invade Miami.

In any case, the "democratization" war aim is also belied by Iraq’s new constitution, which has succeeded mainly in crippling the central government, stimulating deep religious and ethnic tensions, and driving the country to the brink of anarchy and civil war.

Indeed, we’ve seen this war become the realization of Iran’s foreign policy dream – the elimination of Saddam, one of Iran's most bitter enemies, the installation of a Shiite-dominated government in Baghdad, and the diversion of US military resources to a country without any WMDs whatsoever. All this buys valuable time for whatever Iran may be up to with nuclear weapons -- which seems to be no good.

Most recently – as in Bush’s reproach to his critics this week – we’ve also seen the war’s defenders fall back to the last line of defense for a failed foreign policy – that abandoning it will lead both our friends and our enemies to doubt our “credibility.”

As if we could possibly do any more damage to our “credibility” than we’ve already done, by hyping the case for the war and then thoroughly mismanaging its conduct.

Just like Nixon and Kissinger in 1969, Bush & Co., and, for that matter, leading Pro-War Democrats like Hillary Clinton and Senator Joe Lieberman, haven’t given us any reasons to expect that, five years down the line, after another 5000 dead US troops, another 40,000 US wounded, and another 200,000 dead or wounded Iraqis, the US Occupation and the Shiite-dominated theocracy that it has brought to Iraq, wouldl be any more stable.

Just as in Vietnam, operationally, we never lost the war -- we could have continued that bloody stalemate forever. In a strategic sense, however, we lost the very first time we confused a political problem with a military one.

(c) SubmergingMarkets, 2005

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